In today’s briefing:
- 2023 4th Qtr Letter to Investors: A Deep Dive into Lithium
- 5 Things We Watch – Inflation updates, Labor Market, Oil, Chinese equities & Growth
- Inflation Watch: Adjusting for revisions, tax, seasonality and sunspots
- China CPI -0.8% y-o-y (consensus -0.5%) in Jan-24
- Labour Watch: Why you should pay attention to the Border
- EM by EM #42 China Could Do with a Cold Turkey
- UK Wages Still Settling Too High
- India Policy Rate 6.5% (consensus 6.5%) in Feb-24
- CX Daily: China Names New Chief of Securities Watchdog Amid Stock Slump
- Suez Watch: Euro demand cannot cope with these prices!
2023 4th Qtr Letter to Investors: A Deep Dive into Lithium
- 2023 was a challenging year, there was a lot of volatility in both long and short books.
- We reserve the bulk of the letter for an extended discussion of our investments in lithium and the outlook for the sector in the coming years.
- Despite dire headlines related to EVs, we remain optimistic about a lithium rebound and skeptical that supply can grow as robustly as projected.
5 Things We Watch – Inflation updates, Labor Market, Oil, Chinese equities & Growth
- Welcome back to another ‘5 Things We Watch’, where we cover some of the things we look at in the current macro landscape.
- This week will be all about inflation technicalities, as both BLS and Eurostat will update the inflation weightings for 2024 on Friday for US CPI and German HICP, respectively.
- The US is looking VERY solid when scraping the headline numbers on everything from the labor market to PMIs, but some of the strength is simply manufactured in a spreadsheet, leaving us with an iffy gut feeling about what will come later this year.
Inflation Watch: Adjusting for revisions, tax, seasonality and sunspots
- This week will bring about a tonne of revisions- and weight updates in inflation numbers from the statistical bureaus on both sides of the pond.
- The following tradable conclusions are relevant to mention upfront:– There are no reasons to expect seasonal adjustments to lead to a large upside surprise in January inflation in 2024.
- – January key figures, as in 2023, have led to a hawkish repricing of the central bank outlook based on weaknesses in SA filters.
China CPI -0.8% y-o-y (consensus -0.5%) in Jan-24
- China’s CPI declined by 0.8% year-on-year in January 2024, falling short of the consensus forecast by 0.3 percentage points.
- The decline in CPI is much lower than the previous month.
- This trend is below the one-year average, indicating a period of unusually weak inflation.
This insight is AI generated from publicly available sources.
Labour Watch: Why you should pay attention to the Border
- Main takeaways:We ponder whether the influx of migrants is crucial for the U.S. labor market to maintain its current momentum, especially as employment among native-born workers appears stagnant.
- The surge in part-time employment and the increase in individuals holding multiple jobs likely indicate that workers are clocking fewer hours, which in turn erodes their actual earnings and, consequently, their spending power.
- The ongoing political conflict surrounding immigration could significantly, albeit with some delay, affect both the labor and financial markets.
EM by EM #42 China Could Do with a Cold Turkey
Last week was far from boring, but just when I thought we’d hit calm waters last Friday, the CBRT had me on edge. Another Governor jumping ship, signaling a return to Erdoganomics? Thankfully, no.
Surprisingly, the markets remained pretty chill, considering everything. Maybe the prepared statement did its job in calming nerves. But it was the quick and ready appointment of Karahan that really threw water on any doubts about the future of the disinflation effort.
- The latest leaks from the infamous anonymous sources in the know unveil that disagreements about the policy path were essentially Erkan’s undoing (see here) and perhaps that is why many observers are growing even more optimistic about Turkey
UK Wages Still Settling Too High
- UK wage growth has slowed, but settlements in the critical January round are similar in 2024 to 2023. These deals prevent wage growth from slowing to target-consistent rates.
- Employers intend to increase pay by less in 2024 than last year’s plans while still exceeding 2022’s. Actual rises are state-dependent and have exceeded past intentions.
- We expect economic resilience to keep wage growth persistently elevated, encouraging the BoE to delay its first rate cut until Feb-25, beyond the MPC’s likely current view.
India Policy Rate 6.5% (consensus 6.5%) in Feb-24
- The Reserve Bank of India (RBI) has opted to maintain the Policy Rate at 6.5%, in line with economic forecasts, signalling a cautious approach to balancing growth and inflation within its target range.
- Despite a recent uptick in inflation, the MPC’s decision reflects confidence in the underlying strength of the domestic economy and the effectiveness of previous monetary policy adjustments.
- Future policy decisions on interest rates will hinge on inflation trends, the impact of global economic developments, and ensuring the transmission of monetary policy while supporting sustainable economic growth.
This insight is AI generated from publicly available sources.
CX Daily: China Names New Chief of Securities Watchdog Amid Stock Slump
- Software / China’s software service providers cut costs, prices as investors pull back
- Regulator /: China names new chief of securities watchdog amid stock slump
- Stocks /: CSRC vows to crack down on malicious short selling to stabilize stock market
Suez Watch: Euro demand cannot cope with these prices!
- Early weakness in European shipping demand, while US demand remains strong
- The freight rate story is more likely to impact USD-flation than EUR-flation
- Expect another spike in freight rates when spring volumes arrive
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