Insights from the Trail - 27/1/23
Reporting season is the talk of the town. US markets were up overnight amidst strong corporate results, with companies generally holding up better than feared. US macro data pointed to a resilient economy with solid 4Q GDP, better new home sales, and lower jobless claims.
The Australian dollar is back above 70 US cents for the first time since August 2022. The combo of lower US rate expectations and stronger sentiment and pricing of resources is supporting the move. This comes as the ASX200 posted its strongest start to the year since 1991, according to Morgan Stanley.??
And the Bank of Canada may be the first major central bank to complete its hiking process. They raised rates (25bp) for the 8th consecutive, and potentially final, time this week.
Meanwhile, Walmart is raising its starting hourly wage by 17% from February. The largest private employer in the US will pay store and warehouse workers at least USD $14/hour, or nearly $20 AUD!
Three other things that got the team talking this week –
2022 was the first year when investment in energy transition equalled that of fossil fuels, according to BloombergNEF. It was also the first year when investment in decarbonizing surpassed $1 trillion. The annual increase of more than $250 billion was the largest yet.
Meanwhile, China is still generating more electricity from coal alone than the US from all sources combined.
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2. The state of the union…
The amount of money sloshing around the US economy shrank last year for the first time on record. This is giving more hope to economists that US inflationary pressure will abate. The Federal Reserve's main measure of the nation’s money stock has fallen by more than $530 billion since last March when the Fed kicked off its aggressive tightening policy.
Meanwhile, US national debt has surpassed $31 trillion! And roughly 25% of the total national debt incurred over the last 230 years actually occurred during the 4 years of the Trump administration. Primarily due to the unprecedented ~$4 trillion in pandemic relief payments offered to Americans. Biden has accounted for ~11% of the debt during his administration.??
3. The state of communication…
The focus on the consumer is at extreme levels. Let us know your take on this data point. We’ve seen global smartphone shipments record their worst quarterly drop on record, falling 18.3% in the December Quarter YoY. For the calendar year 2022, shipments fell 11.3% and marked the lowest total for a decade. Are we at peak smartphones??