Equities in the early morn' are slightly green. We had thin trading overnight overseas, with some markets still closed. The dollar has weakened against foreign currencies. Many investors are probably still digesting the “everything rally” here in 4Q23 so far.
Swaps traders are pricing in a 150+ reduction in rates here in the US next year, which is definitely above recent Fed-speak levels—double, in fact. That’s helping gold out, with bullion trading at a near record high—pulling off its 1st annual increase in 3 yrs potentially.
BBG Economics is forecasting the global economy to grow only 2.7% next year, which is a slowdown from 2023’s levels of 3.1%. Aside from outliers 2009 and 2020, it would be the slowest year since Pets.com time.
China’s had a bad year. Goldman’s getting raked over the coals by BBG on its early 2023 bullish China forecast, as Chinese equities fell more than -15% this year. Per the chart below, most of EM did just fine—leaving China in the dust. EM banks hiked interest rates proactively to deal with inflation…and developed market central banks were a bit behind the curve. So, now they’re reiterating their call—but for 2024 on EM.
I’m not talking about retail shopping—but M&A and corporate cash investments. Lots of lawyers and bankers working this holiday season. Bristol is paying >$4bn for a radiological drug co, AstraZeneca is shelling out over $1bn for a cancer-drug developer, Intel is investing $25bn in Israel after winning incentives. You’ve got Ratcliffe investing in Manchester United.