Amid the economic gloom and the ongoing conflict in Ukraine, there are signs of a return to normality.
The Golden Globes awards ceremony returns this week to the home of Los Angeles, after a boycott over a lack of diversity led to the show’s cancellation last year. Ahead, world leaders, business leaders and economic thinkers will begin arriving in the Swiss resort of Davos this week for next week’s World Economic Forum.
The next seven days also saw the starting gun fire for the official start of the fourth quarter earnings season, starting with Wall Street banks and UK retailers. This will certainly remind us that we are far from normal for the global economy – more details below.
For Britain, normality now means widespread industrial action. Ambulance workers and driving instructors went further this week, as strike calls closed to teach unions in England and Wales.
Normality has been restored at least in the US Congress with the vote to install Kevin McCarthy as Speaker of the House of Representatives. Attention can now focus on the economic challenges ahead this year – more on this week’s upcoming data announcements below.
A rocket carrying a small satellite payload rests under the wing of ‘Cosmic Girl’, a converted Boeing 747, at Cornwall Spaceport in Newquay © Tim Hepher/Reuters
Can it look up? Yes, if you are in Cornwall. Monday promises to be a historic day for English counties – at least according to Virgin Orbit – with the launch of the first space satellite from mainland England.
It might be better described as classic British eccentricity as nine satellites will be shot into orbit using rockets launched from a repurposed Boeing 747, due to take off from Newquay airport on Monday night. It should show a level of creativity and should at least lift the British spirit.
Company
Who likes rising interest rates? Bank, sing. That will be made clear this week when some of Wall Street’s biggest lenders report fourth-quarter numbers on Friday.
These companies have cashed in on the Fed’s tightening by raising rates on loans more than deposits. Analysts expect JPMorgan Chase, Bank of America, Citigroup and Wells Fargo to report collective net interest income for the final three months of 2022 of nearly $60bn, up 30 per cent year-on-year, according to consensus data compiled by Bloomberg. The concern is that the party raising this revenue cannot sustain it and the net interest margin has reached its peak.
The flip side of rate increases is the problem of high inflation, which brings me to another theme from the corporate calendar this week, retailers. Increasing the price of checks may seem like a good thing for retailers. Not when inflation hits double digits, no.
We will know exactly how bad it has been over the Christmas period – or indeed whether the stock up to see the World Cup provided any sort of fillip – through a slew of trading updates from the English high street and online brands this week.
Consumer spending has always been better than expected, as Next showed last week. Games Workshop, which reported its first half numbers on Tuesday, is creating a lot of excitement (and not just among Dungeons and Dragons-obsessed teenagers) about the growth opportunities due to the surge in role-playing games during the pandemic. Investors (also teenagers) expectations have risen more in the fantasy game producer’s new Amazon TV and film deal.
Economic data
People buying Zara bags on Regent Street London. The British Retail Consortium updated its monthly high street sales survey on Tuesday © Hollie Adams/Bloomberg
Expect a raft of consumer price index and other inflation data in the coming days from the US, China, Japan, Australia, Brazil and Mexico.
The British Retail Consortium updated its monthly survey of high street sales in the UK, while on Friday the Office for National Statistics published its latest monthly gross domestic product estimates that gave an insight into the state of the recession.
Monetary policy comes this week from the Bank of Korea, which is expected to raise its key rate by more than 25 basis points to 3.50 percent on Friday.