Evelyn Reynolds

The $1 billion private credit partnership will co-invest in the Asia Pacific region, with a particular focus on India.
The news follows Goldman’s 2023 expansion in the Middle East with the opening of its office in Abu Dhabi Global Market, the financial center of the UAE capital.

An Emirati woman paddles a canoe past skyscrapers in Abu Dhabi, United Arab Emirates, on Wednesday, Oct. 2, 2019.
Christopher Pike | Bloomberg | Getty Images

DUBAI, United Arab Emirates — Goldman Sachs and Abu Dhabi sovereign wealth fund Mubadala on Monday signed a $1 billion private credit partnership to co-invest in the Asia-Pacific region, with a particular focus on India, the institutions said in a joint statement.
The separately managed account, termed the “Partnership,” will be managed by Private Credit at Goldman Sachs Alternatives, with a staff based on the ground in various markets across the region. It will invest the long-term capital in “high quality companies … across the private credit spectrum” across a number of Asia-Pacific markets.

The news follows Goldman’s 2023 expansion in the Middle East with the opening of its office in Abu Dhabi Global Market, the financial center of the United Arab Emirates capital.
It also comes as the UAE and other Gulf states increase their economic footprint in India, which is set to be the fastest-growing G20 economy for the 2023-24 fiscal year. The UAE in October 2023 announced a target to invest $75 billion in India over a period of time, while Saudi Arabia set an investment target in the country of $100 billion.
“India, in particular, stands out as a key market with significant opportunities in private credit, and where Goldman Sachs has strong exposure and capabilities,” said Fabrizio Bocciardi, Mubadala’s head of credit investments, in a press release.

“The opportunity in private credit in Asia Pacific is expansive,” Greg Olafson, global head of private credit at Goldman Sachs Alternatives, said. “With strong economic growth in the region and favorable conditions for private lenders to support the growth of leading companies by providing flexible, long-term capital, we believe we are at the early stages of a defining era for private credit in Asia Pacific.”
He said the partnership with Mubadala will enable the bank to expand its “long-established investment focus on the region.”

Omar Eraiqat, Mubadala’s deputy CEO of diversified investments, said that the Goldman Sachs partnership “compliments our aspirations to grow our private credit exposure in APAC, a region that is central to Mubadala’s strategic growth initiatives.”
Mubadala Investment Company manages a global portfolio of $276 billion spanning six continents and a range of sectors and asset classes, according to the firm, with a focus on diversification of the UAE economy. More

Taylor Swift’s Eras Tour undoubtedly helped the local economies she held concerts in, but Nomura sees the national-level effect being smaller than some anticipate.
Estimates from the firm show the tour helped nominal U.S. retail sales by 0.03% and real gross domestic product by 0.02% between the first and third quarters of 2023.

Taylor Swift performs onstage at Lumen Field in Seattle on July 22, 2023.
Mat Hayward/tas23 | Getty Images Entertainment | Getty Images

The devil’s in the details, but local economies have a friend in Taylor Swift.
The American pop star has spent nearly a year crossing the U.S. and the globe with her high-flying Eras Tour. The economic effect of the “Karma” singer’s show has caught the attention of everyone from the Federal Reserve to Wall Street.

Her tour undoubtedly helped the local economies she visited, according to a new report out from Japanese investment bank Nomura. But the firm questions how much of an imprint it made on national data.
“Her boost to consumption has certainly enchanted US economic analysts, but we believe the total macroeconomic effect is probably overstated,” Nomura global economist Si Ying Toh wrote to clients last week.
Between the first and third quarter of 2023, Swift’s venture alone lifted nominal U.S. retail sales by 0.03%, and real gross domestic product, a measure of economic output, by 0.02%, Nomura estimates show.
For all of 2023, the 14-time Grammy winner’s tour accounted for 0.5% of nominal consumption growth, according to the firm’s calculations.
Though those data points can be considered marginal, Toh said the economic boost — which some have dubbed the “Swift-lift” — is “undeniable” for the 20 cities U.S. she visited.

Stops on The Eras Tour saw a bump of 2.1 percentage points to lodging inflation during the month of Swift’s visit, according to STR data cited by Toh. Data from hotel booking platform Trivago shows a similar rise, she added.
Looking at Chicago specifically, Toh estimated that lodging prices rose 3.1 percentage points due to Swift’s three shows there. The city, which is the third-most populated in the U.S., saw a bump of 8.1 percentage points in occupancy and a 59% increase in hotel revenue per available room during Swift’s stint.
From that, the consumer price index for the Illinois city increased 0.5 percentage points from the singer’s visit alone. CPI is the measure of a basket of goods and services used to calculate changes in costs over time.
It’s less likely for these local improvements to materialize in national-level statistics from larger economies such as the U.S., U.K. or Japan, Toh said. Still, these events are worth watching as potential economic catalysts in countries around the globe, she said.
Internationally, small economies such as Singapore and Sweden could see the biggest macro boosts from her tour, according to Toh.
“Exogenous shocks play a key role in economic modeling, whether in the form of an extreme weather event, a pandemic or … a pop concert,” Toh wrote to clients. “In recent years, concert tours have grown to become not just major social phenomena but also potentially a significant driver of economic activity.”
Swift’s tour is set to conclude near the end of 2024. The film version, which already captured more than $200 million globally through a movie theater run, begins streaming on Disney+ on March 15.
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Germany’s housebuilding sector is in a “confidence crisis,” Dominik von Achten, CEO of German building materials company Heidelberg Materials, told CNBC.
The sector has gone from bad to worse in recent months with the latest economic indicators hitting all-time lows.
It is questionable whether there is light at the end of the tunnel as pressures such as elevated interest rates continue to weigh on the economy.

A construction site with new apartments in newly built apartment buildings.
Patrick Pleul | Picture Alliance | Getty Images

Germany’s housebuilding sector has gone from bad to worse in recent months.
Economic data is painting a concerning picture, and industry leaders appear uneasy.

“The housebuilding sector is, I would say, a little bit in a confidence crisis,” Dominik von Achten, chairman of German building materials company Heidelberg Materials, told CNBC’s “Squawk Box Europe” on Thursday.
“There are too many things that have gone in the wrong direction,” he said, adding that the company’s volumes were down significantly in Germany.
In January both the current sentiment and expectations for the German residential construction sector fell to all-time lows, according to data from the Ifo Institute for Economic Research. The business climate reading fell to a negative 59 points, while expectations dropped to negative 68.9 points in the month.
“The outlook for the coming months is bleak,” Klaus Wohlrabe, head of surveys at Ifo, said in a press release at the time.

Meanwhile, January’s construction PMI survey for Germany by the Hamburg Commercial Bank also fell to the lowest ever reading at 36.3 — after December’s reading had also been the lowest on record. PMI readings below 50 indicate contraction, and the lower to zero the figure is, the bigger the contraction.

“Of the broad construction categories monitored by the survey, housing activity remained the worst performer, exhibiting a rate of decline that was among the fastest on record,” the PMI report stated.
The issue has also been weighing on Germany’s overall economy.
German Economy and Climate Minister Robert Habeck on Wednesday said the government was slashing its 2024 gross domestic product growth expectations to 0.2% from a previous estimate of 1.3%. Habeck pointed to higher interest rates as a key challenge for the economy, explaining that those had led to reduced investments, especially in the construction sector.

Light at the end of the tunnel?

Ifo’s data showed that the amount of companies reporting order cancellations and a lack of orders had eased slightly in January, compared to December. But even so, 52.5% of companies said not enough orders were being placed, which Wohlrabe said was weighing on the sector.
“It’s too early to talk of a trend reversal in residential construction, since the tough conditions have hardly changed at all,” he said. “High interest rates and construction costs aren’t making things any easier for builders.”
Heidelberg Materials’ von Achten however suggested there could be at least some relief on the horizon, saying that there could be good news on the interest rate front.

“I’m positive inflation really comes down now in Germany, maybe the ECB [European Central Bank] is actually earlier in their decrease of interest rates than we all think, lets wait and see, and if that comes then obviously the confidence will also come back,” he said.
Even if interest rate cuts are a slow process, von Achten says as soon as “people see the turning point” confidence should return.
Speaking to the German Parliament about the economic outlook on Thursday, Habeck said the government was expecting inflation to continue falling and return to the 2% target level in 2025.
The European Central Bank said at its most recent meeting in January that discussing rate cuts was “premature,” even as progress was being made on inflation. While the exact timeline for rate cuts remains unclear, markets are widely pricing in the first decrease to take place in June, according to LSEG data.    More

Federal Reserve Governor Christopher Waller said Thursday he will need “at least another couple more months” of data before inflation is falling enough to warrant interest rate cuts.
While he said he still expects the FOMC to begin lowering at some point this year, Waller said he sees “predominately upside risks” to his expectation that inflation will fall to the Fed’s 2% goal.
The remarks are consistent with a general sentiment at the central bank that while further rate hikes are unlikely, the timing and pace of cuts is uncertain.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022.
Al Drago | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller said Thursday he will need to see more evidence that inflation is cooling before he is willing to support interest rate cuts.
In a policy speech delivered in Minneapolis that concludes with the question, “What’s the rush?” on cutting rates, the central bank official said higher-than-expected inflation readings for January raised questions on where prices are heading and how the Fed should respond.

“Last week’s high reading on CPI inflation may just be a bump in the road, but it also may be a warning that the considerable progress on inflation over the past year may be stalling,” Waller said in prepared remarks.
While he said he still expects the Federal Open Market Committee to begin lowering rates at some point this year, Waller said he sees “predominately upside risks” to his expectation that inflation will fall to the Fed’s 2% goal.
He added that there are few signs inflation will fall below 2% anytime soon based on strong 3.3% annualized growth in gross domestic product and employment, with few signs of a potential recession in sight. Waller is a permanent voting member on the FOMC.
“That makes the decision to be patient on beginning to ease policy simpler than it might be,” Waller said. “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole.”

The remarks are consistent with a general sentiment at the central bank that while further rate hikes are unlikely, the timing and pace of cuts is uncertain.

The inflation data Waller referenced showed the consumer price index rose 0.3% in January and was up 3.1% from the same period a year ago, both higher than expected. Excluding food and energy, core CPI ran at a 3.9% annual pace, having risen 0.4% on the month.
Reading through the data, Waller said it’s likely that core personal consumption expenditures prices, the Fed’s preferred inflation gauge, will reflect a 2.8% 12-month gain when released later this month.
Such elevated readings make the case stronger for waiting, he said, noting that he will be watching data on consumer spending, employment and wages and compensation for further clues on inflation. Retail sales fell an unexpected 0.8% in January while payroll growth surged by 353,000 for the month, well above expectations.
“I still expect it will be appropriate sometime this year to begin easing monetary policy, but the start of policy easing and number of rate cuts will depend on the incoming data,” Waller said. “The upshot is that I believe the Committee can wait a little longer to ease monetary policy.”
Markets just a few weeks ago had been pricing in a high probability of a rate cut when the Fed next meets on March 19-20, according to fed funds futures bets gauged by the CME Group. However, that has been pared back to the June meeting, with the probability rising to about 1-in-3 that the FOMC may even wait until July.
Earlier in the day, Fed Vice Chair Philip Jefferson was noncommittal on the pace of cuts, saying only he expects easing “later this year” without providing a timetable.
Governor Lisa Cook also spoke and noted the progress the Fed has made in its efforts to bring down inflation without tanking the economy.
However, while she also expects to cut this year, Cook said she “would like to have greater confidence” that inflation is on a sustainable path back to 2% before moving. More

Turkey’s central bank has hiked rates by a cumulative 3,650 basis points since May 2023.
Inflation in the country of 85 million last month jumped 6.7% from December — its biggest monthly increase since August — and rose 64.8% year-on-year.
Economists expect a hold on the current interest rate for much of 2024, and some see inflation roughly halving by the end of the year.

Turkish flag over a DenizBank building. Turkey is expected to head to the polls on Sunday.
Ismail Ferdous | Bloomberg | Getty Images

Turkey’s central bank held its key interest rate on Thursday, keeping it at 45% despite soaring inflation after eight consecutive months of hikes.
The move was widely expected as the bank indicated in January that its 250-basis-point hikes would be its last for the year, despite inflation now at roughly 65%.

Consumer prices in the country of 85 million last month jumped 6.7% from December — its biggest monthly jump since August — according to the Turkish central bank’s figures. They rose 64.8% year-on-year in January.
Turkey’s key interest rate climbed by a cumulative 3,650 basis points since May 2023. The latest decision to hold rates, rather than cut them, signals consistency from the newly appointed Turkish central bank governor Fatih Karahan with the strategy of his predecessor, Hafize Erkan. Karahan took office in early February.
Analysts viewed the accompanying press statement from the central bank as hawkish and indicating no easing of rates in the near future.
“The Committee assesses that the current level of the policy rate will be maintained until there is a significant and sustained decline in the underlying trend of monthly inflation and until inflation expectations converge to the projected forecast range,” the bank’s statement said. “Monetary policy stance will be tightened in case a significant and persistent deterioration in inflation outlook is anticipated.”
Economists expect a hold on the current interest rate for much of 2024, and see inflation roughly halving by the end of the year — meaning monetary easing could still be on the cards.

“An extended interest rate pause is likely in our view over the coming months. With inflation likely to end the year at 30-35% (broadly in line with the CBRT’s forecast of 36%), there is still a possibility that the central bank starts an easing cycle before the end of the year, which many analysts are expecting,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a note Thursday.
“But our baseline view remains that interest rates will stay on hold throughout this year and that rate cuts won’t arrive until early next year.” More