Dear valued client,
Markets regained the losses from last week despite higher inflation numbers published Thursday.
U.S. inflation figures came in at 3.4% for December (compared to 3.1% in November and 3.2% in October). This uptick in prices was driven mainly by rising housing costs after an overall rapid cooling through most of 2023. The narrative that inflation remains on a gradual downward trajectory has not necessarily changed. However, this slight reversal may suggest the Fed will need to keep interest rates higher for longer than the market anticipated.
U.S. Secretary of State, Anthony Blinken, was on a 5-day trip through the Middle East this week in an attempt to garner peace efforts and limit the spread of the conflict in the region. Blinken held talks in the United Arab Emirates and Saudi Arabia before traveling to Israel later in the week. Israel’s leadership has vowed to continue the war until Hamas is eliminated. The UAE and Saudi are caught between supporting their Arabic brethren in Gaza and wanting peace to be re-established in the region because, after all, a conflict of this scale and magnitude hinders trade, tourism, and business. Also, the International Court of Justice held a preliminary hearing this week on South Africa’s claim that Israel is committing genocide in Gaza with more than 23,000 Palestinians killed since the war began. This is more of a political move, forcing nations around the world to effectively pick a side because the court in question has never found a country responsible for genocide.
Tomorrow is a monumental day in East Asia as Taiwan will hold its federal election. Polls indicate that Lai Ching-te, leader of the independence-minded Democratic Progressive Party, is ahead in the race. This is significant because Mr. Lai is the candidate most likely to provoke tension with the superpower next door.
“By voting, we add our voice to the chorus that forms opinions and the basis for action.” – Jens Stoltenberg
Have a terrific weekend,
PW
