Good morning. It’s Friday, January 6th.
New concern over the Covid-19 pandemic has emerged in Europe as China plans to ease travel restrictions despite a wave of infections. Germany, in line with the European Commission's advice for all member states, joined Italy, France, and Spain to require travelers from China to take tests before entry to the country. China, in the meantime, has been criticized by WHO for "under-representing" the impact of the outbreak.
- Scroll down to find out more about that and the other news of the day, and remember to get your "Winter Feels" on your way.
—Özlem, with Tanem and Can
• Italian inflation slowed in December, figures released by the ISTAT national statistics institute showed on Thursday, mirroring a trend across Europe’s major economies and fueling optimism that the worst price gains since the euro was introduced may have peaked.
- By the numbers: According to preliminary estimates, the Italian harmonized index of consumer prices (HICP) increased by 12.3% on an annual basis, down from 12.6% in November. In 2022, the average annual rate of increase of HICP was 8.7%, compared with a gain of 1.9% in 2021. So-called core inflation —which excludes volatile energy and fresh food prices— was up by 5.8% year-on-year.
- Looking ahead… The reading reinforced hopes that months of energy-driven inflation is starting to retreat — something that could allow the ECB to increase interest rates less aggressively. Inflation data for the eurozone as a whole, due Friday, are also expected to show a deceleration into single digits.
• German exports unexpectedly fell in November as high inflation and market uncertainty continue to weigh on Europe's largest economy despite easing supply chain disruptions. Exports fell by 0.3% on the month, data from Destatis showed on Thursday, in contrast to a forecast of 0.2% growth. October's figures were revised up to a growth of 0.8% from an initially reported 0.6% fall.
- Furthermore: Imports also posted a bigger-than-expected drop of 3.3% in November, compared with the consensus for a 0.5% decline. Shipments to Germany's top export partner, the US, were down 1.5% on the month, while exports to other EU members fell by 0.4%.
• New car sales in the UK rose by 18% to about 128,000 in December, its fifth consecutive month of gains, according to preliminary industry data released by the Society of Motor Manufacturers and Traders (SMMT) on Thursday. However, overall registrations for 2022 fell 2% to 1.61 million units as compared with 2021, amid pandemic-related global parts shortages, said the SMMT.
- Electric vehicles: Battery EVs claimed their largest ever monthly market share of 32.9% of registrations in December, while for 2022 they comprised 16.6%, as ongoing supply chain snags led manufacturers to prioritize deliveries of the latest zero-emission capable models.
• Inflation in the US has not "turned the corner yet" and it is too early for the Fed to declare victory in its fight against surging prices, IMF deputy managing director Gita Gopinath warned in an interview with the Financial Times. The fund’s second-in-command urged the US central bank to press ahead with rate rises this year despite a recent moderation in headline inflation.
- In other news: The US trade deficit narrowed to $61.5 billion in November 2022, its lowest level since September 2020, and below forecasts of a $73 billion gap. Total exports were down 2% to $251.9 billion, while imports of goods and services declined 6.4% to $313.4 billion.
• Sweden-based Volvo said its car sales grew in December but dropped for the full year due to "challenges across the supply chain, as well as production restraints caused by component shortages and Covid-related lockdowns in China." December sales were up 13% year-on-year to 72,663 cars, while 2022 sales fell 12% to 615,121 cars.
• Deliveries from Tesla's Shanghai factory slowed in December as production was temporarily suspended due to equipment upgrades and low consumer demand, despite introducing purchase incentives, including price cuts and insurance subsidies. Tesla shipped 55,796 China-made vehicles in December, almost half of November’s record numbers.
• Norway’s state-controlled oil and gas group Equinor and German utility RWE signed an agreement on Thursday to build new gas power plants in Germany. The plants will first run on gas, then on hydrogen produced from gas, and finally on hydrogen made using renewable energy. The agreement is a part of plans by Norway and Germany to partner extensively for greener energy.
• McDonald’s is leaving Kazakhstan, after only six years, as the invasion of Ukraine caused disruptions in the Central Asian country’s meat supplies from Russia. Although Kazakh businesses aren’t covered by sanctions against Moscow, McDonald’s —which left Russia following the invasion— banned its local franchisee from procuring meat patties from Russian suppliers.
• Bed Bath & Beyond warned that it may face a bankruptcy filing as a possible outcome, the home goods chain said in a regulatory filing Thursday, stating there is "substantial doubt about the company’s ability to continue" due to its worsening financial situation.
- Furthermore: The company added that it is exploring strategic alternatives, including restructuring its debt, seeking additional cash, selling assets, and filing for bankruptcy.
• Fighting intensified in Ukraine's eastern regions with Kyiv forces trying to push back Russian troops, as Ukraine's President Volodymyr Zelenskiy asked the West to provide heavy tanks to his army. Ukraine's military said they are focused on an offensive in Bakhmut, and the neighboring Luhansk region governor said their troops were recapturing areas "step-by-step" but that it is not "happening fast."
- Helping hand(s): France, Germany, and the US are to send armored vehicles to Ukraine, Bloomberg reported, which would be a major upgrade in firepower that Kyiv has been seeking to fight Russian forces.
- In other news: Yevgeny Prigozhin, a US-sanctioned Putin ally who is also the founder of Russia's Wagner group, granted freedom to the first Russian convicts recruited to fight the most dangerous battles in Ukraine.
- This just in: President Vladimir Putin ordered Russian troops to observe a 36-hour ceasefire on Jan. 6-7 for Orthodox Christmas. Ukraine’s presidential adviser Mykhailo Podolyak called the announcement "hypocrisy" and added Russia must leave "occupied territories" in Ukraine before any "temporary truce."
- Some background: Prior to Putin's announcement, Podolyak responded to Patriarch Kirill of Moscow's appeal for a "Christmas truce," saying the statement was a "cynical trap and an element of propaganda." Kirill has been a vocal supporter of the war in Ukraine and gave a sermon in which he said that "military duty washes away all sins."
• EU officials are "strongly recommending" that all member states require negative Covid-19 tests on arrivals from China, just as travel in and out of the country is about to get easier on Sunday, as part of easing its zero-Covid policy. The recommendation comes a day after the European Commission said an "overwhelming" number of member states have favored restrictions on Chinese arrivals.
- Zoom in: Germany joined the list of EU countries to change their entry rules for arrivals from China, and will require at least a rapid Covid-19 test to enter the country, the Health Minister said.
- Meanwhile: The World Health Organization accused China of "under-representing" the true impact of its Covid-19 outbreak and urged the government to share more data about hospital admissions and deaths.
• Pope Francis led the funeral of former Pope Benedict, who was buried under St. Peter's Basilica, bringing the end to a decade where a former and present pope lived side-by-side in the Vatican after Benedict became the first pope to resign in 600 years, back in 2013. Tens of thousands of mourners gathered to bid farewell, with some calling for the pontiff that symbolized a more traditional Church to be made a saint.
- Controversy: Although many have praised Benedict since his death, the former pope had been criticized heavily for seeking to protect the Church against sexual abuse allegations.
• Amazon CEO Andy Jassy wrote in a blog post that the company will lay off more than 18,000 employees. In November, reports came out that the firm will eliminate 10,000 jobs but the number of planned job cuts has been expanded. Jassy said the majority of the layoffs will be from the retail and recruiting divisions. The e-commerce giant admitted they hired too rapidly during the Covid pandemic.
- Zoom out: Tech companies cut the most jobs in the US in December with 16,193, according to a report by the employment firm Challenger, Gray & Christmas. In 2022, tech companies laid off 97,171 employees, up 649% from last year. US tech firms downsized workforces to brace for the prospect of difficult economic times looming ahead.
• Sony and Honda revealed the prototype of their electric vehicle, Afeela, at the Consumer Electronics Show (CES) in Las Vegas. Nearly a year ago, the two companies announced their plans to jointly make and sell EVs. Sony’s CEO Konichira Yoshida drove the four-door sedan on stage on Wednesday, and said the company prioritizes transforming vehicles into "moving entertainment spaces."
• FTX's former top lawyer Daniel Friedberg cooperated with US prosecutors as they investigate the crypto firm's collapse, adding pressure on founder Sam Bankman-Fried who was arrested on criminal fraud charges last month. Friedberg gave details about how Bankman-Fried's hedge fund Alameda Research functioned in a Nov. 22 meeting, Reuters reported.
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