Finimize - 🥷 Time to get tactical

Hi Reader, here's what you need to know for February 6th in 3:13 minutes.

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Today's big stories

The US added more jobs than expected – and much more than the Fed wanted
Here’s how to navigate markets with tactical investing – Read Now
The IMF called on the Chinese government to up its economic game

And Then I Found A Job

What’s Going On Here?

Fresh data out on Friday showed that the US added more jobs than expected last month – and heaven knows… ah, you know the rest.

What Does This Mean?

It seemed like the Federal Reserve (the Fed) had put the kibosh on the hot-to-trot labor market, with job growth slowing down for 5 months in a row – but Friday’s data showed that the market still had some fight in it. The US economy added a huge 517,000 jobs last month, way more than the 188,000 the eggheads were expecting, notching up the biggest gain since last July (tweet this). Plus, with the unemployment rate hitting 3.4% – the lowest since groovy ol’ 1969 – and demand for workers still lively, companies have nearly twice as many job openings as there are workers available. With competition like that, it’s no wonder wages grew faster than expected compared to the same time last year.

Why Should I Care?

For markets: Not-so-soft landing.
This data will throw a wrench in the works for the Fed, which made its interest rate hikes a little gentler just last week. See, the Fed’s hoping for a “soft landing”, a win-win scenario where inflation slips without hitting employment and the economy too hard. But to make that happen, the central bank’s made it clear that wage growth needs to play ball – something that isn’t panning out right now. That’s got traders betting the Fed will have to extend its hike run, which might be why US stock markets took a tumble after the news.

The bigger picture: All fired up.
This news suggests that tech companies' mass layoffs are the exception rather than the rule – but those cost-cutting firings have won investors’ admiration. Since their job-cutting sprees, Amazon, Meta, Alphabet, and Microsoft have managed to add a combined $800 billion to their market value. That’s probably cold comfort for their axed employees though…

You might also like: These three indicators suggest stocks could be ready for a breakout.

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Analyst Take

Tactical Investing Could Be The Weapon You Need For Today’s Markets

By Luke Suddards, Analyst

When markets are changing as quickly as your TikTok feed, you might want to consider some tactical investing.

See, this style of trading allows you to be agile, adjusting and rebalancing your allocations based on what’s going on in different assets.

That’s today’s Insight: how to navigate markets with tactical investing.

Read or listen to the Insight here

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We’ll even send you £10 or equivalent as a thank you for reading this far.

London’s lovely this time of year

After many dismal months of (stereotypically) gray outlooks, the UK’s finally caught a sunbreak.

Winter was unseasonably kind on Europe, and the region’s relatively modest use of energy has led to a sharp drop in European natural gas prices. Energy bills, then, could start deflating soon.

Inflation has also started slowing down in the UK, and the Bank of England’s governor revealed that the country could see another “rapid fall” when energy costs take a breather.

That could all be good news for British stocks: the country’s key stock index – the FTSE 100 – has been holding up well, it’s true, but it’s still tricky to spot the future winners.

IG, though, has just shared a goldmine: here are IG’s top FTSE 100 dividend stock picks right now.

Find Out More

Your capital is at risk. The value of shares, ETFs, and ETCs can fall as well as rise, which could mean getting back less than you originally put in.

Into Overdrive

What’s Going On Here?

On Friday the International Monetary Fund (IMF) called on the Chinese government to pull out all the stops, in a bid to get the economy growing at warp speed.

What Does This Mean?

China’s recovery is set to give the world a much-needed shot in the arm this year, with the IMF predicting the country’s economy will grow 5.2%, after a paltry 3% in 2022. But the organization reckons China’s got even more in the tank, and needs to shake things up a little to really thrive over the long term. That includes leveling the playing field between state-owned and private businesses – a thorny point that’s kept lots of foreign firms out of China – and boosting the nation’s consumption in all kinds of ways: like reducing social security contributions, supporting households that have been worst hit by Covid-19, and lowering interest rates to encourage spending. And as far as the property sector is concerned, the IMF simply wants China to splash the cash: namely by fast-tracking unfinished housing projects and giving struggling developers a helping hand.

Why Should I Care?

For markets: Castles in the air.
The IMF’s suggestions are all well and good, but whether they actually happen, or even work practically, is another story altogether. Take the notion of cutting interest rates, for example: China’s rates are already well below Western countries, so any additional big cuts could have investors ditching the currency and tanking its value. And with Russia offloading bucketloads of yuan to beef up its own falling revenues, any further hits to the currency wouldn’t be good news for the world’s biggest importer of energy.

Zooming out: Floating on cloud nine.
China's already made one impressive reform: the country’s simplifying and speeding up the process that lets companies go public, something that should allow smaller firms to tap into investor demand a whole lot more easily. Even Goldman Sachs reckons it’s a savvy move, one that brings China a step closer to standard international practices and could boost interest from global investors.

You might also like: Five spicy stocks for China’s reopening.

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💬 Quote of the day

“If you scatter thorns, don’t go barefoot.”

– an Italian proverb

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All events in UK time.

💰 How To Build A Smart Portfolio: 1pm, February 14th
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👩‍💻 Opportunities For Women In Blockchain 2023: 12.30pm, February 16th
🏠 How To Start Investing In UK Real Estate: 6pm, February 20th
🗞 The Relationship Between News And The Markets: 5pm, February 21st
✍️ What Are Investment DAOs And How Do They Work?: 6pm, February 22nd
🌥 Do Recessions Have A Silver Lining?: 5pm, March 8th

🎯 On Our Radar

Not quiet, after all. Here’s why Germany hates the latest adaptation of this literary classic.
Hear, hear. There’s a lot to be said in defense of voice notes.
Tipping point. We shouldn’t have to add 20% service to everything.
Woman, alone. It’s silly to stigmatize women who like their own company.
Kafkaesque. These mind-bending German-language tales are having a moment.

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