It’s been an interesting week on the markets. The S&P500 & Bitcoin put in positive performances while most other markets were essentially flat. The week did mask a lot of intraday volatility as investors and traders tried to make sense of conflicting narratives of what the year will hold. Market strategists are divided on what the year will bring, ranging from moderate upsides (Goldman Sachs) to a vicious bear market (David Rosenberg – who is a bit of a perma-bear).

Source: Trading Economics & S&P Cap IQ

US inflation came in a bit higher than expected. December’s print was 3.4% vs. 3.1% in November. Core inflation was 3.9% vs. estimates of 3.8%. Shelter costs drove most of the increase in the numbers. Bond yields jumped just after the announcement but settled back later in the day. Some still expect the US Federal Reserve to cut rates in March, while others (me included) expect the cuts to come later in the spring. Wages have kept up with price increases. According to the Bureau of Labor Statistics real (inflation adjusted) annual wages grew by 0.8% in 2023.

Saudi Arabia made a surprise cut to its oil price on Monday. The price cut reflects reduced demand, higher supplies, and increased competition.  The cut applies to “Arab light” shipments to Asia where a sluggish economy in China is reducing demand. The price cut spilled over to other markets initially but has been reversed by ongoing attacks on shipping in the Red Sea.

Tesla has some serious competition nipping at its heels. Chinese electric & hybrid car manufacturer BYD sold a total of 3 million vehicles last year vs. Tesla’s 1.8 million. All of Tesla’s cars are pure electric (BEV) while BYD sold a mixture of BEVs (1.6 million) and hybrid (like a Toyota Prius).

Honda is getting ready to up its game in the BEV market. Talks are under in Canada to build an electric vehicle plant in Ontario. Honda is reportedly prepared to invest $18.4 billion in a car and battery plant. Honda already has an EV hub in Ohio where it expects to start production in late 2025. A Canadian plant (if it becomes a reality) is expected to begin production in 2028. Honda plans to be a 100% EV producer by 2040.

If you like technology and gadgets, then you will enjoy this report from The Verge on the annual Tech gathering in Las Vegas, CES. The annual event showcases the Tech industries latest products and concepts for future products. It covers everything from laptops and ear buds to electric vehicles (which compete as much on software as anything else).

Microsoft struck a deal with South Korea’s solar panel manufacturer Qcells to buy 12 gigawatts of solar panels. That is enough to power 1.8 million homes. The panels will be produced in Qcell’s new factory in Georgia. Microsoft has said it would like to source 100% of its power needs from renewable sources by 2025.

There is a theme, of course, to the preceding stories, climate change. The climate numbers are in for 2023 and it was the warmest year on record. The average temperature was 1.48 degrees warmer than the pre-industrial era. December’s average was 1.78 degrees higher than the pre-industrial average for the month. Ironically, it is snowing outside as I write this, but that is weather not climate.

Yes, it’s January, it’s snowing, and some of us (not me I’ve already had my time in the sun) are dreaming about getaways to warmer climes such as Mexico, the Caribbean, and of course California, so on that note we’ll leave you with this from the Mamas & the Papas… enjoy.

Russ Lazaruk, RIAC, CIWM, CIM, FCSI
Managing Director & Portfolio Manager
Tel 250.999.3329.

www.ncpdfo.com