Another record !

INSIGHT WEEKLY : January 28, 2024

An easy to read economic and financial summary. If the images do not load, click to download external images in your email to see the newsletter in full, or click the link above to read online.

🌐 Overview

🌐 Major indexes

The STOXX 50 advanced the most this week due to dovish comments from the European Central Bank that inflation is likely to fall and that there is no need for tightening policy any more, marking a change of mood.

CAC40 also moved up strongly due to the luxury sector performing well after LVMH reported good results.

S&P 500 hit another record high during the week.

🌐 Major stock markets of the world

World stock markets have a total value of $110 trillion. The table below shows the top 10. NYSE and Nasdaq are 43% of the global, which is why global investors and funds weight their investments more in the US. The world’s major tech companies are on the US markets, so that is another big draw.

Tracker funds How does an investor invest in an entire market or major part of it ? A good way is through funds that track the index. These funds are called tracker funds or index funds. Tracker funds don’t need a lot of staff to analyse investible opportunities. It is a simple, mostly automated operation to track the index by buying the stocks that make up the index. Low cost to run means low fees for customers.

Outlook The current outlook indicates that the markets of interest in 2024 would be the US and Japan. And maybe India.

🇬🇧 UK

Technical recession ? Two successive quarters of negative growth is the definition of a technical recession and some commentators are thinking that Q4 may be negative, following a contraction of 0.1% in Q3. October was +0.3% and November was -0.2%, so the question is whether the seasonality that we would expect for December would make any difference.

Some growth is expected in 2024, but in the latter part of the year

FTSE100 had a recovery this week by moving up over 2% in a rebound. It is -1% since the start of the year.

🇺🇸 US

Growth at 3.3% is ahead of what had been expected. So interest rate cuts could be deferred ? Growth can be inflationary. If there had been negative growth, the Federal Reserve might have considered a rate cut, but with the economy showing a good recovery, there really isn’t much need for a rate cut soon. The hawks are not in favour of any cuts in the near future, and would prefer to wait and see.

Inflation as measured by the Federal Reserve, the CPE, came in as forecasted but this is unlikely to encourage the Fed to make an early move on rate cutting.

S&P500 had another record this week. Tech stocks advanced again. The Magnificent 7 will be facing tests in the coming weeks. Microsoft and Alphabet report earnings on Tuesday. Amazon, Meta Platforms and Apple report on Thursday. Tesla has already reported earnings in January. Nvidia will report on February 21.

Tesla After warning of lower sales, Tesla is down 14% this week, and 26% thus far in January. Elon Musk called for trade barriers as Chinese manufacturers "will pretty much demolish most other car companies in the world". Electric vehicle sales appear to be levelling off or even decreasing after several years of growth. China’s BYD overtook Tesla in late 2023 to become the largest seller of EVs.

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🇯🇵 Japan

Inflation dipped below 2% for the first time in 18 months after a decrease in service prices. After a long period of stagnation. Japan would like a bit more inflation. A very different problem in Japan compared to other countries.

Interest rates The Bank of Japan may now need to consider how it is going to move up from the world’s only negative interest rate.

Nikkei 225 In the year to date, it is up 7%. And that’s after a 28% increase in 2023. The outlook is for more increases in 2024.

The economic stagnation is expected to continue till mid 2024.

See last week’s spotlight on Japan.

🚢 Shipping

Red Sea On Friday, an oil tanker was hit by a missile and set on fire. Military ships are providing assistance. Earlier in the week, military aircraft struck targets in Yemen. This escalation will force the hand of shippers to try the longer route around Africa. This alternative longer route may be the most viable route for the next few months.

Panama canal Continuing drought causing concern

🛢️ Oil prices are up : Brent is up $4 at $83, WTI is up $5 at $78. Prices increase after the attack on the oil tanker.

💰 Gold is volatile, slightly lower than last week: Gold at $2,018 per ounce

🏅5️⃣ Billionaire Leaderboard

The billionaire rankings is an indication of what is changing at the top of the global markets. This week Bernard Arnault and family have seen their wealth increase substantially due to the 16% increase in the share price of LVMH (specialises in luxury goods) in just one week. LVMH reported very good earnings. This moves them up to first place. By contrast, Tesla’s share price has fallen by 13% last week, and by 26% in January due to revised sales projections for 2024.

Change in week :

Bernard Arnault and family (LVMH) $207bn ⬆️ $29bn

Elon Musk (Tesla, SpaceX)$205bn ⬇️ $20bn

Jeff Bezos (Amazon) $181bn ⬆️ $4bn

Larry Ellison (Oracle)  $142bn ⬆️ $4bn

Mark Zuckerberg  (Facebook/Meta) $139bn ⬆️ $4bn

SPOTLIGHTS

Earlier : Residential property

Last week : Japan

Next week : India - an emerging economic power ?