Finimize - 🧸 The IMF said to start behaving

The IMF warned global tensions could hurt the economy | Housing jumped in January |
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Hi Reader, here's what you need to know for January 17th in 3:09 minutes.

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Today's big stories

  1. The International Monetary Fund warned that geopolitical tensions could spell trouble for the global economy
  2. Blackstone’s spotted ten big surprises that could crop up this year – Read Now
  3. UK house prices jumped in January, but that probably won't be the start of a new trend

Play Nicely

Play Nicely

What’s Going On Here?

The International Monetary Fund (IMF) warned on Sunday that the global economy could end up 7% worse off if countries don’t start cooperating.

What Does This Mean?

China was admitted to the World Trade Organization back in 2001, and ever since, the Red Dragon’s role as “the world's factory” has been a boon to companies all over the world. China’s benefited too, of course: after all, that huge influx of foreign cash triggered a rapid growth spurt that’s only recently started to slow. But things have taken a turn for the worse lately, and that golden era of globalization seems to be behind us. With international tensions at a steady simmer, countries are now looking closer to home for everything from raw materials to technological know-how – something that the IMF is convinced will hurt us all.

Why Should I Care?

For markets: My fair “Made In”.
It's no coincidence that China's arrival on the global goods trading stage coincided with a long spell of disinflation, when the price of goods barely budged. The country's seemingly endless supply of cheap labor meant that firms in richer nations could outsource manufacturing, juicing up their profit margins without needing to raise prices an inch. But now that global politics have got a lot less friendly, you might see fewer goods stamped "Made in China" on the shelf: instead, expect some more expensive products marked "Made in America, Britain, France, or Germany". That’s not likely to go down well with the world’s inflation-pinched consumers…

The bigger picture: Profit over politics.
Businesses have some tough customers to please, day in, day out: their shareholders. And if firms want to keep them onside, they’ll need to deliver consistently swelling sales and impressive profit margins. That can involve ditching home-turf help for cheaper global supply networks – so while politicians might go crazy for hawkish foreign policy and self-contained strategies, multinational companies are more likely to want friends in faraway places.

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Analyst Take

A Market Bottom By Midyear And Nine Other Surprises Blackstone Sees For 2023

A Market Bottom By Midyear And Nine Other Surprises Blackstone Sees For 2023

By Russell Burns, Analyst

Blackstone’s strategists don’t like to be caught off guard

So every January since 1986, they’ve put together a list of “ten surprises” that could shake up markets in the year ahead.

But to qualify as an actual surprise, each one’s got to meet the team’s list of criteria

So that’s today’s Insight: Blackstones’s ten surprises for this year – and how to play each one, in case it happens. 

Read or listen to the Insight here

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Home Grown

Home Grown

What’s Going On Here?

UK house prices saw their biggest January jump since before the pandemic, according to news out on Monday.

What Does This Mean?

Retailers the world over might be slashing their prices this January, but British homeowners seem immune to the widespread discount fever. According to Rightmove, the average price of a house in the UK is up around 1% since December, sitting at a cozy £362,000. But let’s not get carried away: January’s jump probably doesn’t herald a whole new year of climbing prices. It’s more likely that this month’s early birds are trying their luck, crossing their fingers and listing their homes at prices that they’re unlikely to actually fetch.

Why Should I Care?

Zooming out: Staying put.
Rightmove’s data also revealed that there’s been a surge in home valuation requests this month, with plenty of homeowners interested in selling up at some point. That might sound like good news for would-be first-time buyers, especially when renting a tiny studio will cost you a mansion-sized sum. But unlocking the door to homeownership depends on affordability, and right now the property market’s too hotly priced for most first-timers. There are two ways that can improve: either house prices fall or mortgage rates drop – and neither of those options looks likely anytime soon.

The bigger picture: Patience is a virtue.
There's a glimmer of hope on the horizon, and strangely enough, it comes in the form of rate hikes. See, some British homeowners got a little overambitious when interest rates were rock bottom, and borrowed more than they could afford. And when the time comes to renew their mortgages, they might find themselves struggling to keep up with payments. That could force them to sell up, and when it comes to price negotiations, forced sellers rarely hold the cards. In other words, hold tight, would-be homeowners: house prices might take a tumble yet.

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💬 Quote of the day

“It will never rain roses: when we want to have more roses we must plant more trees.”

– George Eliot (aka Mary Ann Evans, an English novelist)
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🎯 On Our Radar

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