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Monthly Review - January 2023

one year ago

The Markets



S&P 500




FTSE 100


CAC 40


DAX 30


BEL 20






 Source: Bloomberg 31.01.2023
Unconstrained spending

Unconstrained spending

China’s vast urban population was unlocked from Covid restrictions in time to travel home for the Lunar New Year. With over 2 billion journeys, it’s the biggest mass migration in the world. Concerns were raised that this potential Covid ‘super spreader’ event would overwhelm rural healthcare systems. But a Chinese epidemiologist claimed that 80% of the population has already had the coronavirus, establishing herd immunity. What’s likely is that, after three years of restrictions, consumer spending will rebound sharply.
So-called ‘revenge spending’ could push up both demand and prices. And suck in imports from around the globe.

Slowing the pace

Slowing the pace

After a series of aggressive interest rate hikes last year, the US Federal Reserve (Fed) reined back the pace at the first meeting of 2023. Both the Fed and the European Central Bank (ECB) have promised to ‘stay the course’ on rate hikes, aiming to reduce inflationary pressures. But markets increasingly expect rate cuts before year end. Elsewhere, the Bank of Japan has been fighting a different battle, spending 6% of GDP in defending its ultra-loose monetary policy. For Japan, after three decades of declining prices, a 40 year high in inflation is likely welcomed.

Price war is declared

Price war is declared

Tesla missed car sales forecasts for 2022. That has prompted the electric vehicle (EV) trailblazer to launch heavy price discounting in China, the US and Europe. Customers who had recently bought at higher prices protested loudly. Tesla is bidding for market share position. And attacking both rival EV manufacturers, such as BYD and NIO, and legacy automakers, such as VW and Ford, who have all made rapid advances in EV sales. Lower prices risk hitting profit margins. Nonetheless, after a 63% fall last year, the share price rebounded sharply in January. 

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