Finimize - ⚽️ Sports could save the UK economy

Big banks' earnings sent investors into a tizzy | Somehow, the UK's economy grew |
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Today's big stories

  1. Banks beat expectations, but investors were left unimpressed
  2. Amazon’s AWS announced a new partnership, and it’s a big deal for Avalanche – Read Now
  3. The UK economy managed to grow in November, thanks to... sports fans

Cross Your Fingers

Cross Your Fingers

What’s Going On Here?

A legend-worthy huddle of big banks reported earnings on Friday, and their results sent an initial shiver down investors’ spines.

What Does This Mean?

When Citigroup, JPMorgan (JPM), Wells Fargo, and Bank of America released their results on Friday, their profit stats seemed to buck the bad-luck trend of Friday the 13th. But dig into the guts of the reports, and you’ll find there’s more to the tale: the banks poured more cash into their “just in case” reserves than expected, and the fees they made from investment banking dropped off too. Overall, they seemed wary of the real possibility of a deteriorating economy, with JPM’s CEO cautioning that we still don’t know the “ultimate effect of the headwinds coming”. Investors heeded the warning, and left bank stocks and US indexes to retreat in their wake.

Why Should I Care?

For the economy: Big banks, big warnings.
Even if you don’t care for fat cat news, it’s still worth keeping an eye on big banks: their earnings often indicate how the economy’s doing as a whole, and can even offer hints about the future. See, banks make money from a whole range of businesses and individual folk, so they tend to notice changes in sectors early on. So if banks’ voices wavered when they delivered their latest insights, you can understand why investors might’ve got trembling hands.

For markets: Watch out for the rally killer.
Those big bank results could set the scene for the rest of earnings season – so it’s not ideal that the tone is a far cry from “fairytale” right now. Stocks, after all, have had a sudden pep in their step, mainly thanks to falling inflation and an unexpectedly strong economic response to rising rates. But if earnings end up haunting markets, that rally could soon be scared away.

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Analyst Take

Amazon Is Doing Business With This Blockchain. Should You?

 Amazon Is Doing Business With This Blockchain. Should You?

By Jonathan Hobbs, Analyst

One of Ethereum’s top rivals had some big news on Wednesday: Ava Labs, the team behind the Avalanche blockchain, has partnered with Amazon Web Services, the world’s leading cloud computing provider. 

As you’d expect, crypto investors liked the announcement, with Avalanche’s AVAX token pumping 25% on the day. 

But before you YOLO in with the rest of them, let’s take a step back and ponder why it might be positive for Avalanche’s long-term prospects.

That’s today’s Insight: what the AWS partnership could mean for Avalanche.

Read or listen to the Insight here

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Not So Messi

Not So Messi

What’s Going On Here?

The UK economy unexpectedly scored in November, after the World Cup kicked Brits into shape.

What Does This Mean?

British life is looking stereotypically gray: inflation’s still squeezing budgets, manufacturing orders are dwindling, and public sector strikes are putting a pin in business as usual. But Brits are keeping a characteristically stiff upper lip: the services sector plucked up quicker than expected, while production and construction – the other two major drivers of the UK’s economy – held their own. All in all, the country’s economy picked up 0.1% in November, surprising skeptical analysts (tweet this).

And one especially hardy gang deserves a massive participation medal: according to the Office for National Statistics (ONS), sports fans were the economy’s MVP in November. They hit the town no matter the score during the World Cup, celebrating victories with a greasy bag of fish and chips and drowning defeats with an ale. So if the government wants to kick consumer spending up a gear, it knows where to find the right fans for the job.

Why Should I Care?

For markets: London’s lovely this time of year.
Now, one solid month doesn’t guarantee a full-fleshed recovery, and the UK still has plenty of lemons to squash if it wants a pint of lemonade. But the news is a glimmer of hope for down-in-the-dumps British assets: the country’s currency has been looking more like pennies than pounds, and investors still aren’t sold on the future of UK stocks. That does mean, though, that they’re going for less these days, so if you believe in Britain’s recovery, they could be a cheap bet on long-term riches.

Zooming out: Just keep swimming.
The UK’s been labeled an ugly ducking lately, but now the country’s transformed into a, uh, slightly less ugly duckling. And it’s not swimming solo, either: Europe and the US are standing firm in the face of relentless rate hikes too. That’s not enough to completely turn the recessionary tide, mind you, but it could mean the current’s a little weaker than expected.

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💬 Quote of the day

“Money can’t buy happiness, but neither can poverty.”

– Leo Rosten (an American humorist)
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All events in UK time.

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♻️ Which ESG Stocks Will Win In 2023?: 12pm, January 23rd
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