Know someone who would like this newsletter? Forward it to them.
The World
German Chancellor Olaf Scholz met with his French counterpart, Emmanuel Macron, in Paris to mark 60 years since the signing of the Elysee Treaty. Germany and France warned that European businesses will need to unleash investments on a nearly unparalleled scale to keep from falling behind US and Chinese firms as countries revamp their economies to make them more climate friendly. (Deutsche Welle, Bloomberg)
Trade between China and Africa surged last year to a record US$282 billion – an 11% year-on-year increase bolstered by soaring commodity prices, China’s reopening and Beijing’s recent push to boost imports from Africa. According to Chinese customs authorities, exports to Africa totalled US$164.49 billion for the 12 months to December, an increase of 11.2 per cent year on year. Imports from the continent rose at a similar rate to reach US$117.51 billion in the same period. It was the second consecutive year of growth after the Covid-19 pandemic had a devastating effect on trade in 2020. (South China Morning Post)
Brazil and Argentina will this week announce that they are starting preparatory work on a common currency, in a move which could eventually create the world’s second-largest currency bloc. South America’s two biggest economies will discuss the plan at a summit in Buenos Aires this week and will invite other Latin American nations to join. (Financial Times)
Following years of massive economic contraction, in combination with a 95% devalution of its currency, the Lebanese middle class has practically vanished. In March 2020, the World Bank devalued Lebanon to a lower-middle income country. "A person that is earning 1,500,000 Lebanese pounds used to have an equivalent of $1,000 before the crisis, and now it is equivalent to less than $200," Hussein Cheaito, a development economist at The Policy Initiative, a Beirut-based research center, told DW. In a recent publication on rising hunger and poverty in Lebanon by Human Rights Watch (HRW), Lena Simet stated that "millions of people in Lebanon have been pushed into poverty and have cut back on food." The senior economic justice researcher at HRW pointed to worrying trends of food insecurity in the lowest bracket of earners. (Deutsche Welle)
Global Property Market Faces $175 Billion Debt Spiral: A sharp drop in commercial real estate is bleeding into the real economy. The slump in the world’s biggest asset class has spread from the housing market to commercial real estate, threatening to unleash waves of credit turmoil across the economy. Almost $175 billion of real estate credit is already distressed, according to data compiled by Bloomberg — about four times more than the next biggest industry. As the toll from higher interest rates and the end of easy money mounts, many real estate markets are almost frozen with some lenders telling borrowers to sell assets or risk foreclosure amid demands for additional capital. (Bloomberg)
Union membership hit an all-time low in 2022 despite a surge in organizing efforts that emerged during the pandemic. The percentage of U.S. workers who belong to a union dropped from 10.3 percent to 10.1 percent, the Bureau of Labor Statistics reported Thursday, as the job market added non-unionized workers at a faster rate than unionized workers. That’s the lowest the figure has been since the agency first started tracking comparable data nearly four decades ago. (Politico)
Americans Sour on U.S. Healthcare Quality: For the first time in Gallup’s two-decade trend, less than half of Americans are complimentary about the quality of U.S. healthcare, with 48% rating it “excellent” or “good.” The slight majority now rate healthcare quality as subpar, including 31% saying it is “only fair” and 21% -- a new high -- calling it “poor.” (Gallup)
Economy
Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year. They could begin deliberating at the Jan. 31-Feb. 1 gathering how much more softening in labor demand, spending and inflation they would need to see before pausing rate rises this spring. (Wall Street Journal)
The eurozone will avoid a recession this year according to a widely-watched survey of economists which illustrates the sharp about-turn in global economic sentiment in the past couple of weeks. As recently as last month, analysts surveyed by Consensus Economics were predicting the bloc would plunge into recession this year. But this month’s survey found that they now expect it to log growth of 0.1 per cent over the course of 2023. This is thanks to lower energy prices, bumper government support and the earlier-than-anticipated reopening of the Chinese economy, which is set to boost global demand. (Financial Times)
A crisis years in the making: The roots of today's debt-limit standoff stretch back to 2011, when the Tea Party movement helped force then-President Obama to agree to future spending caps in exchange for lifting the ceiling. For Republicans, the achievement "validated one of the animating forces of the right over the past decade-plus — that the party’s failures are a result of weak, feckless leadership, and if they fight, they win," says GOP strategist Liam Donovan. For Democrats, including then-Vice President Joe Biden, the episode demonstrated why they should never negotiate with hostage-takers. (Axios)
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to another month of solid job growth and continued labor market tightness despite efforts by the Federal Reserve to cool demand for workers. The weekly jobless claims report from the Labor Department on Thursday likely does not change expectations that the U.S. central bank will further scale back the size of its interest rate increases next month. It, however, poured cold water on financial market hopes that the Fed would pause its fastest rate hiking cycle since the 1980s, which had been fanned by a slump in retail sales in December and a retreat in inflation. (Reuters)
Tech companies are laying off tens of thousands of employees in anticipation of slower growth and a more cautious enterprise market, but overall tech spending is not forecast to decline in 2023. Tech spending will be below the Covid peak, and below the historical average, according to a recent Citi survey of IT executives, but it will still grow modestly year over year. Cybersecurity will be the most resilient spending item, though even it will see buyers looking to consolidate vendors as a way to save cost. (CNBC)
Technology
Capital One Financial Corp. eliminated hundreds of technology positions last week, the result of the credit-card giant spending years investing in systems meant to improve its efficiency. More than 1,100 workers were affected. Those employees have been invited to apply for other roles in the bank, with hundreds of open positions across the company. (Bloomberg)
Google is delaying a portion of employee bonus checks: Google normally pays full bonuses in January, but this year the company is pushing out 20% of payments to employees until at least March. Google described the January payout as an “advance” in correspondence to employees. (CNBC)
How Apple Has So Far Avoided Layoffs: Lean Hiring, No Free Lunches: The iPhone maker’s workforce grew 20% in the past three years, a far slower pace than rivals. From its fiscal year-end in September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, the employee count at Amazon doubled, Microsoft’s rose 53%, Google parent Alphabet Inc.’s increased 57% and Facebook owner Meta’s ballooned 94%. Apple has about 65,000 retail employees working in more than 500 stores who make up roughly 40% of the company’s total workforce. (Wall Street Journal)
Apple timed the MacBook Pro, Mac mini, and HomePod launches to boost this quarter's revenue and avoid suffering supply issues in the holiday season. (Bloomberg)
Behind your speedy Amazon delivery are serious hazards for workers, government finds. Federal safety inspectors have concluded that the twisting, bending and long reaches that Amazon warehouse workers perform as much as nine times per minute put them at high risk for lower back injuries and other musculoskeletal disorders and constitute an unacceptable hazard. As part of a larger investigation into hazardous working conditions, OSHA announced it has cited Amazon for failing to keep workers safe at warehouses in Deltona, FL; Waukegan, IL; and New Windsor, NY. (NPR)
Smart Links
Kishida says he will nominate new Bank of Japan chief next month. (Reuters)
FDA rejects Lilly’s bid for accelerated approval for its Alzheimer’s drug. (STAT News)
Over Half of Britain’s Homes Tumbled in Value at the End of 2022. (Bloomberg)
Cleveland Clinic expects $200M-plus operating loss in 2022. (Healthcare Dive)
Disney’s troubles show how technology has changed the business of culture. (Economist)