Good morning. It’s Friday, January 27th.
Russia responded to the US and Germany’s pledges to send battle tanks to Ukraine by saying the promises are "evidence of direct and growing US and European involvement in the conflict," while pushing on with its attacks on the country. Ukraine’s armed forces reported 55 missile attacks in nearly a dozen provinces, causing deaths and damage to critical infrastructure despite 47 of them being intercepted.
- Read on for the rest of your daily news along with these calming tunes, and have a relaxing weekend.
—Özlem, with Tanem and Can
• German inflation will remain high at the beginning of 2023 before easing over the course of the year, Economy Minister Robert Habeck said on Thursday. "We have broken the inflation trend," Habeck stated in his address to the Bundestag regarding the annual economic report released on Wednesday.
- A step back: 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.
• The US economy expanded 2.9% in the final quarter of 2022, figures from the Commerce Department revealed on Thursday, down from 3.2% growth in Q3 but above analyst estimates of a 2.6% expansion. For 2022, the economy expanded 2.1% —down from 5.9% in 2021— as robust second-half growth erased the 1.1% contraction in the first six months of the year.
- Demand: Consumer spending, which accounts for more than two-thirds of US economic activity, grew at a 2.1% rate. However, final sales to domestic purchasers —a key gauge of underlying demand which excludes inventories, government spending, and trade— rose just 0.2%, its slowest pace in 2-1/2 years and down from 1.1% in Q3.
- Looking ahead… Despite clear signs of weakness, some experts are cautiously optimistic the economy will avoid an outright recession, suffering instead a rolling downturn where sectors decline in turn rather than all at once.
• Car manufacturing in the UK fell to its lowest level in more than half a century in 2022, due to supply chain disruption and a spate of factory closures. The number of cars produced fell 9.8% to 775,014, the worst year since 1956, according to figures released by the Society of Motor Manufacturers and Traders on Thursday.
• Luxury goods group LVMH reported revenues rose 9% to reach €22.7 billion in Q4, beating estimates for a 7% increase in sales, as shoppers in Europe and the US splurged over the holiday season. That marked a deceleration from the 20% growth recorded in the first nine months of the year, due to the hit in China from lockdowns and its subsequent exit from a zero-COVID policy.
• Renault and Nissan are planning to announce the details of their revamped alliance in London on Feb. 6, Bloomberg reported. Renault is looking for the Japanese automaker to invest in its new EV business while Nissan wants Renault, its top shareholder, to sell down its roughly 43% stake. The two companies are expected to announce five joint projects covering manufacturing, technology, and further geographical development.
• Toyota's chief executive will step down after more than a decade as head of the company his grandfather founded, the automaker said on Thursday, handing the reins to the leader of its Lexus luxury brand as the Japanese giant struggles to meet the shift to electric vehicles. The 53-year-old chief branding officer Koji Sato will take over from April 1 when Akio Toyoda becomes chairman, it said.
• Elon Musk and other executives outlined Tesla’s strategy as the company prepares for a "serious" economic downturn. The company plans to cut costs on everything from parts to logistics, and drop prices by up to 20% to keep the pressure on competitors. The plan also includes expanding production at Tesla's newest plants in Berlin and Austin, Texas, and increasing the company’s in-house production of batteries.
• US defense contractor Northrop Grumman on Thursday forecasted full-year sales above analyst estimates, as it benefits from strong demand for weapons from the US and allies ramping up their arms spending amid Russia’s invasion of Ukraine. The company expects 2023 sales between $38 billion and $38.4 billion, ahead of a median estimate of $37.86 billion, and an adjusted profit of $21.85 to $22.45 per share.
- Zoom in: Northrop posted revenue of $10.03 billion in Q4, ahead of an estimate of $9.66 billion, as sales in its space systems unit jumped 23% to $3.28 billion. Overall adjusted net income stood at $7.50 per share, ahead of analyst expectations of $6.57 per share.
• Blackstone’s Q4 earnings fell 41% year-on-year as it cashed out fewer investments across key portfolios. The world's largest manager of alternative assets is facing $5 billion of withdrawal requests at its property vehicle Blackstone Property Partners, after dealing with rising redemptions at its flagship real estate income trust Blackstone Real Estate Income Trust, or Breit.
• Germany's Defense Minister Boris Pistorius said they plan to deliver Leopard 2 battle tanks to Ukraine by the end of March, a day after confirming to deliver 14 tanks from their own stock, following weeks of diplomatic pressure. Meanwhile, the US said that their delivery of 31 Abrams tanks to Ukraine will be in "weeks, not months," as Pentagon finalizes a training plan.
- The response: Russia said the promised delivery of Western tanks to Ukraine was seen as evidence of direct and growing US and EU involvement in the conflict.
• Russian missile strikes across Ukraine killed at least 11 people and injured another 11, Ukrainian officials said, as emergency power outages were imposed in some areas. The country’s armed forces chief said they intercepted 47 of the 55 missiles that were fired by Moscow.
- This just in: The US designated Russia's private military Wagner Group as a transnational criminal organization, freezing their US assets that were used to help Russia's military in the Ukraine war.
• Turkey's Foreign Minister said it was "meaningless" to hold a trilateral meeting with Finland and Sweden to discuss their NATO membership following the protests in Stockholm where a far-right protestor burned a copy of the Quran. Mevlut Cavusoglu also said that there has been no offer to evaluate Sweden's and Finland's NATO memberships separately.
• EU ministers discussed ways to curb irregular immigration and to send more people away, as the bloc's border agency Frontex reported some 330,000 unauthorized arrivals in 2022 — the highest since 2016. The ministers revived controversial ideas of fences and asylum centers outside of Europe.
- Looking ahead... The ministerial talks come ahead of an EU summit on Feb. 9-10 where leaders will also seek more returns, Reuters reported.
• Israeli forces killed at least 9 Palestinians and wounded several others during an unusual daytime raid in a flashpoint area of the occupied West Bank, Palestinian officials said. The gun battle broke out at the Jenin refugee camp, where the Palestinian Islamic Jihad militant group has a major foothold, and was meant to prevent an imminent attack against Israelis, according to the military.
• IBM announced it would cut 1.5% of its global workforce while delivering a promising sales forecast. The cuts will focus on workers remaining after spinning off the Kyndryl and Watson Health units and affect 3,900 employees, as the company will continue to hire in "higher-growth areas," CFO James Kavanaugh said. The layoffs follow similar job cuts by other big tech companies in recent months.
• Britain's Royal Mail resumed sending international packages two weeks after a cyber attack disrupted its operations. The UK postal operator had told customers to stop trying to send letters and parcels abroad on Jan. 11, causing stress for small British exporters.
• Meta said it will reinstate former US president Donald Trump’s Facebook and Instagram accounts, more than two years after it extended his "indefinite" suspension. The company stated that there would be "new guardrails in place to deter repeat offenses."
- Backstory: Trump was originally booted from Facebook in the aftermath of the attack on the US Capitol on Jan. 6th, 2021, after publicly praising the rioters. Meta's new decision comes just months after Twitter also restored the former president's account, and Trump’s push to be allowed back on Facebook ahead of the upcoming presidential primaries.
• New York startup DoNotPay said it is postponing the debut of its "robot lawyer" in court after the CEO of the company reportedly received jail threats from state bar prosecutors if he were to go through with his plan. CEO Joshua Browder had previously announced that DoNotPay AI will represent a defendant fighting a traffic ticket in the courtroom on Feb. 22, by "whisper[ing] in someone's ear exactly what to say."
🪦 Reuters special report: A Russian graveyard reveals Wagner’s prisoner army
🪖 Analysis: Biden rallies Western alliance and gives Zelensky an ‘iron fist’ against Putin
🔭 Science: New telescopes will help us SETL