Raphael Stevens

A man photographs a Roblox banner displayed, to celebrate the company’s IPO, on the front facade of the New York Stock Exchange (NYSE) in New York, March 10, 2021.
Brendan McDermid | Reuters

Check out the companies making headlines in premarket trading.
Roblox — Roblox shares fell 6.7% after Morgan Stanley downgraded the gaming company to underweight from equal weight and said the upside is limited following the stock’s recent outperformance.

Discover — The online bank lost 7.3% despite beating expectations for per-share earnings and revenue. Discover boosted its provision for credit losses compared to the prior year, potentially signaling that it sees a weaker economy ahead.
CureVac — The biopharmaceutical company jumped 8.2% following an upgrade to buy from neutral by UBS, which said Phase 1 results for a treatment that uses mRNA for influenza saw a “major infection point.”
Alcoa — The aluminum maker slid 6.4% after reporting net losses for the most recent quarter, saying high costs for energy and raw materials, paired with low aluminum pricing, dragged on earnings.
Chegg — The digital learning platform gained 2.5% following an upgrade to overweight from standard weight by KeyBanc. The firm cited the potential for EBITDA upside.
Charles Schwab — Shares of the brokerage firm fell 3% after Charles Schwab was double downgraded to underperform from buy at Bank of America. The bank said in a note to clients that Schwab’s growth would decline this year as customers adjust their portfolios to higher interest rates.

Procter & Gamble — The consumer goods giant shed more than 2% after reporting mixed quarterly results before the bell. P&G’s adjusted earnings per share for the fiscal second quarter matched expectations at $1.59, but total revenue of $20.77 billion slightly topped estimates of $20.73 billion.
Philip Morris — Shares of the tobacco company rose more than 1% after Jefferies upgraded the stock to buy from hold and raised its price target. The Wall Street firm said it’s bullish on Philip Morris’ efforts to acquire oral nicotine company Swedish Match.
Apple — Shares slid 1.2% after JPMorgan cut its price target on Apple and said the technology company had a tough setup going into earnings from supply headwinds.
Ford — The automaker fell 1.2% after Evercore ISI cut its price target on the stock, noting that automakers could struggle if a recession comes but see sales come back in the three to six months following.
Boot Barn — UBS raised its price target on the stock ahead of the company’s quarterly earnings report. UBS said investor sentiment should remain unchanged and doesn’t expect Boot Barn’s earnings release to be a catalyst. The stock slid 0.6% despite the target increase, however.
— CNBC’s Michelle Fox, Tanaya Macheel, Samantha Subin, Jesse Pound, Carmen Reinicke and Yun Li contributed reporting

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JPMorgan Chase CEO Jamie Dimon believes that interest rates could go higher than what the Federal Reserve currently projects as inflation remains stubbornly high.
“I actually think rates are probably going to go higher than 5% … because I think there’s a lot of underlying inflation, which won’t go away so quick,” Dimon said on CNBC’s “Squawk Box” Thursday from the World Economic Forum in Davos, Switzerland.

To battle soaring prices, the Federal Reserve has raised its benchmark interest rate to a targeted range between 4.25% and 4.5%, the highest level in 15 years. The expected “terminal rate,” or point where officials expect to end the rate hikes, was set at 5.1% at its December meeting.
The consumer price index, which measures the cost of a broad basket of goods and services, rose 6.5% in December from a year ago, marking the smallest annual increase since October 2021.
Dimon said the recent easing of inflation comes from temporary factors such as a pullback in oil prices and a slowdown in China due to the pandemic.

Jamie Dimon, President, CEO & Chairman of JP Morgan Chase, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 19th, 2023. 
Adam Galica | CNBC

“We’ve had the benefit of China’s slowing down, the benefit of oil prices dropping a little bit,” Dimon said. “I think oil gas prices probably go up the next 10 years … China isn’t going to be deflationary anymore.”
The series of aggressive rate hikes have fueled worries of a recession in the U.S. Central bankers still feel they have leeway to raise rates as the labor market and the consumer remains strong.

The JPMorgan chief said if the U.S. suffers a mild recession, interest rates will rise to 6%. He added that it’s hard for anyone to predict economic downturns.
“I know there are going to be recessions, ups and downs. I really don’t spend that much time worrying about it. I do worry that poor public policy that damages American growth,” Dimon said. More

Inflation is coming down. On both sides of the Atlantic, falling energy costs are provoking sighs of relief. Price-watchers are now focused on core inflation, a measure that strips out volatile food and energy prices, and is usually much slower to rise—and more difficult to bring down. Since October, core inflation in the euro zone has been higher than in America. Could Europeans end up with a worse inflation problem than their transatlantic peers? Every economist knows Milton Friedman’s dictum that “inflation is always and everywhere a monetary phenomenon.” But the Nobel-prizewinner’s words do not seem to capture the current bout of inflation, where post-pandemic supply disruptions, fiscal splurges, an energy shock and labour shortages have created a near-perfect storm causing prices to soar. How fast inflation comes down may therefore depend not only on what central banks do but on how these factors—the disruptions, energy shock and wage rises—affect economies on either side of the Atlantic.Alongside these surprises, there has been extraordinary tumult in the basic operations of rich-world economies. Covid-19 altered how people work, what they consume and where they live, and did so in short order. Removing pandemic restrictions then led to a surge in demand for travel, nights out and treats. On top of this, governments in America and Europe have decided to subsidise green technologies on an unprecedented scale. Capital, production inputs and workers need to move to parts of the economy that are growing and away from those that are shrinking. Until they do, the economy cannot produce enough to meet demand.Yet moving jobs or investing in new plants or software takes time. A boom accelerates the process. Recent work by Rüdiger Bachmann of the University of Notre Dame and colleagues shows that workers in Germany are more likely to change jobs when demand is high than during recessions. Another study, using American data, suggests that moving to a growing firm increases pay for the job-switching worker substantially. The current shifts in the economy are therefore likely to produce some inflation—and that may be desirable. A recent paper by Veronica Guerrieri of the University of Chicago and colleagues argues that monetary policy should tolerate somewhat higher inflation if doing so allows workers to find a new job during periods of economic change.Government policies in America and Europe have affected the pace of adjustment to these changes. Europe’s approach was generally to try to freeze things in place during the pandemic. The continent’s governments created generous furlough schemes, which kept workers in their existing jobs. Unlike America, there was no boom in durable-goods consumption, financed by stimulus cheques, that required expanded production. Nor did Europe run its economy hot to aid a reallocation of workers and capital. If inflation in America is the result of an economic reshuffle, it may come down faster than Europe’s once that process is complete. Europe also had to cope with a different economic hit. Julian di Giovanni of the Federal Reserve and colleagues show that, compared with America, supply crunches accounted for a greater share of inflation in 2020-21. Wholesale gas and electricity prices began to rise in autumn 2021, and soared after Russia invaded Ukraine, with oil and coal prices following. This added much more to inflation in energy-importing Europe than it did in America. The consensus in economics is that central banks should not tighten policy too much in response to a temporary supply or energy shock. Coping with such a shock is hard enough—no need to give the screw another turn. The effects should subside over time so long as inflation expectations stay stable. Now that supply crunches in everything from lumber to chips are easing and energy prices are coming down, Europe should benefit more than America. That is if inflation has not become entrenched. Inflation gets baked into economies when workers and firms come to believe that prices will keep rising. In the worst-case scenario, this creates a wage-price spiral, with workers and firms unable to agree on a division of the economic pie. In a tight, flexible labour market like America’s, which has little collective bargaining, wage growth should quickly track inflation. And that is what happened: wage growth accelerated when inflation began to rise. As a new paper by Guido Lorenzoni of Northwestern University and Ivan Werning of the Massachusetts Institute of Technology argues, this theoretically increases the risk of a wage-price spiral. But America seems to have made it past the point of greatest danger. According to Indeed, a hiring website, the country’s wage growth, though high, has been coming down for a while. Blessed unionsIn Europe, wages are often decided in collective-bargaining agreements. Across the eu around six in ten workers are covered by such arrangements. Deals typically last a year or more, meaning that wages take time to adjust to economic conditions. That was great when inflation got going. Wage pressures did not immediately add to inflation. Unions and firms could negotiate about how to divide the blow to incomes and profits. After all, the two sides meet at the same table every year, to take stock and adjust. Since they cover large chunks of the economy, they have reason to take the macroeconomic effects of any deal into account.But relations are feeling the strain. With inflation in Europe stubbornly high, unions are demanding extra compensation for their members. Germany’s public-sector outfits are seeking a 10.5% increase in the latest round of bargaining. Such delayed increases in pay are a normal feature of an economy where wages take time to adjust and which has been hit by a supply shock. As Messrs Lorenzoni and Werning demonstrate, real wages typically take a hit before recovering to their old level. But whereas America appears to be making progress, the old continent remains some way behind. Europe’s inflation race has longer to run. ■Read more from Free Exchange, our column on economics:Warnings from history for a new era of industrial policy (Jan 11th)The Federal Reserve’s great anti-hero deserves a second look (Dec 20th)The insidious threats to central-bank independence (Dec 15th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

It is lunchtime at One Vanderbilt, a new office tower which juts out of midtown Manhattan. The building’s vast basement kitchen hums, as harried staff in chef’s whites leap in and out of swing doors. Upstairs, gourmet salads and soup are served in a lounge overlooking Grand Central Station; a sit-down restaurant offers foie gras, grilled scallops and other dishes from Daniel Boulud, a celebrity chef. There is not a soggy, al-desko sandwich in sight.Across the rich world, the commercial-property industry is in a grim state. Tenants have come to terms with the fact that working from home is here to stay, and are downsizing appropriately. In cities such as Hong Kong, London and Paris vacancy rates have hit record highs. Another indicator of the darkening mood is that global investment in offices last year fell by 42%, compared with a 28% drop for property as a whole. A recent paper by Arpit Gupta of New York University and Vrinda Mittal and Stijn Van Nieuwerburgh of Columbia University forecasts that offices in New York could lose almost 40% of their value between 2019 and 2029, equivalent to $453bn.Yet One Vanderbilt, a 93-storey skyscraper with a sparkling “hall of light” observatory at its top (pictured), is among a spate of new trophy properties and renovated buildings offering interiors and services akin to those at elite private-members clubs. Last year tenants in Manhattan signed deals for 6.1m square feet (566,709 square metres) of high-end office space, double the amount the year before, according to jll, a property firm. The luxurious turn was under way before the pandemic, but accelerated as companies found themselves in competition with home offices. If a firm needs space for only half its workers each day, it can pay more per square foot. The picture at the top of the commercial property market is therefore very different to the misery in the lower echelons. Although New York is home to the most opulent new-builds, extravagant offices are appearing in other global cities, too. In London 105 Victoria Street’s owners are adding 30,000 square feet of green space—the equivalent of 14 tennis courts—including an urban farm and a “walk-and-talk” track. Merdeka 118, a skyscraper under construction in Kuala Lumpur, will boast one of the world’s loftiest observation decks. Before the pandemic, desks accounted for around 60% of office space, according to Cushman and Wakefield, a property consultancy. Things have changed considerably. New and refurbished offices are using half that space for workstations, and raising the share dedicated to amenities from 5% to 20%. Meditation rooms, bike storage, showers, outdoor spaces and other treats are now de rigueur.The result is an arms-race at the very top of the market, particularly in the most competitive cities. Many of the new breed of luxury offices offer concierges—some having poached hospitality teams from places such as the Four Seasons hotel chain—and rooftop bars serving high-quality booze. They typically boast eye-catching entrances. The lobby in 425 Park Avenue, an office block round the corner from One Vanderbilt, is three storeys tall. At Spiral, a new tower with tree-lined terraces on every floor, the lobby is infused with a signature scent and soothing music.The ambition is to make life as cushy as possible for workers—not just to get people back into the office, but also to aid recruitment in a tight labour market. Tenants at 50 Hudson Yards, home to BlackRock, an investment firm, and Meta, a social-media giant, have access to a helipad, which offers five-minute transfers to John F. Kennedy International Airport for roughly the price of an Uber suv. Other offices provide services such as pet care, baby-sitting and dry cleaning. Landlords are rushing to spruce up older offices as well. The gm Building, a 55-year-old tower overlooking Central Park and once owned by the Trump Organisation, was recently refurbished to include a bar, lounge and fitness centre with spin and yoga studios. Modern workers do not just seek luxury, however. They also want to salve their consciences. As a result, green buildings are increasingly popular. For landlords, these have the twin advantages of attracting higher rents and hedging against obsolescence, as countries look to meet their net-zero carbon goals. New energy-efficiency requirements for buildings in England and Wales mean that more than half of London’s office stock could be unusable by 2027. In Europe buildings will be required to source roughly half their energy from renewable sources by 2030. Among the newer breed of offices, clean air, minimal carbon emissions and better insulation are commonplace. One Manhattan West, another tower in the Hudson Yards development, is powered entirely by renewable energy. Like many developers, the tower’s owner, Brookfield, is aiming to achieve net-zero emissions by 2050.Yet one question hovers over the luxury boom, and it is a big one. What happens to the market if economic conditions deteriorate? After the global financial crisis of 2007-09, premium buildings were hit less hard than their more humble rivals, but the whole industry suffered. In London, prime-office rents in the third quarter of 2009 were 35% below their peak in 2007. The owners of today’s luxury towers must hope that foie gras and high-tech gyms will protect them next time around. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

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Alongside IEA Executive Director Fatih Birol, activist Greta Thunberg is taking part in the CNBC-moderated panel with youth climate advocates Vanessa Nakate, Helena Gualinga and Luisa Neubauer.

The four climate activists arrived in Davos having recently composed an open letter to the CEOs of fossil fuel companies through the non-profit website Avaaz.
Moderated by CNBC’s Steve Sedgwick, the panel at Davos, Switzerland, will debate how the world can rapidly accelerate the clean energy transition.
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At the annual World Economic Forum meeting this week in Davos, Switzerland, China’s economic tsar, Liu He, met a number of “old friends” he had not seen during his country’s long battle with covid-19. In a solicitous speech, he acknowledged the importance of in-person meetings, lamented the fragmentation of the world and called for economic “re-globalisation”. In a philosophical aside, he also emphasised the “duality” of things. China’s recently abandoned “zero-covid” policy cut the country off from the rest of the world, contributing to the fragmentation Mr Liu bemoaned. But China’s period of isolation had a notable duality of its own. Although the movement of people across China’s borders was sharply curtailed, the movement of goods from China to the rest of the world was spectacular. Despite all the disruptions, China’s exports grew by almost 30% in dollar terms in 2021 and by another 7% in 2022, according to figures released on January 13th. Perhaps in-person meetings are overrated.China’s episodic lockdowns proved less damaging to trade than feared at the time. When Shanghai was brought to a standstill in April and May, many worried it would clog international supply chains and push up global inflation. But a lot of trade passed through nearby Ningbo instead. An index of global supply-chain pressure, created by economists at the Federal Reserve Bank of New York, peaked at the end of 2021, before China’s fraught battles with Omicron last year. The index’s decline since then was interrupted by the Shanghai lockdown and Russia’s invasion of Ukraine, but not for long. Prices tell a similar story. In June, when the headline inflation rate in the United States peaked at 9.1%, the average price of Chinese imports into America rose by only 3.3%, compared with a year earlier. With the abrupt removal of China’s zero-covid policy, the flow of people, like Mr Liu, across the mainland’s borders has resumed. The number of passengers on Air China’s international routes rose by a third in December compared with the previous month. Other parts of the economy will also improve as the year unfolds. A recovery is expected in retail spending, which fell last year and would have been even weaker had it not been for the anxious stockpiling of food and medicines. The outlook should also improve for home sales, which shrank by more than a quarter in 2022, the sharpest decline on record. The government has given property developers a “blood transfusion”, Mr Liu reported in Davos, helping them raise finance. It has also taken steps to quicken the pulse of the market, which he hopes will help developers raise much-needed revenue.But the glaring exception to this brighter outlook is exports. They are likely to fare worse in China’s year of reopening than in its last year of lockdowns. Indeed, the monthly figures have been negative in the past three releases. According to ubs, a bank, merchandise exports will shrink by 4% in dollar terms in 2023 as a whole. This would be only their fifth such fall since 1980. The re-globalisation of China’s people will coincide with a deglobalisation of its goods. China will attract many more foreign visitors and fewer foreign sales.In one important respect, China’s reopening has made life harder for its exporters. The turnaround in China’s zero-covid policy has contributed to a revival of the yuan, which has risen by 8% against the dollar since the start of November, making Chinese exports less competitive. Mr Liu invited his audience in Davos to visit China again. But even before the global capitalists arrive, global capital has rushed to reacquaint itself with Chinese assets, bidding up the price of its currency. Exporters have also converted more of their dollar earnings into yuan. The main reason for the export bust, though, lies outside China. The slowdown in the world economy will cut demand for its wares. And the landing will not necessarily be soft. In December, for example, China’s sales to America, the eu and Japan fell by 17% compared with a year earlier. Ting Lu of Nomura, another bank, worries that China will suffer from the so-called bullwhip effect. A small dip in demand from consumers can lead to pronounced drops in orders for upstream suppliers, just as a small flick of the wrist can lead to a vicious crack of the whip. Even if the level of global spending proves resilient, the mix is becoming less favourable to China. In America and other rich countries consumption has shifted from the sorts of electronic goods that are prized by people working from home to the services people enjoy when they are able to move and mingle. China’s global shipments of computers and their parts shrank by 35% in the latest trade figures. When the threat of lockdowns dangled over global supply chains, people worried that China’s exporters were a source of vulnerability for the world economy. Instead, the world economy is proving a source of vulnerability for China’s exporters. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More