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The Retail Monitor, which excludes autos and gas, rose 0.4% in December, down from a gain of 0.8% in November.
The core retail gauge, which also takes out restaurants, climbed a more modest 0.2% after gaining 0.7% in the prior month.
For the year, it increased by 3.1% and the core was up 2.4%.

People carry shopping bags as they visit a department store during the holiday season in New York City.
Eduardo Munoz | Reuters

Retailers chalked up solid gains in the final month to wrap up the holiday season, according to the CNBC/NRF Retail Monitor for December.
However, the data also shows the true state of consumer spending is now clouded by a new factor: deflation.

The Retail Monitor, which excludes autos and gas, rose 0.4% in December, down from a gain of 0.8% in November, when the holiday shopping season traditionally kicks off. It’s just below the long-run average of 0.6%.

Arrows pointing outwards

The core retail gauge, which also takes out restaurants, climbed a more modest 0.2% after gaining 0.7% in the prior month. For the year, the Retail Monitor increased by 3.1% and the core was up 2.4%.
Some give back from the strong November was inevitable, and economists expect the economy to cool from the outsized growth in the third quarter. One question is whether December marks the beginning of a long-predicted normalization in consumer spending.
Spending was clearly hampered by the slowdown in the housing industry. Three of the biggest negative categories were housing related:

Electronics and appliances (-3.2%)
Building and garden supplies (-1.5%)
Furniture and home furnishings (-0.9%).

Furniture sales have been negative in four of the past five months.

Traditional holiday-related retail categories did better, including a 0.9% gain in general merchandise stores and a 2.6% increase in nonstore retailers, which incorporates internet sales. Restaurants and bars posted a 1.5% rise, it’s best showing since July.

Arrows pointing outwards

Deflation

Deflation is another factor. Goods prices, less food and energy, have fallen for six straight months. They are down 3.7% at an annualized rate from June through November.
The Retail Monitor found sales of clothing and accessories down 0.4% but the November CPI showed prices fell a much larger 1.3%. The December CPI, set to be released Thursday, should show more clearly how prices affected sales.
Wall Street is monitoring how retailers are managing profit margins amid deflation and whether they can be as profitable with falling prices as they were with rising prices. At issue is whether retailers can control costs and if input prices are falling faster or slower than selling prices.
Wall Street has been bullish on retail, with the SPDR S&P Retail ETF (XRT) up 21% since late October despite some giveback beginning in the trading days after Christmas. Retail earnings will be released beginning in late February, but some companies — such as Lululemon, Crocs and Five Below — have guided higher on better holiday sales.

Good, not great Christmas

For the two critical months of the holiday season, November and December, the Retail Monitor rose 3.7% and core retail gained 3.3% making it a good, not great Christmas. But last October and January surprised with stronger gains than either November or December, suggesting the full holiday shopping season could be longer than it has been traditionally.

Arrows pointing outwards

The new Retail Monitor is a joint product of CNBC and the National Retail Federation based on data from Affinity, a leading consumer purchase insights company. The data is sourced from more than 9 billion annual credit and debit card transactions collected and anonymized by Affinity and accounting for more than $500 billion in sales. The cards are issued by more than 1,400 financial institutions.
The data differs from the Census Bureau’s retail sales report as it is the result of actual consumer purchases, while the Census relies on survey data. The government data is frequently revised as additional survey data become available. The CNBC/NRF Retail Monitor is not revised as it’s calculated from actual transactions during the month. It is, however, seasonally adjusted, using the same program employed by the Census.
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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.BrewDog, the UK’s biggest craft beer brewer, has abandoned its pledge to pay all staff the voluntary living wage in a move that points to a broader cooling of wage pressures across the economy.The company said in a letter to staff — published on Wednesday by the trade union Unite — that new staff members would be hired at the statutory minimum wage rate, which stands at £10.42 an hour and is set to rise to £11.44 in April, rather than the higher rates set by the Living Wage Foundation that are paid at present. Pay rates for existing staff outside London will rise from £10.90 to £11.44 in April, while the pay of employees in London will be frozen at £11.95. This is the rate set by the Living Wage Foundation, a charity that accredits employers who meet its standards on pay, to reflect the capital’s higher living costs.The decision is likely to deal a further blow to BrewDog’s reputation as an employer. Chief executive James Watt was forced to issue a public apology in 2021 after accusations from former staff that he had fostered a “toxic” workplace culture.But it could also point to a broader easing of pay pressures across the UK economy, after a year in which wages have grown at a record pace in nominal terms but have still barely outpaced inflation.Bank of England rate-setters are watching developments on pay intently, because they believe high inflation will be more persistent — and interest rates will need to stay high for longer — if wages continue to rise rapidly and companies prove able to pass on the cost to consumers.Ministers are, meanwhile, keen for living standards to rise in the run-up to the general election expected this year, and chancellor Jeremy Hunt has mandated a 9.8 per cent increase in the statutory minimum wage from April.The BoE is worried that this rise in pay for low earners could complicate its job of returning inflation to the 2 per cent target, if it leads employers to lift salaries for staff higher up the pay scale as well.BrewDog’s example suggests that at least some companies are finding it both harder, and less necessary, to boost wages — with redundancies on the rise and labour shortages easing.Some economists have speculated that employers who pay the voluntary living wage at present may feel less pressure than in recent years to compete on salaries for scarce staff, especially as the gap between the voluntary living wage and the statutory rate has narrowed over time.However, supermarket J Sainsbury, which already pays well above the statutory rate, said last week that it would raise its minimum hourly wage by 9.1 per cent from March — a move that could spur similar increases from rivals.Next said in a trading update last week that it expected wage inflation to add £60mn to its costs in the year ahead, although the retailer noted it did not expect to raise selling prices as a result, given other cost savings and falling factory gate prices. Bryan Simpson, lead organiser for the hospitality sector at Unite, said it was “outrageous” to withdraw the living wage pledge “during the most acute cost of living crisis in a generation”.BrewDog, which in a 2019 blog described becoming an accredited Living Wage Employer as “one of the best decisions we ever made”, said in its letter that “hard decisions” were necessary to restore profitability and financial stability after a year of “immense challenges”.The company said staff outside London would still receive a 4.95 per cent pay increase, with those in the capital paid 4.5 per cent above the statutory minimum. It maintains that its overall benefits package, which includes paid sabbaticals for long-serving staff and a week’s leave for employees with a new pet, remains more generous than the industry average. More

(Reuters) – Brazil’s monthly inflation probably sped up in December on higher costs of farm products and airfares, but the annual rate should have remained close to the central bank’s upper target, a Reuters poll showed.Overall, consumer prices in Latin America’s No.1 economy behaved better in 2023 than previously thought, thanks to outstanding agricultural conditions, strict monetary policy, and some fiscal restraint efforts from the government.Brazil’s IPCA inflation index is forecast to have increased 0.48% in December, compared to a 0.28% rise in November, according to the median estimate of 23 economists polled Jan. 3-9. Consumer price figures are scheduled for publication on Thursday.However, the year-on-year rate is seen at 4.54%, below 4.68% in November and the upper limit of the central bank’s official target range of 1.75% to 4.75% for the first time since 2020. Estimates stood between 4.40% and 4.80%.Still, costs of staples, such as beef or rice have recently started to grow faster due to a drop in farm output caused by the effects of the El Nino weather pattern this year, after a bumper crop in the previous cycle.”The most significant positive contribution should come from food and beverages, reflecting stronger agricultural prices,” said Laiz Carvalho, Brazil economist for BNP Paribas (OTC:BNPQY), on the drivers of December’s monthly inflation.”Year-end holidays are also expected to impact transportation due to increased airfares, partially offset by lower fuel prices”, as millions of Brazilians go on vacation during the Southern hemisphere summer.Airfares shot up 65% in the last four months, a “worrying” trend the government is trying to revert, Finance Minister Fernando Haddad said in December, following the release of higher-than-expected bi-weekly inflation data.In all, however, consumer prices are expected to continue relatively subdued in 2024, rising 3.90% and staying under this year’s official goal of 3% plus/minus 1.5 percentage points, according to the latest consensus forecast in a central bank survey.”Overall inflation dynamics remain benign,” said Felipe Sichel, chief economist at Porto Asset. “The central bank will keep on cutting rates at a 50 basis-points clip towards a terminal rate of 9.25%, which should be achieved by July.”Brazil’s central bank governor said last month he viewed the pace of 50-basis-point interest rate cuts per meeting as appropriate for current conditions and aimed at bringing borrowing costs to the “lowest possible level” this year. (Reporting and polling by Gabriel Burin; Editing by Tomasz Janowski) More

NEW YORK(Reuters) – “Sell” or “split” was the favorite word for activist investors across the world last year when their demands for companies to pursue some form of mergers and acquisition-related activity hit a new record and appeared in roughly half of their 2023 campaigns even as M&A activity dropped off, according to new data from Barclays.Hedge funds Elliott Investment Management, ValueAct Capital, Jana Partners and others urged target companies to merge, split off units or sell themselves, with these demands show up in 49% of all campaigns last year. In the previous four years, mergers and acquisitions requests averaged 42%, the data show.”The activists told corporations that this is the new reality and it is time to move on,” said Jim Rossman, global head of shareholder advisory at Barclays.But their requests came during a year takeover activity dropped to its lowest level in a decade, according to Dealogic data, leaving many with little to show for their calls.As total deal volume fell 18% to about $3 trillion, senior dealmakers described the year as one of the toughest in recent memory. Deals weren’t getting done because potential partners couldn’t agree on price and it was tougher to secure financing as interest rates rose. Still many seasoned activists summoned the self-confidence to make demands to corporate management even if they knew it would take longer than usual to get to the finish line, several fund managers and bankers said.Elliott, one of the industry’s busiest activists, called on wireless tower owner Crown Castle (NYSE:CCI) to consider selling the business while Jana Partners pushed Frontier Communications (OTC:FTRCQ) to launch a sales process and ValueAct pressed Seven & i Holdings to spin off its 7-Eleven convenience store chain. Irenic Capital Management and Starboard suggested News Corp (NASDAQ:NWSA) spin off its digital real estate division.While they might have to wait longer for a proposed outcome, activists described their demands last year when market conditions allowed them to build positions for less money.”Activists saw an opportunity to invest at really attractive points where markets featured depressed valuations,” Rossman said, explaining why activism remained very strong last year with 229 new campaigns around the world after 235 campaigns in 2022.Besides M&A, activists also asked for board changes, changes in strategy and operations and improved governance. Changes in management, where activists call for top executives to be replaced, were last on the list of demands last year, showing up in only 10% of all campaigns, the data show. In 2022 there had been a 46% year-on-year increase in activists targeting a company’s top brass, research firm Insightia found. More

(Reuters) -Futures tracking the S&P 500 and the Dow were subdued on Wednesday ahead of inflation reports and potentially weak earnings from major lenders later this week, while a dip in Treasury yields aided gains in the tech-laden Nasdaq.Equities have remained range-bound since the turn of the year, as investors reassess their expectations of the pace of monetary policy easing following contrasting economic data and mixed signals from Federal Reserve officials. After leading last year’s rally on optimism around early interest rate cuts, megacaps stocks have gyrated so far in 2024.”Early optimism seen throughout financial markets may be difficult to maintain given the uncertainty as we head into a crucial second half of the week,” said Joshua Mahony, chief market analyst at Scope Markets.Investors’ focus now remains squarely on the December consumer and producer inflation reports due on Thursday and Friday, respectively. A slew of government and corporate bond issuance are also due this week.”With both headline and core CPI unlikely to hit 2% by March, market expectations around a potential rate cut at that point looks to be built on the high likeliness of a return to target for the Fed’s favoured core PCE metric,” said Mahony.Market participants have scaled back expectations for at least a 25-basis-point rate cut in March, and currently see a 64% chance, down from around 86% in the last week of 2023, as per the CME FedWatch Tool.On Friday, banking giants JPMorgan Chase (NYSE:JPM), Bank of America, Citigroup and Wells Fargo are expected to report lower fourth-quarter profits, as they set money aside to cover souring loans and paid more to depositors. Some analysts fear the earnings season may not produce the results that justify the run up in stock valuations into the end of last year.At 7:12 a.m. ET, Dow e-minis were down 28 points, or 0.07%, S&P 500 e-minis were up 1.75 points, or 0.04%, and Nasdaq 100 e-minis were up 30 points, or 0.18%.Amazon.com (NASDAQ:AMZN), Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) rose between 0.4% and 0.8% in premarket trading, as U.S. Treasury yields ticked lower, with those on the benchmark 10-year note slipping to 3.99%. [US/]Chip stocks Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) also gained between 0.5% and 1.1% as TSMC, the world’s largest contract chipmaker, beat fourth-quarter revenue expectations.Crypto stocks including Coinbase (NASDAQ:COIN), Bitfarms and Riot Platforms (NASDAQ:RIOT) fell between 2.2% and 3%, as prices of the world’s most valued cryptocurrency, Bitcoin, dipped after the U.S. securities regulator said a fake social media message was posted on its account regarding the eagerly awaited approval of exchange traded funds. Boeing (NYSE:BA) inched up 0.3%, recovering from a 9.3% tumble in the last two sessions. CEO Dave Calhoun acknowledged errors by the U.S. planemaker as more than 170 jets remained grounded for a fourth day.Dow Inc (NYSE:DOW) slipped 0.7% after Deutsche Bank downgraded the chemicals firm to “hold” from “buy”.Intuitive Surgical (NASDAQ:ISRG) climbed 5.1% after the medical device maker’s preliminary fourth-quarter revenue beat estimates. More

It was a merchant sailor’s nightmare: armed men in balaclavas dropping from a helicopter before storming the ship’s bridge, ordering the civilian crew to lie down at gunpoint and cutting all communications. The scene played out late last year on the Galaxy Leader cargo ship, which was seized in the Red Sea by Houthi rebels who forced it to switch course to Yemen. It was one of the most audacious of more than two dozen attacks carried out by the Yemeni Islamist movement on merchant ships over the past two months.The assaults have disrupted shipping in the critical maritime trade route and drawn the US Navy into combat. The Islamist rebels have become one of the most active factions in Iran’s so-called Axis of Resistance since the war between Israel and Hamas erupted on October 7. By opening a front in the Red Sea, they have exposed the Iran-linked group’s ability to harm western interests, burnished the Houthis’ credentials as supporters of the Palestinian cause and projected them on to the regional and international stage, said analysts.The Houthis were “very good military entrepreneurs” who have jumped on the “opportunity” presented by the war, said Farea al-Muslimi, a Yemeni expert at the Chatham House think-tank.“They really believe the right opportunity came for them to defend Palestine and stand against Israel, and to show how hypocritical other Arab countries are [for not doing the same],” he said. “As long as the Gaza war goes on, the Houthis will escalate in the Red Sea.”In doing so, they have created a significant challenge to the US and its western allies, which want to protect the region’s shipping lanes but are also wary of the Israel-Hamas conflict triggering a broader regional war.US forces have come into conflict with the Houthis as they protect global shipping in the Red Sea through which about 15 per cent of global sea trade passes.On New Year’s Eve, US Navy helicopters returned fire against small Houthi boats that were attacking an AP Møller-Maersk container ship in the Red Sea, sinking three of the rebels’ vessels and killing their crews. Two days later they fired anti-ship ballistic missiles into the sea, the rebels’ 24th attack on merchant shipping in the region since they captured the Bahamas-flagged Galaxy Leader on November 19. The impact was felt by “multiple” commercial ships in the area, according to the US military, serving the Houthis’ aims of creating fear and disruption in the sea. The rebels have also fired drones and missiles at the southern Israeli port of Eilat. Late on Tuesday, the Houthis launched one of their biggest combined attacks so far, according to US Central Command, with US and UK warships and aircraft shooting down 18 drones, two anti-ship cruise missiles and one ballistic missile. Maersk, the Danish shipping company, recently suspended all transits through the Red Sea for the “foreseeable future”, joining about a dozen other companies including energy group BP in avoiding the route. Container ships and oil tankers instead have to take a 5,000-mile diversion around Africa to reach Europe.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.In a sign of growing western concern, the US and UK and 10 other states issued a joint statement this month warning the Houthis that they would bear the consequences “should they continue to threaten lives . . . and free flow of commerce in the region’s critical waterways”. The warning came amid speculation that US forces could launch strikes against the Houthis.Washington has announced plans to step up the Red Sea maritime task force, but there were still only five warships from the US, France, and the UK patrolling the southern Red Sea and the western Gulf of Aden.The US hopes other countries will deploy vessels, but it faces challenges in countering the threat. Sidharth Kaushal, a research fellow at the Rusi think-tank, said one issue was that western warships only had a finite stock of interceptor missiles used to destroy projectiles. Once these were expended, ships had to return to base to resupply. “The sheer tempo of activity means the Houthis can present the coalition with a challenge, even if the targets are quite simple,” said Kaushal. Even if the task force were to be able to provide security, the success or failure of a convoy operation “exists at the level of perception that private sector actors, and particularly the insurers, believe to be true”, he continued. And as insurers increased premiums, it would become more economical for shipping companies to reroute their vessels, Kaushal added.Houthi troops in Sana’a last year. Many Yemenis loathe the Houthis, but the cause of the Palestinians crosses factional divides in the country More

Saudi estimates for the kingdom’s untapped mineral reserves have jumped from $1.3 trillion in a 2016 forecast to $2.5 trillion.
The Saudi government expects $20 billion in deals will be signed at the annual minerals forum in Riyadh this week.
The concerted effort to invest in minerals exploration and mining and issue licenses to foreign investors is part of Saudi Arabia’s Vision 2030 program.

Saudi Arabia nearly doubled the estimate for the value of its mineral resources and is seeing lucrative deals signed during its Future Minerals Forum held in Riyadh this week, ministers told CNBC.
Estimates for the kingdom’s untapped mineral reserves have jumped from $1.3 trillion in a 2016 forecast to $2.5 trillion, according to Saudi Mineral Resources and Industry Minister Bandar Al Khorayef. The resources include gold, copper, phosphate and rare earth elements, offering new sources of subterranean wealth on top of Saudi Arabia’s mammoth oil reserves.

“We are very excited about this news … it’s really a result of what we have been doing in the last four years,” Al Khorayef told CNBC’s Dan Murphy Wednesday.
The Saudi government announced $20 billion in deals would be signed at the annual minerals forum, and the mining minister hailed recent reforms to the kingdom’s laws and business practices as being pivotal to that windfall.
“Revamping our investment law has helped a lot of investment to come in the light, the number of licenses that we have issued in the last only two years is in the neighborhood of about 4,500,” Al Khorayef said.
“Plus the amount of spending that we have been doing in our geological survey program; these two things alone allow us to access information and data on different reserves. And the beauty about the number … is really it’s the combination of new findings, especially with the rare earth metals, plus also more deposits of what we already know, in phosphate, gold, and copper, and zinc, and so on. So it’s a combination of all of this.”
The minister noted that the figures were “only based on 30% of the Arabian shields exploration … which will continue hopefully to reach 100%.”

Saudi Arabia has developed 33 new exploration sites for mining, and aims to award foreign investors more than 30 mining exploration licenses in 2024, it announced at the forum.

The concerted effort to invest in minerals exploration and mining and issue licenses to foreign investors is part of Saudi Arabia’s Vision 2030 program, a multi-trillion dollar initiative launched by Crown Prince Mohammed bin Salman to diversify the kingdom’s economy away from oil, attract foreign investment and provide more jobs for its burgeoning youth population. Mining is seen by the Saudi government as the third industrial pillar that will move its economy away from reliance on hydrocarbons.
Asked where the country was with respect to those Vision 2030 goals, the mining minister was optimistic.
“You know, sectors such as tourism show quick results, we are maybe a slower sector. But when I see the pipeline, the different projects that we are doing, pipeline of private sector investment, pipeline infrastructure, that is really to me the true proof that we are also going to hopefully meet our targets.”
“Our job actually today in the ministry and the ecosystem is to help accelerate, move projects much faster,” he said, stressing the importance of working with investors to address their needs. Part of that is the kingdom’s new mineral exploration incentive program, announced Wednesday, that has a budget of more than $182 million.
“Generally speaking, I’m really very happy to see the progress,” Al Khorayef said. “I mean, in terms of policies, it’s all set in terms of enablers, it’s all set in terms of the infrastructure. In terms of budgeting and financing all of the infrastructures, we have been enabled. So, you know, it’s our job now to do it.” More