Good Economic News out of UK, Canada and Japan

January 19, 2023

Good Morning,

NZ knocks on recession’s door after ‘shattered’ business survey. NZIER QSBO reveals record net 73% of businesses expect economy to get worse in months ahead, Microsoft to cut 10,000 jobs as tech layoffs intensifyThe BoJ maintained ultra-low interest rates, including a bond yield cap it was struggling to defend, European Central Bank policymakers are reportedly considering a slower pace of rate rises,

Let's jump in.

Before The Bell

Markets

  •  Wall St stayed pretty stable, with the Nasdaq up +0.1% and S&P 500 down -0.2%. European shares struggled for direction following recent gains, with the FTSE 100 inching -0.1% lower. The ASX 200 (+0.1%) and NZX 50 (+0.3%) both moved higher.

    Earnings and Data

    • UK CPI drops to 10.5% in Dec from 10.7% in Nov (RT)

    • Canadian Inflation Slows to 6.3%, Opening Door to Rate Pause (BBG)

    • The Bank of Japan on Wednesday maintained ultra-low interest rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure. (RT)

    • Stats NZ figures show NZ retail card spending fell 2.5 percent in December over November - falling $166 million in December, the first drop in nine months. (RNZ)

    • Morgan Stanley posted fourth-quarter net earnings of $2.2bn, beating analysts’ estimates (FT)

    • Goldman Sachs said quarterly profit plunged 66% from a year earlier to $1.33 billion, or $3.32 per share, about 39% below the consensus estimate. That made for the largest EPS miss since October 2011. (CNBC)

    • United Airlines reported an $843 million profit for the last three months of 2022, a 31% increase compared with three years earlier, on revenue of $12.4 billion. (CNBC)

    News Summary

    • The Financial Markets Authority has appointed Stuart Johnson to the newly created role. (NBR)

    • High-end property market strong in uncertain times, agents say. (NBR)

    • NZ knocks on recession’s door after ‘shattered’ business survey. NZIER QSBO reveals record net 73% of businesses expect economy to get worse in months ahead. (NBR)

    • Australian Agriculture Minister Murray Watt has jetted to London as part of a government push to inject a sense of urgency into Britain’s ponderous passage of the Australia-UK free trade agreement. (AFR)

    • House and unit values slumped in more than eight out of 10 suburbs Australia-wide during the December quarter as the housing downturn worsened, data from CoreLogic shows. (AFR)

    • Vice Premier Liu He told the World Economic Forum in Davos, Switzerland, that China would welcome foreign investment and prioritise economic growth as the country reopened after three years of strict COVID-19 controls. (AFR)

    • At the World Economic Forum in Davos, Gita Gopinath, deputy managing director of the IMF, signalled that the fund would upgrade its economic forecasts. Instead of predicting a “tougher” 2023, she now expected an “improvement” in the second half of the year and into 2024. (AFR)

    • The Bank of Japan held its ground in the face of mounting market pressure trying to force the central bank to dump its commitment to keeping the Japanese 10-year bond rate no higher than 0.5 per cent. (AFR)

    • European Central Bank policymakers are reportedly considering a slower pace of rate rises in what would represent a reversal of the hawkish rhetoric expressed by president Christine Lagarde in December. (AFR)

    • Tesla video promoting self-driving was staged, engineer testifies (RT)

    • Microsoft to cut 10,000 jobs as tech layoffs intensify (RT)

    • Russia posts record current account surplus of $227 bln in 2022 (RT)

    • Netflix Inc (NFLX.O) is expected to report its slowest quarterly revenue growth on Thursday as its ad-supported plan struggles to attract customers in the saturating U.S. market, which could pressure the company to pull back on content spending this year. (RT)

    Deal Flow

    Investments / M&A

    • Todd Corp sells remnants of big Aussie dream. Assets associated with Western Australia rail and port project will go to ASX-listed Flinders Mines. (NBR)

    • Bombed out and in need of a billionaire buddy, Blundy’s long-awaited arrival on City Chic’s share register sent the shares up 25 per cent during Wednesday’s match and fuelled expectations of more buying in the weeks ahead. (AFR)

    • Battery metals hopeful Leo Lithium has asked its broker Euroz Hartleys to get it some face-time with fund managers, while it’s battling shareholder Firefinch shops a sizeable stake in the business. (AFR)

    • U.S. engineering and industrial software company Emerson Electric Co on Tuesday disclosed a nearly $7 billion offer for National Instruments Corp. (RT)

    • Microsoft Corp (MSFT.O) on Monday said it is widening access to hugely popular software from OpenAI, a startup it is backing whose futuristic ChatGPT chatbot has captivated Silicon Valley. (RT)

    • Private equity giant KKR & Co (KKR.N) will buy S&P Global's (SPGI.N) engineering solutions business for $975 million. (RT)

    • Deutsche Lufthansa AG said it aims to buy a minority stake in ITA Airways, seeking to advance an industry consolidation that would give the German airline a stronger foothold in a major European aviation market. (BBG)

    • Saudi Aramco has acquired the trading arm of US refiner Motiva Enterprises LLC as the state-owned oil giant expands its operations in the Americas. (BBG)

    • BASF, Eramet Plan $2.6 Billion Nickel Smelter in Indonesia. (BBG)

    VC & Fundraising

    • Carvana Co (CVNA.N) has adopted a "poison pill" to limit shareholders from raising their stakes and has reached an agreement to sell up to $4 billion of auto loans, the struggling used car retailer said on Tuesday. (RT)

    Equity Raises

    • Drilling services group Imdex has agreed to pay about $330 million for Norway-based Devico and plans to fund it with a $220 million equity raising. (AFR)

    • Nickel Industries’ brokers Bank of America, Morgan Stanley and Bell Potter had the $US185 million ($264 million) placement covered at launch on Wednesday morning (AFR)

    • Adani Enterprises Ltd. is seeking to raise 200 billion rupees ($2.5 billion) by selling shares in a price band of 3,112 rupees to 3,276 rupees a piece, according to an exchange filing Wednesday. Bloomberg News reported earlier that large investors would get a concession of 10% on the current market price while retail investors would pay even less to buy into a company that has almost doubled in market value over the past year. (BBG)

    • Big C Supercenter Pcl has picked Bank of America Corp. and UBS Group AG to help with a Bangkok initial public offering of about $1 billion, according to people with knowledge of the matter. (BBG)

    Daily Picks

    • India’s population has already overtaken China’s, analysts estimate (AFR)

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