China’s economic growth is expected to slow, and the central bank may have more reasons to cut interest rates
NY Fed President: The Fed is ‘closer’ to a rate hike decision:
New York Federal Reserve Bank President John Williams said the Fed is getting closer to a decision to gradually raise interest rates given the current signs of a very strong labor market. “The next step in reducing monetary stimulus is to gradually raise the near-zero benchmark interest rate to a more normal level, and given the clear signs of a strengthening labor market, we A decision on the initiation of interest rate normalization is approaching.” San Francisco Fed President Mary Daly said at an online event hosted by The New York Times that there are not many signs that inflation will repair itself and Fed policymakers “have to adjust policy.” This week, Fed Chairman Jerome Powell and vice-chair nominee Brainard both emphasized the importance of controlling high inflation.
Tech stocks had their worst year-to-date start since 2016, with fears of a rate hike looming:
Shares of U.S. tech companies are off to their worst start to the year since 2016 as worries about runaway inflation jeopardize the high valuations fueled by market gains over the past few years. Investors are reluctant to invest heavily in growth stocks after several failed attempts at a strong counterattack this week, and there are still no major signs that the pressure on tech companies will ease anytime soon. The Nasdaq 100 is down more than 4% this year, and a late Friday rally that erased some losses earlier in the week did little to help. The Nasdaq Composite fell for a third straight week. Some high-flying growth stocks are bearing the brunt of the growing belief that the U.S. Federal Reserve will soon begin withdrawing its massive monetary stimulus since the start of the pandemic.
Germany’s economy slumps in Q4 and could see a second recession in the pandemic era:
Germany is likely to suffer its second recession since the outbreak, as the emergence of the omicron variant of the coronavirus exacerbates the drag on economic output from supply chaos and the highest inflation in 30 years. Europe’s largest economy shrank between 0.5% and 1% in the fourth quarter of 2021, according to estimates released by the Federal Statistics Office on Friday. Deka Bank, Norddeutsche Bank and ABN AMRO all expect another contraction this quarter, given the record number of new Covid-19 cases and continued difficulties in sourcing parts for key manufacturing. Gross domestic product grew by 2.7% for the whole of last year, in line with expectations but still below pre-crisis levels. Germany’s recovery is lagging behind France, Italy and Spain, which are expected to report 2021 growth of 4.5% or higher later this month.
Russia says Iran nuclear talks have made progress and a deal is expected:
As the final round of Iran nuclear talks slogged, Russia’s foreign minister said he expected world powers to be able to salvage the landmark deal that limited Iran’s nuclear activities in exchange for easing sanctions on Tehran. Russian Foreign Minister Sergei Lavrov’s comments came as his Iranian counterpart was in China for a meeting with Chinese officials. Chinese officials held a series of meetings this week with senior envoys from several countries in the Middle East to discuss regional security and economic cooperation. Iran nuclear talks in Vienna have entered their eighth round, and this week is the third week of the round. “There is real progress,” Lavrov told reporters in Moscow on Friday. “We expect an agreement will be reached.”
Citi’s quarterly trading division revenue fell far short of expectations, and the new CEO announced a restructuring plan:
For the unpredictability of the trading business, Citigroup used its performance to remind investors. The company reported a sharply lower-than-expected revenue from its trading division as new chief executive Jane Fraser embarks on a restructuring. Fixed-income trading revenue fell 20% year over year in the fiscal fourth quarter, missing analysts’ expectations, while equity trading revenue fell 3%, compared with the market’s forecast for growth. At the same time, Fraser unveiled plans to restructure the bank to give investors a clearer picture of the difference between the sectors that manage money for the rich and corporations.
China’s economic growth is expected to slow, and the central bank may have more reasons to cut interest rates:
Markets expect China’s quarterly data on Monday to show economic growth at its weakest pace in more than a year, given the deepening property slump and devastation from the outbreak. Gross domestic product (GDP) likely grew 3.3 percent in the final three months of last year, the slowest pace since the second quarter of 2020, according to the median forecast of economists polled by Bloomberg. The December industrial added value, total retail sales of consumer goods and fixed asset investment data released on the same day are also expected to weaken.