The World Economic Forum is currently taking place in Davos, Switzerland. Geopolitics is front and centre, with transatlantic trade tensions taking centre stage.
With inflation numbers softer recently, attention is being drawn to the employment market. Microsoft announced it is laying off 5% of its workforce globally, amounting to 11,000 roles, the latest tech company to pare back operations.
The next big date on the calendar is February 1st when the Fed meets to decide on the latest monetary policy.
The US is slated to hit the debt ceiling today, a largely bureaucratic limit on government spending, but a piece of legislation that could be used to bargain for spending cuts or other political chips, with Republicans holding a fresh majority in the House.
2. Stock market
Stocks have pulled back this week, as below-expectation earnings arrived in investors’ mailboxes.
Disappointing data for US retail sales and industrial production has sparked greater fears of an imminent recession. The S&P 500 has dipped back below 4,000.
Netflix earnings will come out today and could be a potential barometer for the tech sector following a few tough months and large-scale layoffs, alongside the continued burden of high interest rates on the sensitive industry.
Crypto is trading relatively flat this week, meaning it is still flying on the year.
Binance has won regulatory approval in Poland. Coinbase announced the disappointing news that it is pulling out of Japan, as the exchange continues to reel – it is up 50% in the last two weeks but still down 85% off highs.
The founder of Bitzlato, a Hong Kong-based crypto exchange, was charged with $700 million of financial crimes. Genesis looks like it is finally set to file for bankruptcy after getting caught up in the FTX collapse, a move that the market has expected and likely largely priced in.
The Fed meeting on February 1st is bound to inject volatility into the digital space, as crypto continues to trade off macro news.
4. Other assets
Mortgage demand jumped 28% in a week following a decline in average interest rates, giving real estate investors a boost, despite a recession appearing more likely.
Gold has pared back in the last couple of days but still remains within range of its all-time high. The metal has risen off the back of increased recession expectations and a view that the Fed could become less hawkish.
What to look out for
Overall, the Economic Forum in Davos and earnings in the stock market are taking headlines right now.
Other than that, the main story is the increased expectations of a recession overtaking inflation as the greatest concern for the market.
The Fed meeting on February 1st presents as the next pivotal date, when the latest monetary policy will be revealed and volatility should be expected
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