Week in Review: 16-20 January 2023

Summary:

This week, the rich, powerful and visionary met in Davos, Switzerland (World Economic Forum). Nothing very useful came out of there, including the interviews that passed on the mainstream media. There is a general optimism of the politicians and stock markets. But both technical indicators and fundamentals point downwards. It's too soon for optimism regarding the monetary policy and economic performance.

Retail sales in the US declined 1.1% month-over-month in December 2022, following an upwardly revised 1% drop in November and worse than forecasts of a 0.8% fall.

Producer prices for final demand in the US dropped 0.5 percent from a month earlier in December 2022, following a revised 0.2 percent gain in November and compared with market expectations of a 0.1 percent fall. It was the largest monthly decline since April 2020, adding to signs that inflationary pressure in the world's largest economy is cooling. On an unadjusted yearly basis, the PPI increased 6.2 percent in December, the least since March 2021.

Existing home sales in the US fell by 1.5% to 4.02 million in December, the lowest level since November of 2010 but slightly above market forecasts of 3.96 million. It marks an eleventh straight month of falling home sales, the longest stretch since 1999, as buyers continue to face limited inventory and high mortgage rates.

Next week, in the US, there will be releases including the Q4 GDP growth rate, durable goods orders, the PCE price index, personal income and spending, and earnings reports. Also, flash PMI data for January will be published for the US, UK, Japan, and Euro Area countries.

Economic data source: Trading Economics

The Debt Problem

Video: Huge Systemic Risks: The Bankers Are Terrified | Alasdair Macleod

Channel: Liberty and Finance

Video: The Federal Reserve Is About to 'Run Over a Cliff'

Channel: Stansberry Research

The Master Plan

Video: Decoding The Elite Plan For The World Economy - Mike Maloney On Federal Reserve Strategy

Channel: GoldSilver (w/ Mike Maloney)

A Walk Around the Markets

 

OIL

 

Source: Trading Economics

 

WTI crude futures stabilized around $81 per barrel on Friday and are on track for a second consecutive weekly gain, supported by an improving demand outlook and persistent supply worries. The International Energy Agency said global oil consumption would reach a record daily average this year as top crude importer China opened its economy. At the same time, the IEA also warned that price cap sanctions on Russia could dent supply further. OPEC echoed a similar view in its monthly report released earlier this week, saying that demand for crude will rise by 2.22 million barrels per day (bpd), or 2.2%, lifted by higher Chinese consumption and a recovery in economic activity among advanced economies. On the supply side, OPEC+ decided in December to stick with their policy of curtailing oil output, restricting global supplies by 2 million barrels per day, a move due to run through the end of 2023.

Natural Gas

 

Sources: Trading Economics

US natural gas futures were trading below $3.4/MMBtu, closing in on their lowest level since June 2021, as soaring domestic production and high storage levels offset prospects of a recovery in demand amid forecasts of a cold spell. US natural gas production is likely to grow more than 2% this year to a record daily average of 100.3 billion cubic feet, the Energy Information Administration said. At the same time, EIA data showed that utilities unexpectedly injected 11 bcf into storage last week. Adding to the bearish tone, the Freeport LNG export plant in Texas, forced to go offline in June following a fire, again delayed the restart to the second half of January, leaving more supply on the domestic market. Still, arctic weather will move into the United States next week, resulting in below-normal temperatures, which, in turn, should boost demand for heating and push prices higher.

 

US Stock Markets

 

Source: Trading Economics

The Dow added more than 300 points on Friday, while the S&P 500 and the Nasdaq 100 were up roughly 1.9% and 2.7%, respectively, backed by rallies in tech and other high-growth stocks, sweeping some of the week’s losses. Mega-cap companies, including Meta, Amazon, Microsoft and Tesla jumped between 1% and 5%. Meantime, Google (Alphabet) was up 5.3% after announcing that it will cut 12000 jobs. Netflix soared 8.5% amid weak earnings after reporting stronger-than-expected subscriber numbers. Earlier on Friday, Fed Governor Waller backed a 25 basis points interest rate hike for the next meeting. Comments from Federal Reserve officials have shown to expect interest rates to climb to at least 5% this year to tamp down high inflation. For the week, the Dow was down 2.1%. while the S&P 500 and Nasdaq 100 roughly added 0.3% and 2.9%. Next week, investors’ eyes will be on earning reports from Microsoft on Tuesday, Tesla and IBM on Wednesday.

 

Bitcoin

 

Source: Trading Economics

Bitcoin US Dollar traded at 22821 this Sunday January 22nd, increasing 503 or 2.25 percent since the previous trading session. Looking back, over the last four weeks, Bitcoin gained 35.73 percent. Over the last 12 months, its price fell by 37.09 percent. Looking ahead, we forecast Bitcoin US Dollar to be priced at 20729 by the end of this quarter and at 15457 in one year, according to Trading Economics global macro models projections and analysts expectations.

 

Gold

 

Source: Trading Economics

Gold held above $1,920 an ounce on Friday, hovering near its strongest levels in nine months on firm expectations that the US Federal Reserve will slow the pace of its interest rate hikes. The metal is also on track to gain for the fifth straight week. Meanwhile, a chorus of Fed officials reiterated their commitment to tighter policy this week, though weakening US data that fueled recession fears tempered rate hike concerns. Markets are currently expecting the US central bank to downshift to a smaller 25 basis point rate hike in February after delivering a half-percentage point increase in December. Elsewhere, consumer prices in the UK also fell for the second straight month in December, adding to further signs that inflationary pressures may have finally peaked in Western economies. Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion, and vice versa.

 

 

Silver

 

Source: Trading Economics

Spot silver held above $24 per ounce, not far from a near nine-month high of $24.5 touched on Monday, amid a weaker US dollar and expectations of a slower pace of Federal Reserve rate hikes. Investors see a reduction of Fed's rate hikes to 25 bps for the next meeting, after the institution delivered lower 50 bps in December, and following four consecutive 75 bps increases. Elsewhere, the lack of investment demand could weigh on the commodity price. Silver closed 2022 with minor gains due to the USD strength and higher bond yields as central banks across the globe raised borrowing costs to combat high inflation.