Stock bulls are hoping to extend the positive start to 2023 after all three indexes climbed more than +1% in the first week of the new year. Bulls were happy to see an optimistic US labor report last Friday, along with weakening inflationary data, and a reopening of the Chinese economy.

The monthly US jobs report appeared to move all in the right direction, with more jobs being created than expected, a lower unemployment rate, a better labor participation rate, and a slowdown in wage growth.

Bulls are also pointing to accumulating signs of "disinflation" data that they believe will lead to less aggressive Federal Reserve policy in 2023. Net-net, the market is now thinking the Fed will hike rates by just 25 basis points in both its February and March meetings. If this is how it plays out, the early 20-23 rate hikes will take the Fed Funds to 4.75-to- 5.00%.

Also, keep in mind, the market is still thinking the Fed might have to "pivot" and cut rates by late 2023. outside the US, bulls are looking at the Chinese reopening and the fact tens of thousands of travelers have started flying in and out of mainland

China this weekend as Beijing removed almost all of its border restrictions, bringing an end to pandemic measures that effectively sealed off the world’s most populous nation from the rest of the world for three years.

China is also said to be relaxing borrowing caps and other restrictions for property developers which some bears worry could spark a spike in commodity prices. Other strategists disagree, noting that while activity will probably increase across all sectors, it will likely be gradual and remain subdued because China is not handing out stimulus money.

Some also expect China's full reopening will help ease many of the remaining supply chain snags and serve as a further global disinflationary force.

Lots to debate surrounding the Chinese economy and reopening.

Here at home this week, the trade will be focused on today's New York Fed comments and projections regarding inflation. Fed Chair Powell is expected to speak at a Riksbank event in Stockholm on Tuesday. The trade isn't expecting Powell to say much about US policy, especially ahead of the highly anticipated CPI inflationary data scheduled for release Thursday morning.

Then on Friday, Q4 earnings season kicks-off with results due out from Bank of America, BlackRock, Citigroup, Delta Airlines, JPMorgan Chase, United Health Group, and Wells Fargo. It's worth noting that analysts have sharply cut Q4 earnings expectations with consensus now anticipating earnings for S&P 500 companies will fall -2.2%.

As in the past few reporting seasons, investors will be paying very close attention to the impact of higher costs on corporate margins and looking to reward the companies that have taken steps to successfully protect profits.

Investors are also keeping an eye on Brazil where civil unrest has been brewing over the country's recent presidential election that saw Luiz Inacio Lula da Silva defeat Jair Bolsonaro. Protestors stormed Brazil’s Congress and presidential offices on Sunday to protest what they falsely claim was a stolen election. The buildings have since been secured but there is obviously a risk that the unrest could escalate, potentially disrupting Brazil exports. Buckle-Up, early-2023 looks like it is going to be a wild ride...

Record High Global Food Prices in 2022: The Food and Agriculture Organization's (FAO) food price index, which tracks international prices of the most globally traded food commodities, averaged 143.7 points in 2022, up +14.3% from 2021, and the highest since records started in 1990. Also, keep in mind, the index had already gained +28% in 2021. Source: Reuters

Redfin CEO Predicts ‘Terrible Consolidation’ in the Real-Estate Sector: According to Glenn Kelman, CEO of real-estate brokerage Redfin RDFN, we should expect more pain to come before things start to normalize in the housing market. During the pandemic years of 2020 and 2021, many Americans jumped into the real estate industry, Kelman recounted, so many that there were more real-estate agents than listings during parts of 2021. At this point, there are about a million-and-a-half realtors trying to sell roughly five million homes. Source MarketWatch

Record Levels of Dry Powder Could Trigger a Delayed Explosion of New Startups: After the challenging year that was 2022, one might think that the coming months are not looking great for VCs or founders. But, “dry powder” — money raised by VCs that hasn’t yet been deployed — has risen to record levels. Venture capital investors in the United States, for instance, are sitting on a $290 billion powder keg that’s ready to ignite a new wave of tech startups. Source: TechCrunch

I Had No Idea... The average cost to paint a plane is between $175,000 and $200,000. The global commercial aviation aircraft paint market was estimated at nearly $18.5 billion in 2020 and is expected to grow to a $65 billion market by 2027.

Share of People With $1,000+ Car Payments Hits Record High: The rise in auto loan interest rates is driving an increase in average monthly payment levels, with one study indicating that the share of new car buyers who paid more than $1,000 a month increased to 15.7 percent in Q4 of the 2022 calendar year. According to a recent report from Edmunds, nearly 16 percent of consumers who financed a new vehicle signed on for a monthly payment of $1,000 or more, the highest rate yet, as compared to 10.5 percent of consumers in Q4 of 2021, and 6.7 percent of consumers in Q4 of 2020. Meanwhile, 5.4 percent of consumers who financed a used vehicle in Q4 of 2022 signed on for a monthly payment of $1,000 or more, also a record, as compared to 3.9 percent of consumers in Q4 of 2021 and 1.5 percent of consumers in Q4 of 2020. Analysts indicate that higher vehicle financing costs and cooling used car values could result in negative equity for car buyers down the road. Per the recent Edmunds analysis, 17.4% of new vehicle sales with a trade-in had negative equity in Q4 of 2022, as compared to 14.9% in Q4 of 2021. The average amount owed on upside-down loans increased to $5,341 in Q4 of 2022, as compared to $4,141 in Q4 of 2021. The company’s analysts warn "we are only seeing the tip of the negative equity iceberg Source The Deep Dive

Warehouse Leasing Tumbled at the End of 2022: The U.S. warehousing market is retrenching heading into 2023, a turnaround from the pandemic-driven boom in industrial real-estate demand as companies slow down decisions on new storage and distribution space amid fears of a recession. Companies leased 132 million square feet of industrial space across the U.S. in the fourth quarter, down -28.2% from the third quarter, according to a new report from commercial real-estate services firm Cushman & Wakefield. That was the second straight quarter-to-quarter drop in leasing. After “the extreme acceleration we saw the past couple years, there’s just a natural kind of cooling right now,” said Carolyn Salzer, Americas head of logistics and industrial research for Cushman & Wakefield. Still, the warehousing market remained tight in the fourth quarter even as the vacancy rate ticked up to 3.3% from 3.1% the prior quarter, the Cushman & Wakefield report said. That was the second-straight quarter that vacancy increased after two years of tightening availability, but the empty space remains far below the 5% average vacancy rate in 2020. Source WSJ

More Home Sellers Dangling Incentives to Lure Buyers: Some home sellers are finally accepting the writing on the wall, and offering concessions to home buyers as demand remains weak in the housing market. According to a new report from Redfin, approximately 42% of homes sold in the fourth quarter of 2022 came with concessions. In contrast, over the same period in 2021, only about 30% of homes sold came with deals. Concessions refer to tactics sellers use to reduce the total cost of purchasing a home for a buyer. That includes providing money for repairs, or covering closing costs, or mortgage-rate buy-downs. It doesn’t refer to a cut in the list price. Concessions were most commonly offered by buyers in San Diego, followed by Phoenix, Portland, Las Vegas, and Denver. In San Diego, 73% of homes sold in the fourth quarter came with concessions. Phoenix had about 63% of sellers offering concessions. Concessions were an increasingly popular tactic among home sellers in pandemic boomtowns, which has seen demand wane. For instance, Phoenix saw the biggest jump in the share of sellers giving concessions to buyers, at 62.9% in the fourth quarter. That’s up from 33.2% from a year ago. Concessions were least common compared to a year ago in New York, where only 13.4% of home sellers gave concessions to buyers, followed by San Jose, Boston, and Philadelphia. Source MarketWatch

Why Luminar's CEO was Running Over Fake Kids at CES: Luminar Technologies Inc. Chief Executive Austin Russell climbed into the back seat of a Tesla Thursday morning and told the driver to floor it toward a child. The child was not real, but the eventual collision was. The Tesla electric vehicle, equipped with an automatic emergency-braking system, failed to stop in time, striking the child-size dummy exactly as Luminar’s 27-year-old CEO and his engineers had expected. Alongside the Tesla, a vehicle equipped with Luminar’s lidar (light detection and ranging) technology stopped well short of the dummy while traveling at the same rate of speed, roughly 40 miles an hour. The point Russell was trying to make is that automotive-safety systems that use lidar — sensors that employ high-frequency focused laser beams to process the world in three dimensions, and the technology at the core of his company — are safer than those that don’t. Source MarketWatch

Sales of Fully Electric Vehicles Nearly Doubled in 2022: Last year was a rough one for the auto industry. Sales slipped to their lowest levels in over a decade. One bright spot, though: electric vehicles. EV sales nearly doubled from 2021 to 2022 and now account for about 5% of U.S. car purchases, according to the auto website Edmunds. But some carmakers’ strategies have been more successful than others. Tesla is still the 800-pound gorilla in EVs, with an estimated 60% of the market. But 2022 was the year competitors made real inroads, according to Jessica Caldwell at Edmunds. “It’s not just a one-trick pony with Tesla,” she said. “We’re seeing their market share of all EVs start to decline significantly.” South Korean automaker Hyundai and its affiliate, Kia, more than tripled the number of EVs they sold in 2021. Their strategy was to attract customers with futuristic, attention-grabbing cars, Caldwell said — but without the Elon Musk stigma or sticker prices. Ford and GM are doing what American automakers typically do: going big, with all-electric SUVs and pickup trucks. As of last year, the waitlist for General Motors’ all-electric Hummer was in the tens of thousands. There are also long waits for the all-electric Ford F-150 pickup truck. Source Marketplace

America Needs Carpenters and Plumbers but Gen Z Isn't Interested: The application rate for young people seeking technical jobs — like plumbing, building and electrical work — dropped by -49% in 2022 compared to 2020, according to data from online recruiting platform Handshake shared with NPR. Researchers from Handshake tracked how the number of applications for technical roles vs. the number of job postings has changed over the last two years. While postings for those roles — automotive technicians, equipment installers and respiratory therapists, to name a few — saw on average 10 applications each in 2020, they got about five per posting in 2022. While the creation of technical positions has continued to grow, the number of students interested in applying for them — hasn't. Occupations such as auto technician with aging workforces have the U.S. Chamber of Commerce warning of a "massive" shortage of skilled workers in 2023. Source NPR

More Than $8 Million Raised to Support Damar Hamlin's Charity: More than $8 million has been raised to support a charity backed by Damar Hamlin, the Buffalo Bill's safety who collapsed and went into cardiac arrest on the field last week during a game against the Cincinnati Bengals. The 2020 GoFundMe titled, "The Chasing M's Foundation Community Toy Drive," had a $2,500 goal but raised over $8.4 million as of Sunday. It was originally created "to support a toy drive for Damar's community, sponsored by The Chasing M's Foundation." "However, it has received renewed support in light of Damar's current battle, and we can't thank all of you enough," the updated post on the fundraiser continued. Source Insider

1 9 2023
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