Market recap: Week of 15–19 Jan 2024

Citigroup Q4 highlights

Reuters:

• Revenue: $17.4B (↓3% YoY)  
• Markets revenue: $3.4B (↓19%)
• Banking revenue: $949M (↑22%)
• U.S. personal banking: $4.9B (↑12%)
• Plan job cuts: 20,000 (8% of staff) by 2026
• Challenges persist, with rivals JP Morgan and Bank of America also reporting lower profits.

Global gold ETFs

World Gold Council:

Net outflows: -$1B in Dec (7th consecutive monthly loss)
Total holdings: 3,225t (↓10t in Dec)

Regional flows:

• North America: +$717M
• Asia: +$208M
• Europe: -$2B
  

Historical:

• Soft landings: Avg. flat returns in the past two instances.
• Recessionary strength: Gold historically performs well during economic downturns.

Japan economy

Reuters, Gold.Org and Japan Times:

• Bank of Japan monetary policy meeting on 22-23 January affects USDJPY
• Market anticipates insights on wages and potential end to negative rates in April.
• Real wages concern: Shrinking for 20th month (Nov), down 3.0% YoY—heightening worries for economic recovery.
• 2024 Shunto (wage negotiation): Rengo seeks a substantial 5% pay increase.

Oil markets

Reuters and Offshore Technology:

• Conflict impact: Limited effect on crude output
• Profit taking: Prices weakened after 2% gains last week
• Brent Crude: Settled at $78.15 (-0.2%)
• WTI (West Texas Intermediate) Crude: $72.50 (-0.3%) on Holiday
• Saudi cuts & OPEC (Organization of the Petroleum Exporting Countries) Rise: Countering Middle East concerns
• US EIA (Energy Information Administration) outlook: 2024–25 average oil prices stable
• Navigating geopolitical shifts in the energy landscape.

US and Eurozone inflation

Financial Review and The Wall Street Journal:

• Federal Reserve governor Christopher Waller: US “within striking distance” of 2% inflation goal
• Caution urged: No rush to cut benchmark interest rate; must ensure sustained lower inflation
• Economy strong, labour markets solid, gradual inflation decline to 2%
• Atlanta Fed President Raphael Bostic warns of inflation “see-saw” if rates cut too soon
• Euro hits 5-week low vs. USD on bets of early European Central Bank rate cuts, contrasting with potential prolonged high rates from the US Federal Reserve

European economy

CNBC:

• Portugal’s central bank governor, Mario Centeno: Eurozone inflation moving positively
• Medium-term focus, not fixated on short-term fluctuations like February
• German central bank chief, Joachim Nagel: Inflation too high for rate cut talks now
• Summer potential for discussions, domestic pressures cited for inflation shift  

ECB Update

AFP News:

• President Lagarde hints at potential interest rate cuts this summer
• Emphasises reliance on the latest economic data for decision-making
• Eurozone inflation at 2.9% in Dec, down from 2022 peak but above 2% target
• Key risk factors: Energy prices & supply chain disruptions
• Wage negotiations & profit margins closely monitored for inflation battle
• Lagarde: More clarity in April/May post-wage agreements

2023 year-end bonus trends

Gusto and Morgan Stanley:

• American bonuses down 3.8-36.2% vs 2022, 12.3-36.7% vs 2021
• Tech sector resilient (-3.8% YoY), stable bonuses despite slow growth
• Transportation sector hit hard, down -36.2% since last year
• Bonus cuts expected to impact consumption and inflation
• Morgan Stanley warns of overvalued stocks post-2023 rally
• Bonus reduction adds pressure to the stock market

UK inflation

The Financial Review, DailyMail UK, and the Guardian:

• Inflation report: UK consumer prices rose 4% in Dec, exceeding estimates.
• Money markets price four quarter-point reductions.
• Largest upward contribution tobacco, due to tax
• 65% chance of a fifth cut in 2024, per swaps tied to central bank meetings.
• May rate cut chance drops to just over 50%, from 85% the previous day.
• June rate cut remains fully priced.
• UK Chancellor Jeremy Hunt teases big tax cuts in March budget.
• Note: Former Chancellor Kwasi Kwarteng’s mini-budget caused chaos in GBP with proposed rate cut.

Workforce reduction

Breakingthenews.net:

Macy’s cuts jobs

• Workforce reduction: About 2,350 employees (13% of corporate staff, 3.5% of overall workforce).
• Store closures: Five locations shuttered to embrace automation and offshore roles.
• Strategic Shift:
  • Visual appeal: Focus on visual display managers for enhanced in-store appearance.
  • Digital upgrade: Improving online shopping experience through digital function enhancements.

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Disclaimer:

The information contained in this blog is for educational purposes only and is not intended as financial or investment advice. It is considered accurate at the date of publication by the sources. Changes in circumstances after the time of publication may impact the accuracy of the information.

Past performance is not indicative of future results. Doing your own research before making any trading decisions is recommended.

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