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January 8, 2023 – rdspinvestments

January 8, 2023

China reopens borders in final farewell to zero-COVID

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China reopens borders in final farewell to zero-COVID© Reuters. Passengers arriving on international flights wait in line next to a police officer wearing personal protective equipment (PPE) and speaking with a woman at the airport in Chengdu, China January 6, 2023. REUTERS/Staff

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By Joyce Zhou and Yew Lun Tian

HONG KONG/BEIJING (Reuters) -Travellers streamed into China by air, land and sea on Sunday, many eager for long-awaited reunions, as Beijing opened borders that have been all but shut since the start of the COVID-19 pandemic.

After three years, mainland China opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine, dismantling a final pillar of a zero-COVID policy that had shielded China’s 1.4 billion people from the virus but also cut them off from the rest of the world.

China’s easing over the past month of one of the world’s tightest COVID regimes followed historic protests against a policy that included frequent testing, curbs on movement and mass lockdowns that heavily damaged the second-biggest economy.

Long queues formed at the Hong Kong international airport’s check-in counters for flights to mainland cities including Beijing, Tianjin and Xiamen. Hong Kong media outlets estimated that thousands were crossing.

“I’m so happy, so happy, so excited. I haven’t seen my parents for many years,” said Hong Kong resident Teresa Chow as she and dozens of other travellers prepared to cross into mainland China from Hong Kong’s Lok Ma Chau checkpoint.

“My parents are not in good health and I couldn’t go back to see them even when they had colon cancer, so I’m really happy to go back and see them now,” she said.

Investors hope the reopening will reinvigorate a $17-trillion economy suffering its slowest growth in nearly half a century. But the abrupt policy reversal has triggered a massive wave of infections that is overwhelming some hospitals and causing business disruptions.

The border opening follows Saturday’s start of “chun yun”, the 40-day period of Lunar New Year travel, which before the pandemic was the world’s largest annual migration, as people returned to their hometowns or took holidays with family.

Some 2 billion trips are expected this season, nearly double last year’s movement and recovering to 70% of 2019 levels, the government says.

Many Chinese are also expected to start travelling abroad, a long-awaited shift for tourist spots in countries such as Thailand and Indonesia. But several governments – worried about China’s COVID spike – are imposing curbs on travellers from the country.

Travel will not quickly return to pre-pandemic levels due to such factors as a dearth of international flights, analysts say.

China on Sunday resumed issuing passports and travel visas for mainland residents, and ordinary visas and residence permits for foreigners. Beijing has quotas on the number of people who can travel between Hong Kong and China each day.

VISITORS, HOMECOMINGS

    At the Beijing Capital International Airport, families and friends exchanged emotional hugs and greetings with passengers arriving from places such as Hong Kong, Warsaw and Frankfurt, meetings impossible just a day earlier.

“I’ve been looking forward to the reopening for a long time. Finally we are reconnected with the world. I’m thrilled, I can’t believe it’s happening,” said a businesswoman surnamed Shen, 55, who flew in from Hong Kong.

Others waiting at the airport included a group of women with long-lens cameras hoping to catch glimpse of boy band Tempest, the first idol group from South Korea to enter China in three years.

“It’s so good to see them in person! They are much more handsome and taller than I expected,” said a 19-year-old who gave her name as Xiny, after chasing the seven-member group, who arrived in Beijing from Seoul.

CONCERNS OVER RURAL AREAS

China downgraded its COVID management to Category B from A, which had allowed local authorities to quarantine patients and their close contacts and lock down regions.

But concerns remain that the great migration of city workers to their hometowns and reopening of borders may cause a surge in infections in smaller towns and rural areas that are less-equipped with intensive-care beds and ventilators.

The World Health Organisation said on Wednesday that China’s COVID data underrepresents the number of hospitalisations and deaths from the disease.

Chinese officials and state media defended the handling of the outbreak, playing down the severity of the surge and denouncing foreign travel requirements on Chinese residents.

Jiao Yahui, an official from the National Health Commission, said in an interview published by state broadcaster CCTV on Sunday that demand for emergency and critical care in China’s large cities had likely peaked but was rising fast in small and midsize cities and rural areas due to the Lunar New Year travel.

Some 80% of ICU beds in China’s top- and second-tier hospitals were in use, up from 54% on Dec. 25, she said, adding that the country’s medical services to treat COVID were facing an “unprecedented challenge”.

Health officials told a news conference they would not rule out the possibility of taking emergency COVID prevention measures such as suspending nonessential large-scale activities and business at large entertainment venues to deal with large outbreaks.

China’s Center for Disease Control and Prevention announced two new daily COVID deaths on the mainland, compared with three a day earlier, bringing the official death toll to 5,269.

Christmas joy and anger for rival Orthodox churches in historic Kyiv monastery

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World 20 minutes ago (Jan 08, 2023 03:11AM ET)

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Christmas joy and anger for rival Orthodox churches in historic Kyiv monastery© Reuters. Metropolitan Epifaniy I, head of the Orthodox Church of Ukraine, leads for the first time a Christmas service inside Uspenskyi (Holy Dormition) Cathedral, at the compound of the Kyiv Pechersk Lavra monastery, previously used by Ukrainian Orthodox Church b

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(In paragraphs 19 and 20 inserts context on Bartholomew)

By Max Hunder

KYIV (Reuters) -Tears of joy streamed down worshippers’ faces as Ukraine’s main church celebrated a “return” to Kyiv’s Cathedral of the Assumption on Orthodox Christmas day, shortly after taking control of it from a rival church with alleged ties to Russia.

The golden-domed cathedral, of huge cultural and religious significance, sits on a high hill in the centre of Kyiv by the river Dnipro, and forms part of the 980-year-old Kyiv-Pechersk Lavra monastery complex, also containing chapels and administrative buildings.

It has become a focus of a bitter conflict between Ukraine’s Orthodox communities, triggered by Russia’s invasion.

Members of the Orthodox Church of Ukraine (OCU), Ukraine’s largest, piled into the cathedral’s ornate interior on Saturday, to hear the first-ever Ukrainian-language service in the cathedral.

“During these days of festivities, with strong feelings we ask God: Help us to defeat the enemy, who brought grief into our home. Help us to finally drive out the foreign invasion from the Ukrainian land,” said the OCU’s Metropolitan Epifaniy I.

Vadym Storozhyk, a 50-year-old Kyiv city councillor, said the Christmas service meant to him a “return” of a holy site under Ukraine’s control.

“Thirty years after renewing our history and gaining our independence — we return to our holy places, to our (spiritual) sources,” he said.

Ukraine’s culture minister, Oleksandr Tkachenko, who attended the service with the speaker of Ukraine’s parliament, posted a message on Facebook (NASDAQ:) celebrating what he said was the end of three-and-a-half centuries of the Kyiv-Pechersk Lavra’s “capture” by Moscow.

Ukraine’s Orthodox Church, in its various iterations, has been subordinate to Moscow since the 17th century.

In a note at the bottom of his post, Tkachenko hinted at a major change to Ukraine’s Christmas celebrations, hitherto always held on Jan. 7, the same date as Russia and several other Orthodox-majority countries.

“I hope that this year all the churches will come to an agreement and we will celebrate Christmas together on December 25th,” he wrote.

Ukraine has about 30 million Orthodox believers, divided between different church communities. The war, now in its 11th month, has led many Ukrainians to rally round the OCU, which they see as more pro-Ukrainian than its rival, the Ukrainian Orthodox Church (UOC).

The UOC was officially under the wing of Russia’s Orthodox Church until May 2022, but announced a severing of ties due to the Moscow church’s support for the war.

President Vladimir Putin on Saturday praised the Russian Orthodox Church for supporting Moscow’s forces fighting in Ukraine in an Orthodox Christmas message and called it an important stabilising force in society.

Despite cutting ties, the UOC still faces allegations of pro-Russian views and direct collaboration with Moscow, which it denies, from Ukraine’s government and from much of Ukraine’s press and civil society. The UOC says it is the victim of a political witch hunt by its enemies in government.

The UOC was evicted from the cathedral after its lease from the government expired.

The handover of the cathedral took many by surprise – an OCU priest, Vasyl Rudnytskyi, looked stunned as he walked towards the building’s gates amid the deafening pealing of bells.

“I didn’t even consider the possibility of this two weeks ago, or the fact that we would celebrate Jesus’ birth in such a meaningful place for the Ukrainian people,” he said.

RIVALS

The OCU was established in 2019 and recognised as Ukraine’s official branch of Orthodoxy by Ecumenical Patriarch Bartholomew, the global head of the Orthodox Church. Bartholomew is based in Istanbul, known in the Orthodox Christian world by its old name, Constantinople.

That decision infuriated Russia’s Orthodox Church, as Orthodox leadership had previously recognised the UOC, then under Moscow’s rule, as the legitimate Ukrainian church.

Some of the UOC’s clergy and many of its worshippers moved to the OCU, to the former organisation’s dismay. Both churches say the other is canonically illegitimate. Although the OCU soon had more worshippers than the old church, the UOC maintained control of over 12,000 churches, including the Kyiv-Pechersk Lavra complex.

Ukraine’s government institutions and local press often refer to the UOC as the “Moscow Patriarchate”, a label the church rejects. A poll last August showed the UOC only retaining 20% of its worshippers from 2021, suggesting many had left it since the invasion, but the church told Reuters this data didn’t correspond to reality.

The UOC’s spokesman, Metropolitan Kliment, told Reuters the government’s actions were a “provocation intended to upset and humiliate millions of UOC worshippers.”

Lyudmyla, a 69-year-old worshipper, said she feared the government was biased against the UOC.

“I don’t like this. We need to be united not divided, right now. And this could lead to some kind of religious split (in our society),” she said.

The UOC’s monasteries and churches, including the Kyiv-Pechersk Lavra, faced a wave of searches by Ukrainian security forces and the police have announced a string of investigations.

Authorities said they found pro-Russian literature and Russian citizens being harboured on church premises, something the UOC denied.

Energy & precious metals – weekly review and outlook

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Commodities Jan 08, 2023 04:10AM ET

Energy & precious metals - weekly review and outlook© Reuters

By Barani Krishnan

Investing.com — China has kicked off the year by buying large quantities of oil despite its worrying COVID situation. But before bulls in the market get excited again at the prospect of $100 a barrel, the Chinese actions seemed geared more towards storing crude than buying it for immediate use. In the energy universe, storage is a dirty word that tends to depress, rather than lift, prices.

China has also increased export quotas for refined oil products in the first batch for 2023, signaling expectations of poor domestic demand. Its focus is on the international market as independent refiners in the country see higher profits from processing Russian oil, made cheaper by the day by Western sanctions on Moscow that give the Chinese leverage to negotiate for steeper discounts.

In a parallel world, Saudi Arabia’s Aramco (TADAWUL:) oil company this week slashed the selling price of its benchmark Arab Light crude to lows not seen since November 2021. It was a calculated move to keep Saudi barrels attractive amid persistent discounting on Russian oil after the G7 price cap of $60 per barrel on seaborne Russian crude.

Already the world’s largest oil importer, China was reported on Friday to have bought five million barrels of mostly-Kazakh crude for collection from a port in the Black Sea next month, according to traders cited by Bloomberg. In daily flow terms, it’s the largest Kazakh crude purchase since at least the start of 2021.

The purchase matters because Kazakh oil has been the preserve of European refiners, especially since the middle of last year when companies in the European Union cut purchases from Russia following the Ukraine invasion.

The Chinese purchase seems politically motivated as well, as Kazakhstan pivots from Moscow towards Beijing, after the Ukraine invasion raised concerns about which territories in the region might be on Russia’s hit list next.

Physical traders report that Europe’s own demand for Kazakh oil, along with Chinese buying, has raised prices for the commodity. The so-called CPC Blend crude from Kazakhstan has rallied to a discount of $3 a barrel versus Dated Brent, an international marker for physical oil transactions. As recently as a month ago, the CPC Blend was at $8 below Dated Brent. 

China International United Petroleum & Chemicals Co, or Unipec, has also bought at least 2 million barrels of crude from Norway’s Johan Sverdrup oil field for January loading. Johan Sverdrup oil is now fetching $3 to $4 a barrel below Dated Brent, having been at a discount of more than $6 in early December. 

But the bump-up in pricing for Kazakh CPC and Johan Sverdrup crude do not go anywhere near to mitigating the discount on Russian barrels. Before we explore  Russian oil pricing in greater detail, let’s take a look at China’s demand for oil, which is a preeminent factor in valuing crude.

Demand for oil in China typically rises each year after the Lunar New Year, which, this year, is due at the end of January. With Beijing going from a zero-COVID to a que-sera-sera COVID policy, there’s no telling now how its oil demand will fare. Data for the just-ended week showed Chinese manufacturing activity shrank for a fifth straight month in December, as the country grappled with an unprecedented spike in coronavirus cases. 

Still, some oil bulls are banking on a near-term springback in Chinese demand to lead to three-digit pricing.

“Despite all of this talk of slowing demand, which is happening due to higher [U.S. interest] rates and warm weather, the reality is if you look at the big picture, supplies are still way too tight,” said Phil Flynn, an analyst at Chicago’s Price Futures Group and one of the most vocal on the long side of the trade. “The [supplies] will get even tighter if normal weather returns and will spike as China revs up from COVID lockdowns.”

Some reject that notion.

“To me, the market is oversupplied by at least 1 million barrels a day,” said Gary Ross, a veteran oil consultant-turned-hedge-fund-manager at Black Gold Investors. “We are going to have large stock builds. In a couple of weeks, you’re going to be building 10 million barrels a week; how is the market going to handle that?” 

If China’s economy performs slower than expected, then the large quantities of oil it is buying now will likely end up in storage. Such an expansion in storage could widen the contango in oil. Both U.S. crude and Brent are now in contango, a market dynamic where longer-dated oil is priced higher than nearby contracts, making it unprofitable for those trying to hold a futures position by rolling out of the expiring front-month into the next closest contract. 

At Friday’s close, the contango between the February and March contracts in U.S. crude was at 27 cents a barrel. The difference between March and April Brent was 18 cents. By historical standards, the price gaps are small. But they could grow if the storage situation expands.

To make up for its tepid oil demand at home, China is ramping up output of refined oil products for export. The result would be more competition to other international suppliers of refined products, including the United States, and more pricing pressure on this front. 

In past years, the Chinese were major suppliers of refined products to the Pacific markets. But they slashed their refined production abruptly last year as domestic demand for oil fell — a decision that the powers-that-be in Beijing are presumably lamenting.

“The Chinese totally missed out on last year’s huge crack spreads for refined products by limiting the capacity of their independent refiners,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The Chinese thought they were protecting their internal oil market with the curtailment in production, without realizing the damage they were causing to their export market for refined products. They have also woken up to that now.”

On the other end, “the Saudis have woken up to the fact that the Russians are eating their lunch”, notes Kilduff.

Russian Urals crude is going to Chinese and Indian buyers at around $58-$59 a barrel now versus Brent’s close on Friday at under $79. China is, meanwhile, buying so-called ESPO crude from Siberia at above the G7’s $60 price cap because independent refiners, mainly located in the eastern province of Shandong, are attracted to the oil’s short shipping distance and low-sulfur quality, traders said.

ESPO crude – shipped on the 4,188km-long Eastern Siberia Pacific Ocean pipeline – is oil from fields at Tomsk Oblast and the Khanty-Mansi Autonomous Okrug in Western Siberia.

Spot discounts for ESPO crude have widened with at least one January-arrival ESPO cargo sold to an independent refiner last week at a discount of around $6.50 per barrel against the March ICE Brent price on a delivery-ex-ship (DES) basis, Reuters reported, citing two traders with knowledge of the deal. 

Other cargoes for the same delivery month had traded at around a discount of about $5 a barrel, widening from a discount of $4 in the prior week, the traders said.

As most Chinese refiners will soon wrap up purchases of crude to be delivered ahead of the Lunar New Year on Jan. 20, ESPO sellers are also keen to clear cargoes on hand even at slightly lower prices, according to a Shandong-based oil trading source.

“Chinese buyers are bidding at lower prices as they now have bigger leverage on price negotiation,” the person said.

The price war deepened in recent days after the Saudis dropped the Official Selling Price on their Arab Light crude, said Kilduff of Again Capital.

“The Saudis anticipate that by dropping their price, those who want oil, even on a deferred basis, will lock in now,” said Kilduff. “But if demand for spot crude is weak, it could lead to builds in oil storage – exactly what will encourage the contango to grow.” 

Kilduff also observed that Russia’s gamble on Ukraine hasn’t gone as Vladimir Putin had expected. “The Ukraine premium in oil now is just about $10 a barrel. A year ago, it was around $30, along with another $30 to $40 in pandemic-related supply chain disruptions. That’s what pushed crude to 14-year highs of between $130 and $140 in early March. Now, we’re trading closer to realistic value.”

Oil: Market Settlements and Activity 

New York-traded crude registered a final trade of $73.73 per barrel, after officially ending Friday’s session at $73.77, up just 10 cents, or 0.1%. 

For the week, WTI, as the U.S. crude benchmark is known, was down 8.3%, posting its largest weekly drop since the week ended Dec. 2. The dismal weekly showing came after WTI’s drop of 10% between Tuesday and Wednesday – the worst for any first two days of a trading year in oil since 1991. 

London-traded crude registered a final trade of $78.60 per barrel, after officially ending Friday’s session at $78.57, down 12 cents, or 0.2%. The global crude benchmark reached as high as $80.56 earlier on Friday. For the week, Brent was down 8.5%.

The crude price collapse in the first two days of 2023 came on the back of fresh warnings about a global recession and on fears of China falling into a coronavirus crisis similar to the one it experienced three years ago.

Friday’s initial advance in oil, which followed Thursday’s rebound, came as moderating U.S. jobs growth signaled more slowing ofby the Federal Reserve.

Oil: Price Outlook

Sunil Kumar Dixit, chief technical strategist at SKCharting.com, noted that WTI finished the week under extreme bearish pressure as prices faced rejection from the $81.50 key resistance zone built around the 50-Day Exponential Moving Average.

“Going further, a sustained break below $72 will prompt a quick drop to the horizontal support of $70.”  

“If this $70 level creates demand, WTI can resume its advance towards the broken-support-turned-resistance zone of the 5-week EMA $77, followed by the 50-Day EMA of 79.50 and extend its rebound toward the 100-week Simple Moving Average of $82.90.”

Dixit, however, cautions that if bulls fail to defend the $72 & $70 support, “the next bearish wave will lead WTI to reach the 200 week SMA of $65.50.”

Natural Gas: Market Settlements and Activity 

On the natural gas front, prices have tumbled for a third week in a row, forcing America’s premier heating fuel down 17% on the week and more than 50% lower over a three-week period.

Gas futures’ benchmark contact on the New York Mercantile Exchange’s Henry Hub did a final trade of $3.761 per million British thermal units after officially settling Friday’s session at $3.71 per mmBtu. February gas was down 10 cents, or 2.6% on the day. For the week, it was off 76.50 cents, or 17.1%.

The tumble came as market participants looked beyond the weekly draw in U.S. gas inventories reported by the Energy Information Administration, or EIA, to focus on more unseasonable warmth expected for this winter.

Natural Gas: Price Outlook

Dixit says natural gas could return to above $4, although the chance for a sustained push higher appeared small for now.

“As long as prices keep above $3.60, some upward move towards $3.88 followed by a gap area of $4.2 is likely,” he said.

“Yet, sustainability below $3.60 may extend the drop to $3.03.”

Gold: Market Settlements and Activity 

Gold futures’ benchmark contract on New York’s Comex did a final trade of $1,870.50 per ounce after officially ending Friday’s session at $1,869.70. For the day, February gold was up $29.10, or 1.6%.

For the week, it rose around 2.4%, rising for a sixth time in seven weeks. Friday’s session peak of $1,870.15 was just shy of Wednesday’s high of $1,871.30 — which was the loftiest level for Comex gold since June 17.

The , which is more closely followed than futures by some traders, settled at $1,865.97., up $32.92, or 1.8%, on the day. For the week, it rose 2.1%. Spot gold’s intraday peak for Friday was $1,869.88 – also the highest since June 17.

Gold: Price Outlook 

Gold bulls will need to defend the $1,850-$1,830 support areas in order to keep alive the momentum in the yellow metal and test the next level of $1,896. 

“Spot gold is known to spend a couple of weeks into momentum distribution and accumulation which is mostly perceived as indecision. This often happens before the next leg up begins.”

“Substantial buying above the $1,900 line will bring the much-needed $1,940-$1,970 bull targets in closer proximity.”

The uptrend will be invalidated by any breakthrough below $1,825, Dixit warns.

Disclaimer: Barani Krishnan does not hold positions in the commodities and securities he writes about.

Mercedes expects double-digit growth in India in 2023 despite weak rupee

Mercedes expects double-digit growth in India in 2023 despite weak rupee© Reuters. FILE PHOTO: Different car models of Mercedes-Benz are parked at the company’s vehicle assembly plant in Chakan, outside Pune, India, June 11, 2015. REUTERS/Danish Siddiqui/File Photo

By Aditi Shah

NEW DELHI (Reuters) – Mercedes Benz expects double-digit sales growth in India this year, despite concerns that a weaker rupee could increase car prices, the head of its local unit said in an interview.

The German luxury carmaker’s sales in India rose 41% last year to 15,822 cars, its highest ever in the country, and it has an order backlog of around 6,000 vehicles, Santosh Iyer, managing director for Mercedes-Benz India, told Reuters.

One risk to the growth of India’s luxury car market is a weakening Indian currency, which could force Mercedes to increase domestic prices as imported components get pricier, he said.

The rupee fell 10% against the dollar in 2022, its steepest drop since 2013, making it the one of the worst performing Asian currencies.

“One of the biggest risks we see for us is the exchange rate. With the rupee weakening a bit more, that will lead us to more price increases. So that’s some headwind we see when it comes to the growth potential,” Iyer said.

“But we are starting the year with a very healthy order bank and that gives us the confidence of a double-digit growth even for 2023,” said Iyer.

Mercedes plans to launch 10 new cars in India in 2023, most costing more than 10 million rupees ($120,000), the top-end segment that grew 69% in 2022. The new launches will include gasoline cars, electric vehicles (EVs) and plug-in hybrids.

The company launched three EVs in India in 2022 including a locally assembled, electric model of its flagship S-Class sedan. EVs have seen strong demand, with Indian customers waiting four to six months after booking their cars. Iyer wants to reduce this to two to three months before launching more EVs.

India’s EV market is gaining momentum – Renault (EPA:) is considering building a mass-market EV locally, Reuters reported on Friday, in a renewed push into a market where sales of such cars expected to grow quickly from a small base.

Domestic carmaker Tata Motors (NYSE:) and foreign players like Stellantis and Hyundai Motor have also lined up EV launches.

Mercedes has seen an easing of a global semiconductor shortage, but still faces some disruption due to a shortage of parts and delayed shipments caused mainly by geopolitical issues, energy crisis in Europe and pandemic-related lockdowns in different parts of the world, Iyer said.

He predicted it will take 12 to 18 months for the situation to normalise.

($1 = 82.5410 Indian rupees)

Top 5 things to watch in markets in the week ahead

Top 5 things to watch in markets in the week ahead© Reuters

By Noreen Burke

Investing.com — U.S. inflation figures and the start of corporate earnings season will be the main highlights of an otherwise quiet week on the economic calendar. Inflation data for December will help influence the size of the Federal Reserve’s next rate hike, while corporate earnings will give an important insight into the health of the economy amid concerns over a potential slowdown. U.K. GDP, Japanese inflation, and Eurozone data will also be in focus. Here’s what you need to know to start your week.

  1. U.S. CPI

The U.S. consumer price index for December is due out on Thursday with economists expecting core inflation to have increased from a year earlier. Any sign that price pressures are continuing to ease could not only reinforce the view that the Fed is nearing the end of its most aggressive tightening cycle in decades but may also fuel speculation that rate cuts could come later this year.

U.S. data on Friday showed that December payrolls expanded more than expected even as wage increases slowed and services activity contracted, easing worries about the Fed’s monetary policy path.

Fed officials on Friday acknowledged cooling wage growth and other signs of a gradually slowing economy, with Atlanta President Raphael Bostic hinting at the chance of a quarter percentage point at the Fed’s next policy meeting on Jan. 31 – Feb. 1. It raised rates 50 basis points in December.

  1. Earnings season gets underway

Companies are due to start reporting fourth quarter earnings in the coming week with investors looking for signs of a potential economic slowdown filtering through to bottom lines.

On Friday alone, reports are due from banks Wells Fargo (NYSE:), Citigroup (NYSE:), Bank of America (NYSE:) and JPMorgan (NYSE:), healthcare titan UnitedHealth Group (NYSE:), asset manager BlackRock (NYSE:) and Delta Air Lines (NYSE:).

Consensus analyst estimates call for a 1.6% decline in Q4 earnings versus the year-ago period, according to Refinitiv IBES. Some reckon 2023 projections are still too rosy given recession risks.

Stocks may be more expensive than they appear if current earnings estimates do not fully account for any economic slowdown, while any downturn could further dampen what investors are willing to pay for equities.

  1. U.K. GDP

The U.K. is to release November figures on Friday against a background of a historic cost-of-living squeeze amid double digit levels of inflation, transport and public sector strikes and a softening housing market as the country faces what is likely to be a lengthy recession.

Following nine consecutive rate rises by the Bank of England, and more to come, British mortgage approvals plumbed their lowest level in November since the pandemic-induced slump of June 2020, recent data showed.

As price pressures and higher borrowing costs bite, Prime Minister Rishi Sunak has pledged to halve inflation, grow the economy, reduce public debt and cut health service waiting lists.

But analysts at Deutsche Bank see high inflation persisting this year, no rate cuts until 2024 and fiscal policies becoming more austere, while analysts at Barclays expect the UK economy to keep contracting until the end of the third quarter of 2023.

  1. Eurozone data

Germany is to publish an estimate of on Friday which will show the impact of the energy crisis triggered by Russia’s war in Ukraine on the Eurozone’s largest economy.

The broader Eurozone is to publish data on and the same day. The high costs of energy imports have flipped the bloc’s trade balance from surplus to deficit, but the deficit reduced in October as gas prices eased and market watchers will be looking to see if this trend continued in November.

Industrial production is forecast to make a small rebound after a decline in October.

  1. Tokyo inflation

Market watchers will be keeping a close eye on Tokyo’s inflation numbers on Tuesday, after last month’s report first tipped the market to a potential Bank of Japan policy shift.

– which front-runs the national numbers, often by several weeks – surged to a four-decade high in November.

Less than a month later, the BOJ tweaked its bond-yield control that allows long-term interest rates to rise more, wrong-footing markets. The move was aimed at easing some of the costs of prolonged monetary stimulus.

The has strengthened to seven-month highs on rising expectations for a further hawkish shift, even as BOJ officials maintain the move was a one-off. The BOJ is due to hold its next policy meeting on Jan. 18.

–Reuters contributed to this report

California braces for ‘parade of cyclones’ after storms kill 12

California braces for 'parade of cyclones' after storms kill 12© Reuters. FILE PHOTO: Capitola Wharf damaged by heavy storm waves is seen in Santa Cruz, California, U.S., January 5, 2023, in this screen grab obtained from a social media video. Kelly Pound/via REUTERS

By Fred Greaves

SACRAMENTO, Calif. (Reuters) -California on Sunday braced for more severe weather after a week of torrential downpours and damaging winds killed at least 12 people in the past 10 days and knocked out power for hundreds of thousands of homes and businesses.

Forecasters with the National Weather Service warned that northern and central California were still in the path of a “relentless parade of cyclones,” promising little relief for the region until the middle of the week.

Two overlapping phenomena – an immense airborne stream of dense moisture from the ocean called an atmospheric river and a sprawling, hurricane-force low-pressure system known as a bomb cyclone – have caused devastating flooding and record snowfall over the past week.

The latest storms vividly illustrated the consequences of warmer sea and air temperatures caused by climate change.

“These storms are supercharged by climate change,” California Natural Resources Secretary Wade Crowfoot told a news conference.

Despite the temporary deluge, the western United States remains in a two-decade drought. While climate change has resulted in extreme heat, drought and floods, experts say the west would need several exceptionally rainy years in a row to replenish aquifers and reservoirs.

At least 12 people have died from weather-related incidents in California in the past 10 days, Governor Gavin Newsom told a news conference. Among the victims was a toddler who was killed by a redwood tree that fell and crushed a mobile home in northern California.

A woman living in a homeless encampment along the Sacramento River died Saturday night during a raging storm when a tree branch fell on her tent.

Joe Costa, the woman’s neighbor in the encampment, told Reuters on Sunday that he had found her barely breathing.

“I started yelling for 911 … I opened her side of her tent and pulled her out, and she was unresponsive,’ Costa recalled.

First responders attempted to resuscitate the woman before taking her to a hospital, where she was pronounced dead, according to local news reports.

Some 424,000 California homes and business remained without power as Sunday afternoon, state officials said at a news conference.

Another severe storm was supposed to hit on Monday, and another atmospheric river, the sixth of the season, was expected later in the week, state officials said.

“We expect to see the worst of it still ahead of us,” Newsom said.

In the last week, severe weather spawned violent wind gusts that toppled trucks, flooded the streets of small towns along northern California’s coast and churned up storm surge that destroyed a pier in Santa Cruz.

The heavy rain and snow have caused significant flooding and ground saturation, meaning the next storm to move through this week would bring an additional flood threat, the National Weather Service said.

Five feet (1.5 meters) of snow could fall on the Sierra Nevada mountains by Tuesday.

Newsom declared a state of emergency on Wednesday and said he had asked the White House to issue a federal emergency declaration ahead of the coming storms.

UK PM Sunak says he is open to discussing pay rises for nurses

UK PM Sunak says he is open to discussing pay rises for nurses© Reuters. FILE PHOTO: British Prime Minister Rishi Sunak speaks to the media as he visits Harris Academy at Battersea in London, Britain January 6, 2023. REUTERS/Henry Nicholls/Pool

By Andrew MacAskill

LONDON (Reuters) -British Prime Minister Rishi Sunak said on Sunday he was willing to discuss pay rises for nurses ahead of a meeting with public sector trade union leaders in an effort to end the biggest wave of industrial disputes in decades.

Britain’s National Health Service, long treasured and funded by taxpayers, delivers free care to all, but is under strain following years of relative underinvestment and the fallout from the COVID-19 pandemic.

The strikes involving nurses and ambulance workers, staff shortages, and winter flu have led some hospitals to declare critical incidents. Patients are facing hours-long waits for ambulances, and some are being treated in corridors.

Sunak, who is under increasing pressure including from members of his Conservative Party to improve wage offers to healthcare staff, said the government was willing to have conversations with union leaders about pay, despite ministers previously refusing to reopen talks about this year’s deal.

“We want to have a reasonable, honest, two-way conversation about pay,” Sunak told the BBC. “The door has always been open to talk about the things that nurses want to talk about, and the unions want to talk about more generally.”

Pat Cullen, the head of the Royal College of Nursing union, said she had a “chink of optimism” after noticing a “little shift” in the prime minister’s stance.

The government will hold a meeting on Monday with union officials representing public sector workers such as nurses and train drivers.

The main opposition Labour Party and the Unite union, which represents ambulance workers, accused Sunak of making misleading statements over the offer to negotiate pay.

Labour said the prime minister was taking nurses and ambulance workers “for fools” because the government has made it clear it would only negotiate pay rises for next year.

Unions have said they will only call off strikes in the next few weeks if offers are made to resolve the disputes over this year’s pay settlement.

Thousands of nurses in Britain will go on strike again on Jan. 18 and 19 after walking out on two days in December. Ambulance workers are due to go on strike on Jan. 23.

Sunak repeatedly refused to say during the interview on Sunday whether he uses private healthcare insisting the issue is a “distraction from the things that really matter”.

“As a general policy I wouldn’t ever talk about me or my family’s healthcare situation,” he said. “It’s not really relevant.”

Sunak also said it is “not a given” that inflation will slow this year amid ongoing wage negotiations.

Lowering inflation “is a function of having a responsible economic policy when it comes to things like pay”, he said.

“It’s not a given that it just happens. You have to continue to be disciplined and make the right, responsible decisions.”

No sign of casualties after Russia claims revenge attack on Ukrainian soldiers

No sign of casualties after Russia claims revenge attack on Ukrainian soldiers© Reuters. FILE PHOTO: Plumes of smoke rise from a Russian strike during a 36-hour ceasefire over Orthodox Christmas declared by Russian President Vladimir Putin, as Russia’s attack on Ukraine continues, from the frontline Donbas city of Bakhmut, Ukraine, January 7,

By Vladyslav Smilianets

KRAMATORSK, Ukraine (Reuters) -A Russian missile attack on the Ukrainian city of Kramatorsk missed its targets and there were no obvious signs of casualties, a Reuters reporter said on Sunday, after Moscow claimed the strike killed 600 Ukrainian soldiers.

A Reuters team visited two college dormitories that Moscow said had been temporarily housing Ukrainian personnel and which it had targeted as revenge for a New Year’s attack that killed scores of Russian soldiers and caused outcry in Russia.

But neither dormitory in the eastern city of Kramatorsk appeared to have been directly hit or seriously damaged. There were no obvious signs that soldiers had been living there and no sign of bodies or traces of blood.

Serhiy Cherevatyi, a Ukrainian military spokesperson for the eastern region, described the claim of mass casualties as an attempt by the Russian defence ministry to show it had responded forcefully to Ukraine’s recent strikes on Russian soldiers.

“This is an information operation of the Russian defense ministry,” Cherevatyi told Ukrainian broadcaster Suspilne News.

Authorities in Kyiv did not immediately comment. Kramatorsk’s mayor earlier said there had been no casualties.

As Moscow’s invasion of Ukraine grinds towards the one-year mark, Russia’s military is under domestic pressure for battlefield successes. Hawkish voices have sought an escalation of the war effort after setbacks including loss of captured territory and high rates of death and injury.

Bad winter weather has hindered fighting on the front lines, although a cold snap that freezes and hardens up the ground could pave the way for both sides to launch offensives with heavy equipment, Serhiy Haidai, governor of Ukraine’s Luhansk region said.

There have also been growing concerns that Belarus – a close ally of the Kremlin – could be used as a staging post to attack Ukraine from the north after military activity including planned joint aviation drills in the country and a fresh transfer of Russian troops there.

REVENGE ATTACK

Russia’s defence ministry, in a statement, said the strike on the buildings in Kramatorsk was a revenge operation for the deadly Ukrainian attack last week on a Russian barracks in Makiivka, in part of the Donetsk region controlled by Moscow’s forces, in which at least 89 servicemen were killed.

It said Moscow had used what it called reliable intelligence to target the Ukrainian troops. More than 700 Ukrainian troops had been housed in one hostel and more than 600 in another, it said.

“As a result of a massive missile strike on these temporary deployment points of Ukrainian army units, more than 600 Ukrainian servicemen were destroyed,” the defence ministry said.

If true, it would be the single largest loss of Ukrainian troops since Russia invaded on Feb. 24 last year. Neither side in the war, now in its eleventh month, usually disclose losses.

Ukraine was believed to have stopped housing troops close together in single facilities after a deadly Russian missile strike on a base in western Ukraine in March which killed dozens.

The practice of housing soldiers all together came into focus too after Ukraine’s New Year’s Day strike, with Russian military commanders subject to fierce criticism inside Russia for not dispersing their forces.

‘A NORMAL DAY’

In Kramatorsk, residents in the populated area around the dormitories described the force of the explosion that rocked their homes overnight but said it was not out of the ordinary for the region, close to the eastern front.

The residents said they heard explosions shortly after 11 p.m. local time – midnight Moscow time – when a ceasefire declared by Russia for Eastern Orthodox Christmas had been due to end.

The Russian statement named two buildings, the dormitory of a site called College No.47 and a dormitory affiliated with College No.28, both in Kramatorsk.

Reuters visuals showed some of the windows broken at the College No.47 dormitory. There was a large crater in the courtyard. The windows of the nearby college had been smashed.

The College No.28 dormitory was entirely intact. A crater lay about 50 metres away from it closer to some garages. Some of the college’s windows were smashed.

“It was very loud, it threw people out of their beds. Some people hurt their fingers because of the blast wave,” said Polina, 74, a resident who lives across from one of the dormitories.

“There was an explosion, and then another explosion. The windows shook… Really, there’s nothing else to tell you. Just a normal day,” said Mykhailo, a 41-year-old resident.

Oleksandr Honcharenko, Kramatorsk’s mayor, said the attack had damaged two educational facilities and eight apartment buildings and garages but that there had been no casualties.

Pavlo Kyrylenko, Ukraine’s governor of Donetsk, had said earlier that Russia had launched seven missile strikes on Kramatorsk.

Russia has repeatedly shelled Kramatorsk, which is also in the Donetsk region, one of four regions Moscow claims to have formally incorporated into Russia, something Ukraine and most countries in the world do not recognise.

Kramatorsk lies a few miles northwest of Bakhmut, a small city which Russia has been trying to take for more than five months in a brutal battle which has become the scene of some of the fiercest fighting in recent weeks.

Ukrainian officials earlier said at least two people had been killed elsewhere in Russian overnight bombing after the unilateral Russian Orthodox Christmas ceasefire had expired.

A 50-year-old man had been killed in the northeastern region of Kharkiv, Oleh Synehubov, the governor of the region, said on the Telegram messaging app.

Another person had been killed in overnight attack on Soledar, close to Bakhmut, local officials said.

Reuters could not immediately verify those claims.

Biden visits U.S.-Mexico border as immigration issue heats up

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Biden visits U.S.-Mexico border as immigration issue heats up© Reuters. Santiago, an 8-year-old migrant boy from Colombia who is traveling with his family and seeking asylum in the United States, carries a Spider-Man doll as he tries to cross a barbed wire that was placed by the Texas National Guard on the border between the

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By Jarrett Renshaw and Andrea Shalal

EL PASO, Texas (Reuters) -President Joe Biden visited the U.S.-Mexico border on Sunday for the first time since taking office, tackling one of the most politically charged issues in the country as he prepares for a re-election bid.

Accompanied by Border Patrol agents, Biden toured a section of the wall that divides the two countries, a signature priority of his Republican predecessor Donald Trump, in an effort to demonstrate that he was taking the issue seriously.

Biden on Thursday said his administration would tighten immigration enforcement by blocking Cuban, Haitian and Nicaraguan migrants at the border, expanding the nationalities of those who can be expelled back to Mexico.

But that has not impressed Republicans like Texas Governor Greg Abbott, who accused him of failing to enforce immigration laws.

“You have violated your constitutional obligation to defend the States against invasion through faithful execution of federal laws,” Abbott, a possible 2024 presidential candidate, wrote in a letter he handed to Biden upon his arrival in the state.

Biden told reporters he had not yet read the letter.

Joined by Secretary of Homeland Security Alejandro Mayorkas, the president also visited the Bridge of the Americas, which connects the United States and Mexico, and viewed equipment that border officials use to detect illegal drugs.

Biden hopes to strengthen relations with Border Patrol agents, some of whom have bristled at the rollback of hardline enforcement policies by the White House.

The long-term goal of Congress reforming America’s creaky immigration system is unlikely to succeed given Republicans’ newly assumed control of the U.S. House of Representatives.

Right-wing lawmakers have repeatedly torpedoed U.S. immigration reform proposals over the past two decades.

Biden sent Congress an immigration reform plan on his first day in office two years ago, but it floundered due to opposition from Republicans, who also blocked his request for $3.5 billion to beef up border enforcement.

Republicans are pushing their own plans for the border after securing a narrow majority in the House of Representatives in the 2022 midterm elections.

Republican U.S. Representative Jim Jordan told Fox News that Biden should adopt the zero-tolerance policies pursued by Trump, which included separating children from their migrant parents.

“They’ve allowed now a situation where frankly, we no longer have a border,” Jordan said.

Mayorkas on Sunday said international crises and legislative gridlock limited Biden’s ability to reduce the number of migrants making their way to the United States.

“We’re just dealing with a broken system,” Mayorkas told reporters aboard Air Force One on the way to Texas.

El Paso’s Democratic mayor declared a state of emergency last month, citing hundreds of migrants’ sleeping on the streets in cold temperatures and thousands being apprehended every day.

U.S. border officials apprehended a record 2.2 million migrants at the border with Mexico in the 2022 fiscal year that ended in September, though that number includes individuals who tried to cross multiple times.

‘MARKEDLY DIFFERENT’

At the same time as he expanded his authority to expel migrants, Biden on Thursday opened legal, limited pathways into the country for Cubans, Nicaraguans and Haitians – allowing up to 30,000 people from those three countries plus Venezuela to enter the country by air each month.

While winning praise from some U.S. industry groups desperate to solve pressing labor shortages, Biden’s moves have drawn criticism from human rights activists and some Democrats who say the new restrictions are a retreat from the president’s 2020 campaign promise to restore historical rights to asylum-seekers.

Mayorkas rejected the idea that Biden was reviving Trump-era clampdowns.

“It is not a ban at all,” he said. “It is markedly different than what the Trump administration proposed.”

On the ground in El Paso, migrants greeted the new policy with trepidation.

David Guillen, 43, asked Biden to forgive him and fellow Venezuelan migrants who entered the country illegally, many of whom are now sleeping outside a church in El Paso, fearful of being arrested and deported if they attempt to travel to another city.

“We made a mistake … but not a bad mistake. It’s just that we want a better life,” he said.

After the El Paso visit, Biden took Air Force One south to an airport near Mexico City, where he was greeted by Mexican President Andres Manuel Lopez Obrador.

Biden, Lopez Obrador and Canadian Prime Minister Justin Trudeau will hold a three day summit beginning Monday on energy, economic cooperation, immigration and drug trafficking, especially fentanyl.

Biden and his Mexican counterpart spoke briefly at the airport, without giving any statement to the press.

Americans give Biden failing grades on immigration policy, polls show.

An average of polls gathered by Real Clear Politics shows 37% of the public disapprove of Biden’s handling of immigration, a number lower than his overall approval rating.

“Fundamentally we have to fix the system,” Mayorkas told reporters.

Sweden says Turkey asking too much over NATO application

Sweden says Turkey asking too much over NATO application© Reuters. FILE PHOTO: Swedish Prime Minister Ulf Kristersson speaks during a joint statement with French President Emmanuel Macron before a meeting at the Elysee Palace in Paris, France, January 3, 2023. REUTERS/Gonzalo Fuentes

STOCKHOLM (Reuters) -Sweden is confident that Turkey will approve its application to join the NATO military alliance, but will not meet all the conditions Ankara has set for its support, Sweden’s prime minister said on Sunday.

“Turkey both confirms that we have done what we said we would do, but they also say that they want things that we cannot or do not want to give them,” Prime Minister Ulf Kristersson told a defence think-tank conference in Sweden.

Finland and Sweden signed a three-way agreement with Turkey in 2022 aimed at overcoming Ankara’s objections to their membership of the North Atlantic Treaty Organization.

They applied in May to join NATO in response to Russia’s invasion of Ukraine, but Turkey objected and accused the countries of harbouring militants, including from the outlawed Kurdistan Workers’ Party

At a news conference later on Sunday, Kristersson said the demands that Sweden could not or did not want to fulfil were outside the scope of the three-way memorandum.

“From time to time, Turkey mentions individuals that they want to see extradited from Sweden. To that I have said that those issues are handled within Swedish law,” he said.

Ankara expressed disappointment with a decision late last year from Sweden’s top court to stop a request to extradite a journalist with alleged links to Islamic scholar Fetullah Gulen, blamed by Turkey for an attempted coup.

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