Aurelia Butler

Investing.com — Stocks are set for a weak open despite support from Apple (NASDAQ:AAPL), which posted a record quarter for sales. Economic bellwether Caterpillar (NYSE:CAT), oil giant Chevron (NYSE:CVX) and others report quarterly earnings. The U.S. releases more data on inflation and wage costs. China’s stocks finish at 16-month lows before the New Year holiday. The Eurozone economy was held back by its usual powerhouse, Germany, in the fourth quarter, and the world’s second-largest battery maker has a wild market debut. Here’s what you need to know in financial markets on Friday 28th January.1. Apple’s record salesApple shrugged off supply chain constraints and Covid-related store closures in the final three months of 2021 to post record revenue and a 25% rise in earnings per share in its fiscal first quarter.Sales of iPhones were up 9% rather than the 3% rise expected, while revenue from Mac sales rose 25% and revenue from services was up 24%. iPads were the weak spot, as the company diverted chips away from that segment to service demand for phones.The company said revenue in the current quarter will also be up in year-on-year terms but was less confident about longer-term forecasting. Analysts responded positively to statements about the company’s investment in Metaverse-related projects. Apple noted that it already has some 14,000 augmented reality apps in its store.2. PCE, ECI and spending dataAre you ready for the daily test of nerve from the data calendar?Friday’s big numbers are the Personal Consumer Expenditures price index for December and the Employment Cost Index for the fourth quarter, both due at 8:30 AM ET (1330 GMT), which come on the back of GDP numbers that did nothing to allay fears of an aggressive tightening of monetary policy throughout the year.The Employment Cost Index will be particularly important for what it says about wage inflation. The third-quarter rise of 1.3% was the largest since before the Great Financial Crisis. Analysts expect it to have eased only marginally to 1.2%.The PCE prices index, meanwhile, is the Fed’s preferred indicator of inflation, rather than the CPI.There are also data on personal income and spending due for December.3. Stocks set for weak open; Caterpillar, Chevron earnings dueU.S. stocks are set to open mostly lower, with the sharp drop in Tesla (NASDAQ:TSLA) stock on Thursday seemingly still weighing on sentiment despite support from Apple’s earnings. By 6:15 AM ET, Dow Jones futures were underperforming, falling 186 points, or 0.6%, while S&P 500 futures were down 0.5% and Nasdaq 100 Futures were down 0.2%.For the last two days, the S&P 500 has closed in the red despite being up more than 1.5% intraday. The last time that happened – and, indeed, the only time that has happened in recent history – was in October 2008, according to Steve Deppe, Chief Investment Officer at NDWM.Aside from Apple and Tesla, stocks in focus on Friday will include Visa (NYSE:V) and luxury goods giant LVMH, which both reported strong earnings late on Thursday. Robinhood (NASDAQ:HOOD) stock is going in the other direction after a weak growth forecast. Caterpillar, Chevron, Charter Communications (NASDAQ:CHTR) and Colgate-Palmolive (NYSE:CL) lead the daily roster of companies reporting.In China meanwhile, benchmark stock indices finished at a 16-month low as the country prepared for the week-long Lunar New Year holiday.4. Eurozone GDP mixed as Germany slipsThe Eurozone economy was a mixed bag at the end of 2021, with the currency union’s largest economy, Germany, shrinking by 0.7% on the quarter, much worse than the 0.3% expected (although the numbers need to be taken with a pinch of salt, given that Germany routinely revises its economic data upwards).The picture was more positive in France and Spain, both of which posted quarterly growth above expectations due to robust domestic demand.Separately, the ECB released numbers showing that credit growth and money supply weakened in December. On the price front, Germany’s import price numbers suggested that inflationary pressures may be peaking, posting their smallest monthly rise in 15 months. The annual comparisons still look horrible though, up 24% on the year. Italy’s PPI hit 22.6% in December, leading to a sharp drop in business confidence in January.5. LG Energy’s wild debutShares in LG Energy Solution Ltd (KS:373220) had a wild ride on their market debut in South Korea, as the world’s second-biggest maker of lithium-ion batteries finally started trading.The stock ended the day 15% below its IPO price, despite rising nearly 100% at the open. LGES supplies Tesla, Volkswagen (DE:VOWG_p) and General Motors (NYSE:GM) with batteries for their electric vehicles, and is the world’s second-biggest battery maker by volume after China’s CATL.Back in the world of conventional energy, oil prices stayed close to their seven-year highs posted earlier in the week, with no sign of a resolution to the crisis over Russia’s threats against Ukraine. By 6:30 AM E, U.S. crude futures were up 0.7% at $87.17 a barrel, while Brent crude was up 0.8% at $88.65 a barrel. More

The Beijing Summer Olympics of 2008 were seen as a coming-out party for the economic and geopolitical powerhouse of the new China. For all the power projection of their grandly synchronised opening ceremony, attendees remember the Games’ warm atmosphere and Beijingers’ delight in welcoming visitors from across the world. Many western capitals saw the event as affirming their optimistic vision of a China becoming increasingly integrated into the world community — and one whose system would, with time, move closer to their own. Fourteen years later, the Beijing Winter Olympics opening next Friday are taking place in a very different China, and a different global context.It seems a touch surreal that the Games are happening at all, at a moment when the Omicron variant has taken coronavirus cases to a new global high, and in a location where they will use almost entirely artificial snow. They will be held in a “closed loop” in which 11,000 visitors will be cocooned in three competition zones as much as 111 miles apart, completely sequestered from the Chinese population. This bubble is intended to prevent contagion between Games participants and the local community, driven by the zero-Covid policy to which Beijing is still clinging. But it serves as at least a partial metaphor for today’s China: one that has moved strongly away from engagement with the west, and especially from any idea of integrating into a western-led international order.Many Chinese blame the west for this divergence. The US has become increasingly mistrustful of a country it now sees as its principal strategic competitor. The trade war launched by the Trump administration has not been resolved by the Biden White House. Yet China’s shift was triggered earlier, by the man who, as a Politburo member, was in charge of final preparations for the Beijing summer Games: Xi Jinping.In 2008, the US and its allies still thought bringing China into the global trading system and boosting economic ties would empower a middle class that would demand political freedoms. In 2022, China does have a substantial middle class, record numbers of billionaires and a mighty economy. But it has shifted to a more authoritarian rule at home and combative relations abroad. A secret Communist party document circulated in 2012 — months before Xi became party chief, then president — was highly critical of what it called malicious ideals spreading in China such as constitutional democracy, civil society and universal values, and warned of western “anti-China forces”. Xi has acted forcefully to stop that spread.China under Xi has conducted crackdowns on mainly Muslim Uyghurs in Xinjiang and the opposition in Hong Kong, repressed internal dissidents, and curbed private businesses seen as posing a challenge to state power. It has asserted its claim to sovereignty in the South China Sea, and acted aggressively against foreign critics.As a result, the winter Games face diplomatic boycotts — by the US, UK, Australia, Canada and others — that did not feature in 2008. Today’s Beijing leadership cares little. Domestic media will present a narrative of China successfully holding the Olympics against the odds, fearlessly managing the event in the face of a pandemic and attempted western interference.Hopes that the 2008 Games were evidence of openness by Beijing to join the international order proved misplaced. The 2022 Winter Olympics may turn out to be a staging post on the way to China’s ambitions to lead a future world order of its own. Not for the first time in its history, the western world is left to rue how it got China so wrong. More

(Reuters) – U.S. real bond yields, borrowing costs stripping out inflation, will end January with their biggest monthly rise in almost a decade, highlighting the scale of turnaround in markets preparing for the Fed’s stimulus rollback campaign. Essentially representing the real cost of capital, inflation-adjusted yields are critical for investors who charged into riskier assets such as stocks and corporate bonds during the years when real yields languished near record lows. The recent yield shock therefore has been a key driver of this month’s 9% rout on Wall Street. The world’s most-traded inflation-linked bond, the 10-year U.S. Treasury Inflation Protected Security (TIPS), saw yields rise 50 basis points in January, the biggest move since June 2013, just after then-Fed boss Ben Bernanke ignited a selloff by flagging policy tightening.They stand now around -0.6% compared with around -1.20% in November. Five-year TIPS yields rose an even more, up nearly 60 bps for their biggest monthly rise since October 2008. Real yields gained further momentum after the Federal Reserve signalled at the start of the month it may tighten policy faster than earlier expected, which may also include shrinking its $8 trillion-plus balance sheet. Fed Chairman Jerome Powell sounding more hawkish than expected at Wednesday’s policy meeting caused sharp swings this week. “I’m not surprised real yields have led the way,” said Paul Rayner, head of alpha strategy at Royal London Asset Management. “That combination of, maybe inflation reaching the peak, with central banks becoming more hawkish, you would expect real yields to bear the brunt of the pain initially.” (Graphic: TIPS yields monthly change, https://fingfx.thomsonreuters.com/gfx/mkt/egpbklynjvq/tips%20monthly%20change%20jan%2028.png) Real yields have led this month’s broader bond selloff; their larger rise relative to nominal yields means breakevens – a proxy for markets’ inflation expectations – have fallen. Ten-year breakevens, the gap between nominal and real yields often seen as a market gauge of inflation expectations, are down nearly 20 bps in January to around 2.4%. That, ING Bank reckons, is no longer elevated, as they discount expected inflation expectations just over 2% – the Fed’s target – plus a slight premium. Royal London is underweight inflation markets for the first time in around two years, Rayner said.Whether or not inflation becomes more permanent will determine where real yields move from here and if inflation proved more stubborn than expected, nominal bonds rather than TIPS would lead future selloffs, he said. (Graphic: U.S. 10y real yield vs breakeven, https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwxkmopo/breakeven%20vs%20real%20yield%20jan%2028.png) European moves are less eye-popping; with interest rates unlikely to rise this year, German real yields have risen 17 bps in January.The key question is how much more real yields might move.Nick Sanders, portfolio manager at AllianceBernstein (NYSE:AB), said it was the speed of the January moves that unnerved markets. He expects 10-year real yields around 0% by year-end, a 50 bps rise from current levels.”If that’s a gradual move higher, equity markets and the credit markets can stabilize, given… how improved (economic) fundamentals are,” he added. More

China also set the quota for smelting and separation of rare earth at 97,200 tonnes, China’s Ministry of Industry and Information Technology (MIIT) and the Ministry of Natural Resources said in a joint statement.This is also up 20% from a year earlier. The mining quotas will be shared among the country’s four main producers. China is the world’s dominant producer of rare earths, a group of 17 minerals used in electric vehicles (EVs), consumer electronics and military equipment. More

How well did you keep up with the news this week? Take our quiz.Apple shares surged after the iPhone maker overcame chip shortages and expanded its services business to report record revenues for the final quarter of 2021.Net profits jumped 20 per cent to $34.6bn — well above expectations — on revenues of $123.9bn for the three months to the end of December. Finance chief Luca Maestri told the Financial Times the supply chain problems plaguing broad swaths of the economy cost Apple “more than $6bn” in revenue. But that was below the $10bn impact investors were expecting, pushing Apple’s share price up 5 per cent in after-hours trading to $167.25.The iPhone, launched 15 years ago, remained Apple’s most successful product, accounting for 58 per cent of total revenues. Sales from the services unit, which houses the App Store and digital media purchases, jumped 24 per cent to $19.5bn. Maestri said the company now had 785m paying subscribers on its platform, up 165m in the past year. Mac sales rose 25 per cent to $10.9bn.iPad sales were the only category to decline, as Apple prioritised components for the iPhone. Sales of the tablet fell 14 per cent to $7.2bn.The results boosted the mood of investors. After a wild week on Wall Street, US futures trading pointed to a higher open for US equity markets today.Comment: Apple’s success will help fuel the tech company’s stock buyback programme, says investment column Lex. But, it argues, if it is going to find a revenue driver that can one day challenge the iPhone it needs to reduce the amount it spends on buybacks and invest more heavily in research.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. UniCredit abandons potential bid for Russian bank The Italian lender has pulled out of a possible bid for Russian lender Otkritie amid tensions over Ukraine. The UK and EU are preparing to hit new Russian gas projects with sanctions if the Kremlin orders an attack on Ukraine. Meanwhile, China yesterday offered its backing for Russia in its stand-off with the US and Europe.2. Marcelo Claure to depart SoftBank after dispute with Masayoshi Son The SoftBank executive who led the turnround at struggling office-sharing group WeWork has quit the Japanese technology conglomerate after falling out with its founder Masayoshi Son. 3. Oaktree risks clash with Beijing over Evergrande debt The Los Angeles-based asset manager has a secured loan to a sprawling tourism resort on China’s Yellow Sea coast called “Venice” that would allow it to take control of the land in the event of a default by ailing property developer Evergrande. 4. Robinhood growth loses steam Shares of the retail brokerage fell more than 12 per cent in after-hours trading after it missed targets in the final quarter of 2021, as retail trading fervour in meme stocks and cryptocurrencies lost steam.5. Biden vows to nominate first black woman to Supreme Court The US president confirmed that he would nominate a black woman with “extraordinary qualifications, character, experience and integrity” to replace Stephen Breyer on the top US court. Ketanji Brown Jackson, a judge on the US Court of Appeals for the DC Circuit, is among the frontrunners to replace Breyer.Keep up with the news throughout the day with Top Stories Today, a short-form audio digest of headlines. Find the latest episode here.Coronavirus digestGermany’s economy shrank 0.7 per cent in the final three months of last year, underperforming most other major European countries. The Spanish economy posted its most rapid growth for two decades over the same period and France’s economy experienced its fastest expansion in more than half a century in 2021.The US economy underwent its fastest full-year rebound since 1984 last year as the country began to move past the worst of the pandemic’s economic damage.Hong Kong will loosen mandatory isolation for arrivals from 21 days to 14 days, after international chambers of commerce and bankers raised concerns over the impact of the Chinese territory’s tough quarantine regime. Opinion: As the world faces severe supply constraints, it is best not to destroy jobs and growth but to allow economies to recover, writes Philipp Hildebrand.The days aheadInflation data Economists have forecast that the core personal consumption expenditures index, the Federal Reserve’s preferred inflation measure, rose 0.5 per cent in December from the previous month. That would leave the index, which strips out food and energy prices, up 4.8 per cent year on year, potentially the fastest rate since September 1983.Chevron earnings Higher oil prices should underpin strong fourth-quarter earnings from the oil supermajor. Also reporting are Caterpillar, North Face parent VF Corp and Colgate-Palmolive.Mike Lynch extradition decision The UK home secretary will decide whether to approve the extradition of the British software entrepreneur, who faces trial in the US on criminal fraud charges over the $11bn sale of his company Autonomy to Hewlett-Packard in 2011.Australian Open Ashleigh Barty and Danielle Collins meet in the women’s singles final tomorrow. Barty is the first Australian to make the women’s final since 1980. On Sunday, Rafael Nadal will play the winner of Stefanos Tsitsipas and Daniil Medvedev, with the prize of achieving his 21st Grand Slam men’s singles title on the line. (ausopen.com) Portugal general election The EU member country holds a snap parliamentary election on Sunday. The opposition centre-right Social Democratic party has a lead in opinion polls over the ruling Socialist party.What else we’re reading and watching The empire returns As the Kremlin attempts to reassert control over its neighbours, Ukrainian historian Serhii Plokhy uncovers the deep roots of the crisis. Ukraine marks the biggest test yet for the “Biden doctrine” on foreign policy, write James Politi and Demetri Sevastopulo, while Edward Luce looks at the US president’s Germany headache in his latest column. The subscription shuffle is tiring Netflix and Peloton “Subscription fatigue” may be worse among media companies than their subscribers. As viewers become more adept at shuffling their subscriptions, companies are having to spend constantly on new films and series to excite them, argues John Gapper.Would you buy a home in the metaverse? You could buy an island, complete with a villa, for prices as low as $104,000. There’s one slight catch: you can’t actually live in it. It exists only online, in a virtual world filled with buyable digital assets ranging from art to cars.

A marina in The Sandbox © Republic Realm and The Sandbox

Investors: beware liquidity holes This week, investors would be wise to ponder the concept of “liquidity holes”, writes Gillian Tett. After US Federal Reserve chair Jay Powell indicated future rate rises, markets could experience a shortage of buyers for some assets relative to supply, she argues. Space-based solar power beckons The US, UK and China are exploring the potential of an untapped source of clean energy. But there are risks to harnessing space-based solar power for use on earth — namely issues of launch costs, space governance and land use, writes Anjana Ahuja.StyleIs Kanye West good for Gap? What started as a coup for the store has turned to frustration at the slow rollout of the Yeezy Gap brand.

Yeezy Gap’s hoodie, released in September and puffer jacket, released in June 2021. Both have sold quickly though little has been revealed about Yeezy Gap’s sales performance More

FRANKFURT (Reuters) -The European Central Bank is looking into corporate governance issues surrounding the chief executive officer of Deutsche Bank (DE:DBKGn)’s fund business DWS, a person with knowledge of the matter said on Friday.The ECB’s move comes on top of separate investigations by the U.S. Securities and Exchange Commission as well as Germany’s financial regulator BaFin into allegations that DWS overstated https://www.reuters.com/business/shares-dws-fall-53-early-frankfurt-trade-after-report-us-probe-2021-08-26 how it used sustainable investing criteria to manage investments. DWS has denied those allegations. DWS, Deutsche Bank and the ECB declined to comment on the ECB’s enquiry.Germany’s Sueddeutsche Zeitung first reported the ECB’s involvement on the topic. The ECB is the primary bank supervisor for Deutsche.Deutsche Bank is itself conducting an internal investigation into DWS CEO Asoka Woehrmann’s possible private email usage for business purposes and also an alleged money transfer to another individual, the Financial Times reported earlier this week, citing documents and people familiar with the matter.Bankers with knowledge of the investigation said there is no indication of wrongdoing.A spokesperson for Woehrmann at DWS declined to comment on Friday on the ECB or other investigations. During DWS’s earnings call with analysts on Thursday, Woehrmann was asked if he wanted to address the allegations. Woehrmann said: “I emphatically reject all these allegations and insinuations.”     “I will not be intimidated,” Woehrmann also said on the analyst call. He has in recent months received threatening letters https://www.reuters.com/business/ceo-deutsche-banks-dws-received-racist-threat-letter-dws-spokesperson-2022-01-25, including one with red crosshairs, white powder and a racial slur. Deutsche Bank CEO Christian Sewing, commenting on the bank’s investigation, said on Thursday during the bank’s results’ news conference that Woehrmann had done a wonderful job. “Asoka Woehrmann has done a wonderful job, and for that I’m very, very grateful and for that reason I have no doubts,” Sewing said during the news conference.Manager Magazin on Friday reported that Woehrmann’s alleged use of unauthorised communication platforms included Whatsapp. Manager Magazin said BaFin had received a whistleblower complaint about use of Whatsapp for official business purposes.BaFin and DWS declined to comment on the Manager Magazin report.DWS came under scrutiny by the SEC and BaFin after a former employee alleged that the company overstated how it used sustainable investing criteria to manage investments.DWS shares have been hit by the SEC and BaFin investigations. The shares were 3.6 lower by 1214 GMT on Friday.($1 = 0.8986 euros) More