Week of Dec 8, 2023 Weekly Recap & The Week Ahead
“Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Systematically you get ahead, but not necessarily in fast spurts. Nevertheless, you build discipline by preparing for fast spurts. Slug it out one inch at a time, day by day. At the end of the day – if you live long enough – most people get what they deserve.” — C Munger
1. Bank of Canada Expected to Hold Rates Steady on Deteriorating Outlook –Bank of Canada Gov. Tiff Macklem said interest rates may be at an appropriate level to wrestle inflation down further to the central bank’s 2% target. Economists say those remarks were prescient given new indicators measuring price increases, gross domestic product and the health of the labor market. Headline inflation in Canada cooled to 3.1% in October, from 3.8% in the prior month, and a peak of 8.1% in June 2022. More important, three-month measures of core consumer prices—which strip out volatile items like food and energy—fell to their lowest levels since early 2021. The Bank of Canada sets rate policy to achieve and maintain 2% inflation, and central bank officials have repeatedly said they need to see evidence of sustainable deceleration in core inflation before rate cuts can be entertained.
2. Moody’s Faces Growing Backlash Over Its Negative Outlook on China — New York-based Moody’s on lowered its outlook on China’s credit rating to negative from stable and kept its A1 investment-grade rating on the country—which it hasn’t changed since 2017. The credit rater said the growing debt problems of some cities and provinces would force China’s central government to provide financial support when economic growth is slowing. The country is also grappling with a deep property slump.
The change in Moody’s view led to a raft of similar changes to its outlooks for China’s state-owned banks, insurers and companies, including 22 local government financing vehicles that have issued international bonds. Moody’s also shifted to a negative credit-rating outlook for Hong Kong and Macau, both semiautonomous regions of China. That similarly cascaded down to its outlook for other companies, including the operator of Hong Kong’s subway system.
3. U.S. Wholesale Inventories Fell Again in October — Inventories at merchant wholesalers were 0.4% lower at the end of October than the same point a month earlier, according to adjusted Commerce Department figures released. Economists had expected inventories to slip by 0.2%, according to a poll carried out by The Wall Street Journal.
In September, inventories stayed at the same level as in August, according to revised figures that had previously shown a slight and unexpected rise.
Inventories of nondurable goods led the decrease in October, slipping 1.0%, with petroleum levels falling the fastest. Durable goods, on the other hand, increased slightly on the month, led by rising machinery stocks.
4. U.S. Consumer Confidence Jumps in December as Inflation Pressure Eases — A preliminary reading Friday of the University of Michigan’s consumer-confidence index show it surging to 69.4 points from 61.3 at the end of November. Economists polled by The Wall Street Journal had expected it to rise less sharply to 62.4.
The jump reverses four previous months of declines, though confidence remains well below levels before the Covid-19 pandemic, survey director Joanne Hsu said. Consumers are confident that inflation will fall more rapidly than previously expected, seeing it at 3.1% for the year ahead compared with 4.5% previously, the survey showed.
The week ahead — Economic data from Econoday.com:
