Good morning. Today is Thursday, January 26th.
Germany and the US finally agreed to send main battle tanks to Ukraine, with the German government allowing allies to follow suit and send the Leopard 2 tanks they have as well. The tanks are expected to be in use on the battlefield in 3 months at the earliest. The agreement came as Ukraine's army lost ground on the battlefield, making a tactical retreat from the salt mine town of Soledar.
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—Can and Tanem
• German business sentiment improved in line with market expectations in January, according to the latest report by the Ifo Institute released on Wednesday, another sign that Europe’s largest economy may avoid a recession. The Munich-based institute’s Business Climate Index rose to 90.2 points from 88.6 points in December, showing “considerably less pessimistic expectations” among manufacturers and companies in the service sector.
Ifo Institute
- On that note: The German government revised up its economic forecast to grow by 0.2% this year from a 0.4% decline, according to its annual economic report published on Wednesday. Inflation is seen at 6% in 2023, down from the previous 7% prediction, as energy prices ease following the initial shock of the energy crisis triggered by the Ukraine war.
• Industrial production price inflation in Spain eased in December to its slowest since April 2021, the National Statistics Institute (INE) said on Wednesday, after it peaked at an all-time record of 47% in the period through March. The Industrial Price Index rose by 14.7% year-on-year in December, down from a revised 20.5% increase. In monthly terms, prices fell by 1.7% from November.
• Producer price inflation in the UK continued to slow in December, easing to its slowest pace in almost a year, the Office for National Statistics said on Wednesday. Producer input prices rose by 16.5% in the year to December, down from 18.0% in November and 20.2% in October. Meanwhile, output prices slowed to 14.7% year-on-year, down from 16.2% in the previous month.
ONS
- In other news: British income inequality climbed to a three-year high in the 2021-2022 financial year after a dip during the Covid-19 pandemic, according to the ONS. The median household income was £32,300 (€36,650) in the year to the end of March 2022, 0.6% less than the year before after adjusting for inflation.
• Australia’s inflation rate reached 7.8% in the year to December, its highest level since 1990 and more than twice the pace of wage growth, official data showed on Wednesday. The consumer price index surged 1.9% in the December quarter, outpacing market forecasts of 1.6%, driven by surging electricity prices and the cost of holiday travel and accommodation.
- On a related note: According to official figures, consumer prices in New Zealand held nearly three-decade highs last quarter but came in slightly below the central bank's forecast. Annual inflation ran at 7.2% in Q4, unchanged from Q3. On a quarter-on-quarter basis, the CPI rose 1.4%, following a 2.2% increase in Q3.
• Tesla reported Q4 earnings after the bell late Wednesday, beating market expectations on both earnings and revenue. Adjusted earnings fell to $1.19 per share from $2.52 in the same period a year ago, against a forecast of a fall to $1.13 per share. Meanwhile, income rose to $24.32 billion, slightly more than the $24.16 billion expected. Full-year vehicle deliveries amounted to around 1.31 million, a record for Tesla.
via CNBC
- On a related note: The EV maker said it would invest more than $3.6 billion to expand its Nevada Gigafactory complex with two new factories, one to mass produce its long-delayed Semi electric truck and the other to make its new 4680 battery cell.
• Microsoft issued a disappointing revenue forecast for the current quarter in its earnings call on Tuesday, causing a dip in share prices despite posting better-than-expected results for the quarter that ended on Dec. 31.
- Zoom in: Adjusted earnings came in at $2.32 per share vs. $2.29 expected, while revenue was $52.75 billion vs. $52.94 billion expected. Total revenue increased by 2% year-on-year, the slowest rate since 2016. Cloud business continued to slow, as revenue in the Intelligent Cloud segment grew by 18%, down from 26% in the same period last year.
- Looking ahead… The tech giant called for $50.5 billion to $51.5 billion in revenue for the next quarter, while analysts expected over $52 billion. In addition, Microsoft said cloud growth could slow further in the next quarter.
• Boeing's losses widened for 2022 on weakness in its defense unit as it warned of further supply chain issues, but the US planemaker reported its first yearly positive cash flow since 2018. The aeronautics giant reported a $650 million operating loss in Q4, missing market expectations. The company also warned Wednesday that it would post a loss in the current quarter, although it did not give a range.
via CNN
- The backstory: Boeing has reported only two profitable quarters in the nearly four years since the grounding of the 737 Max, which was grounded for 20 months after two fatal crashes that killed 346 people.
• AT&T reported better-than-expected results in Q4, triggering a 6% rise in its shares despite a weak earnings forecast for 2023. During Q4 of 2022, the US telecom giant added 656,000 postpaid phone subscribers and 280,000 Fiber customers during the quarter, ending the year with a 2.9 million net subscriber addition.
• Germany agreed on Wednesday to supply its Leopard 2 tanks to Ukraine, and to let its allies provide their Leopard tanks, overcoming their hesitancy to dispatch heavy weaponry as international pressure built up for them to take action. Germany aims to quickly establish two battalions of Leopards and initially provide 14 tanks from its own inventory. Defense Minister Boris Pistorius cautioned that it would take about three months for the "best battle tanks in the world" to be deployed in Ukraine.
via Reuters
- Furthermore: The US is finalizing plans to approve sending around 31 M1 Abrams tanks to Ukraine according to US officials. Although it could take months for them to be delivered and to train troops to use the tanks effectively, officials added.
- Good to know: Germany had indicated last week that they would only approve sending its Leopard tanks to Ukraine if the US also agreed to send its own M1 Abrams tanks, a move US resisted due to their tanks requiring extensive and complex maintenance and training.
• Ukrainian forces retreated from Soledar, a town in the eastern Donbas region where intense fighting has been going on, and soldiers pulled back to previously prepared defensive positions, an army spokesperson said. He added that the army retreated from the salt-mining town near the strategic city of Bakhmut to "preserve the lives of the personnel," marking it a battlefield triumph for Russia after a series of setbacks in its invasion.
• The European Council must grant public access to documents circulated in their working groups for adopting laws, an EU court ruled on Wednesday, as efforts to prise open the bloc's legislative machine make further progress. Transparency and civil rights advocates have long called for more openness at the Council and Commission discussions on key issues, and that documents circulated among working groups should be made available.
• Chris Hipkins was sworn in as New Zealand's new Prime Minister following the former PM Jacinda Ardern's unexpected resignation last week. Hipkins, who promised a "back-to-basics" approach to the economy, has less than nine months before facing a tough general election with polls indicating his Labour Party is trailing its conservative opposition.
• Amazon union workers went on strike for the first time in the UK, demanding better pay and working conditions as they add to a wave of industrial labor protests across the country triggered by soaring inflation. 98% of the GMB union workers at Amazon's Coventry fulfillment center voted for the walkout, rejecting a "derisory" £0.50 pay raise, and are demanding an increase to £15 an hour.
via Engadget
• Microsoft acknowledged an outage in its various services including Teams, Xbox Live, Outlook, and Microsoft 365 suite, as they were inaccessible to thousands of users around the world, and said it was working on a fix. A popular service reliability tracker DownDetector said the number of outage reports dropped considerably throughout the day.
• A new Twitter whistleblower spoke to the US Congress and the Federal Trade Commission (FTC) that any Twitter employee still has access to an internal program formerly called "GodMode" that lets them tweet from any account, Washington Post reported. The former employee alleges that the now-called "privileged mode", which also came up in 2020 when teenagers breached internal systems and tweeted from accounts like Barack Obama and Joe Biden, remains on the laptop of any engineer who wants it.
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