New Year Optimism Could Be Short-Lived. Markets Face a Tide of Gloom.
Happy New Year #HappyNewYear
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Stocks may seem determined to begin 2023 in upbeat fashion after their worst year since 2008, but there’s plenty of doom and gloom predicted.
There was no happy new year message from the head of the International Monetary Fund, Kristalina Georgieva. In fact, she said 2023 will be “tougher” than last year, with ‘one third of the world economy’ expected to enter recession, on CBS’s Face the Nation.
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In a sliver of good news, she said the U.S. is the most resilient economy and may avoid a recession, citing the strong labor market. The big banks don’t share that optimism, though, with more than two-thirds of economists at 23 large financial institutions predicting a U.S. recession, according to The Wall Street Journal.
Even if a U.S. recession is avoided due to labor market strength, as Georgieva notes, the Federal Reserve is likely to keep interest rates higher for longer in 2023, posing further problems for the economy and the stock market.
Investors won’t have to wait long to find out if the strength of the jobs market is holding up. The first trading week of the year will be punctuated by employment data, including December’s jobs report Friday as well as job openings and private payrolls data earlier in the week.
Minutes from the Fed’s December meeting are also due to be released Wednesday, offering more clues as to the future path of its aggressive rate-hiking.
While U.S. stocks look set to rise on the first trading day of the year, the early 2023 optimism may not last the week.
—Callum Keown
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*** Tesla Deliveries for 2022 Miss the Mark Amid Stock Drop
Tesla shareholders got more disappointing news on Monday, when the electric-vehicles maker said it delivered fewer units than its target for 2022, adding a sour note to a year when the stock sank 65% and lost $675 billion in market value amid softening demand and Covid-19 production interruptions.
What’s Next: Analysts expect Tesla deliveries to increase about 40% in 2023, hitting 1.8 million to 1.9 million units. The company said it would have an investor day on March 1 live-streamed from its Texas factory, but some institutional and retail investors have the opportunity to attend in person.
—Al Root and Liz Moyer
*** Southwest Airlines’ Chaos Eases—It’s Still Canceling Flights
Southwest Airlines’ operations finally appear to be returning to normal after a winter storm and subsequent technology issues caused mass cancellations over the holiday season.
What’s Next: Southwest said passengers whose flights were canceled or significantly delayed between Dec. 24 and Jan. 2 can request a refund. Customers can also rebook without paying additional charges. CEO Bob Jordan told employees Sunday there are plans to invest in tools and technology and processes.
—Callum Keown
*** TikTok Continues to Draw Scrutiny From Lawmakers
Lawmakers want to further restrict the video sharing app TikTok even after a ban of it on federal government-owned devices was tucked into the spending bill approved in December. Critics of the app, owned by Beijing-based ByteDance, cite security concerns because China’s government could seek data on U.S. users.
What’s Next: The Rapid City, S.D., city council will consider banning TikTok from city-owned devices and networks at a meeting today. One councilman called TikTok a security threat, The Wall Street Journal reported, while another said the app is used to recruit police officers and firefighters and reach younger residents.
—Janet H. Cho
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner