Events:
- The Canadian CPI (Consumer Price Index) for January, that will be published on the 21st of February, is expected to increase by 0.5% compared to December 2022. The Canadian CPI is a statistical measure that tracks the changes in the average price of goods and services purchased by Canadian households in a given month compared to the previous month. The CPI is considered one of the most important economic indicators as it measures inflation.
Forecast: 0.2%
- The Australian Wage Price Index (WPI) for the fourth quarter of 2022, scheduled to be published on the 22nd of February, is expected to remain the same as in the previous quarter – 1%. The Australian WPI is a quarterly economic indicator that measures the changes in wage rates paid by employers to their employees in Australia. The WPI is an important indicator of inflationary pressures in the economy because wages are a significant component of business costs and therefore can impact the overall price levels of goods and services in the country.
Forecast: 1%
- The Preliminary Gross Domestic Product (GDP) for Q4, which will be published on the 23rd of February, is expected to remain as it was in Q3 – 2.9%. The preliminary GDP is an economic indicator that measures the change in the inflation-adjusted value of all goods and services produced by a country’s economy in a specific quarter compared to the previous quarter.
The preliminary GDP report provides an early estimate of economic growth and is typically released within a few weeks after the end of the quarter. It is considered an important indicator of a country’s economic health, as it reflects the country’s level of economic activity, consumer and business spending, and overall economic output.
Forecast: 2.9%
- The Core Personal Consumption Expenditures (PCE) Price Index for January, scheduled for the 24th of February, is expected to rise by 0.1% compared to the previous month. The Core PCE PI is a monthly economic indicator released by the Bureau of Economic Analysis (BEA) of the United States Department of Commerce. It measures the average change in prices paid by consumers for goods and services, excluding the volatile food and energy components. The Core PCE Price Index is considered the Federal Reserve’s preferred inflation gauge, as it tracks the prices paid by individuals for the consumption of goods and services, which make up the largest component of the overall economy.
Forecast: 0.4%
Earning reports:
Market analysis:
- Despite the certainty that the Federal Reserve will continue to raise interest rates, investors are focused on the strength and resilience of the US economy, overlooking the potential risks. It is expected that the Fed’s committee will vote to increase interest rates until May and will then reevaluate inflation, employment, and economic growth.
- Despite the negative impact of increasing bond yields and terminal rates, stocks in the US, Europe, and Asia have uplifted in value, thanks to positive economic data that has raised confidence and lowered the risk of a recession. Nevertheless, the question remains whether economic stability can be maintained while also lowering inflation. Many economists are calling this scenario a “soft landing.” However, higher interest rates have been known to significantly pressure the stock market, with JP Morgan warning that an interest rate of 6% could result in a 30% drop in the S&P 500. Therefore, the stock market’s ability to maintain its value while the economy remains resilient, even with higher interest rates, depends on the simultaneous decline in inflation.
Recap from Last Week (13.02.23 – 17.02.23):
- Tesla Inc. (TSLA) has initiated a recall of 362,758 vehicles due to safety concerns linked to the automaker’s self-driving software, which may increase the likelihood of accidents. The Full Self-Driving Beta software, intended for city driving, has been observed to pose an increased risk of crashes by allowing cars to travel through intersections in a disorderly and illegal fashion, according to a recall notice published by federal regulators. The National Highway Traffic Safety Administration (NHTSA) said that Tesla had agreed to provide an over-the-air software update to rectify the issue, with affected cars being recalled for this purpose. As a result of the news, TSLA shares dropped, falling more than 3%.
- The European Union has implemented new and stricter online content rules, which will apply to companies such as Google (GOOGL), Twitter (TWTR), Meta (META), Apple (AAPL), based on their published monthly user numbers. Companies with above 45 million users will be designated as “very large online platforms”, subjecting them to additional obligations, such as risk management, external and independent auditing, data sharing, and a code of conduct. The rules, known as the Digital Services Act (DSA), require these platforms to comply within four months or face fines.
Twitter has estimated that it has 100.9 million average monthly users in the EU. Google said that the average monthly number of signed-in users was 278.6 million at Google Maps, 274.6 million at Google Play, 332 million at Google Search, 74.9 million at Shopping and 401.7 million at YouTube. Apple reported that only its App Store built for iPhones, with more than 45 million monthly users, qualifies as a very large online platform. However, it will also apply the same rules to the App Store for iPads, Mac computers, Apple Watch, and TV, on a voluntary basis.
Meta Platforms said that it had an average of 255 million monthly active users on Facebook in the EU and about 250 million monthly active users on Instagram in the last six months of 2022. Meanwhile, eBay said it is below the EU user threshold. The new rules aim to address the challenges posed by the digital era and ensure a safer and more transparent online environment, with the goal of protecting consumers from illegal content.
- The stock market experienced a significant increase during Friday’s trading, closing slightly higher than the previous day. The NASDAQ and S&P 500 have fully corrected upwards, recovering from the previous disappointment caused by CPI figures published on Thursday. However, the Dow Jones is struggling, with a minimal increase of only 0.29%. What triggered the market’s climb?
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