🌎 A cooling US economy may be a good sign for the globe
Plus: Sweden discovers Europe’s largest rare earth deposits
Hi there Intriguer. Customers rarely protest a price cut, but that’s exactly what happened outside Tesla’s showrooms and delivery centres in Shanghai last week. The electric vehicle giant announced heavy discounts for customers in the EU, US, and China, which annoyed recent buyers who missed out on the deal. For a company that rarely, if ever, discounts its cars, Tesla’s discounts suggest competition in the EV space is heating up!
Today’s briefing is a 5 min read:
- 📉 US inflation is cooling off.
- ⛏️ Sweden discovers Europe’s largest rare earth deposits.
- ➕ Plus: Europe’s mild winter is raising economic hopes, how the papers are covering Finland and Sweden joining NATO, and Egyptian robbers nearly walked away with a ten-tonne statue.
– VC & EP
🗺️ AROUND THE WORLD
- 🇦🇷 Argentina: Argentina’s annual inflation rate for 2022 was a stunning 94.8% in 2022, the highest in over 30 years.
- 🇯🇵 Japan: Japanese authorities will release cooling waters from the Fukushima nuclear power plant into the sea later this year. Local fishermen (and Japan’s neighbours) worry the water may still be radioactive.
- 🇧🇯 Ethiopia: The French and German foreign ministers said during a visit to Addis Ababa last week (12 January) that the Ethiopian peace process is making “good progress”, a little more than two months after hostilities ended.
- 🇬🇧 The UK: Security seized a package containing uranium at London’s Heathrow Airport. The package originated in Pakistan, but UK authorities don’t believe the package is linked to any ‘direct threat’.
- 🇦🇺 Australia: Prime Minister Anthony Albanese visited Papua New Guinea last week to finalise a security pact designed to counter Chinese influence in the Indo-Pacific.
📉 US | INFLATION
US inflation cools, but the global economy is facing a tough 2023
Briefly: We open the week with some good news! The US’s inflation rate fell for the sixth consecutive month to 6.5% in December, the lowest rate in over a year. Inflation still has a long way to fall to reach the Federal Reserve’s 2% target, but December’s data suggests that interest rate hikes are working.
There are other cautiously optimistic signs for the global economy:
- Energy prices have retreated from their March 2022 peak.
- The world’s second-largest economy, China, is abandoning its growth-crushing Covid lockdowns.
- Pandemic-related supply-chain bottlenecks have mostly cleared up.
Consumer expectations are improving, too. And, as the value of the US dollar weakens, countries around the globe are enjoying cheaper credit and commodities. What’s not to love?
Intrigue’s take: We hate to be a buzzkill, but the World Bank thinks the global economy is in for a tough time in 2023: “in virtually all regions of the world, per-capita income growth will be slower than it was during the decade before COVID-19.”
The story isn’t much better over at the IMF, where Managing Director Kristalina Georgieva expects “one-third of the world economy to be in recession” this year. Did we say we’re opening the week with good news? Whoops!
Also worth noting:
- The Fed has promised to continue raising interest rates beyond current market expectations.
- The US dollar doesn’t weaken easily: according to the ‘dollar smile’ theory, greenbacks will continue to appreciate against other currencies even in a recession.
📰 GLOBAL PERSPECTIVES
How newspapers are covering: The Swedish and Finnish applications to join NATO both of which must be ratified by Turkey.
Links: Posta, Svenska Dagbladet, DW
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For example, last week they shared a chart showing how China Begins 2023 in a Recession.
⛏️ SWEDEN | MINING
iPhones, Teslas, and F-35s! Oh my, Sweden discovers massive rare earth deposit
Briefly: Last Thursday (12 January), Sweden’s state-owned mining company, LKAB, announced it had discovered a one million-tonne rare earth reserve near the far-north town of Kiruna. With average temperatures of -12C in January, we’re glad all that digging around the snow and ice wasn’t for nothing.
The discovery is a big deal for Europe, which imports 98% of its rare earth elements from China. That reliance on China is a geopolitical risk for Europe because several critical industries, including clean energy and defence tech, rely on rare earths.
Intrigue’s take: The Swedish deposit won’t be enough to wean Europe off imports any time soon – China is home to an estimated 44 million tonnes of rare earths, and LKAB’s mining operations won’t begin for 10-15 years. Nevertheless, this discovery is an important first step towards a more durable supply chain for mineral-starved Europe.
Also worth noting:
- Rare earths are a potent geopolitical weapon – in 2010, China imposed rare earth export limits to Japan following a fishing dispute.
- The global rare earth market is expected to grow at an annual rate of 8.3% from 2022-2027.
💬 QUOTE OF THE DAY
Warming weather is good for something
Europe’s milder-than-expected winter might be upsetting skiers, but it’s causing economists to revise their negative growth projections. According to the German Economy Ministry’s monthly report, private consumption rose while inflation fell in December.
Unfortunately for German Economy Minister Robert Habeck, the good economic news hasn’t translated into political popularity. Habeck led the German Greens party to its best-ever election result last year, but Russia’s invasion of Ukraine has made his policies – including a promise to shut down Germany’s nuclear power plants – unpopular.
👀 EXTRA INTRIGUE
Some light-hearted news to start your week off on the right foot:
- Bolivia’s state airline enlisted an animal psychic to track down a missing cat.
- Three people attempted to steal a 10-tonne ancient Egyptian statue. Unsurprisingly, they failed.
- An Ecuadorian mayoral candidate recreated the famous Claude Van Damme Epic Split for a campaign ad. 10/10, no notes.
- A town in England cancelled its New Year’s fireworks display to avoid disturbing a vacationing walrus.
❓ QUIZ TIME!
Which of these items are NOT made using rare earths? |
Last Friday’s poll: Japanese prime ministers don’t get to have all the fun! Where do you most want to travel this year?
🟨⬜️⬜️⬜️⬜️⬜️ 🇬🇧 London (12%)
🟨🟨🟨⬜️⬜️⬜️ 🗼 Tokyo (20%)
🟨⬜️⬜️⬜️⬜️⬜️ 🗽 New York City (7%)
🟨⬜️⬜️⬜️⬜️⬜️ 🇿🇦 Cape Town (9%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇦🇪 Dubai (0%)
🟨⬜️⬜️⬜️⬜️⬜️ 🇻🇳 Hanoi (9%)
🟩🟩🟩🟩🟩🟩 🌍 Somewhere else! (42%)
- 🌍 L.L: “As most of us are itching for some post-pandemic revenge travel, I’m looking forward to spending some time in hidden gems like the Azores.”
- 🌍 T.F: “Morocco; for something to arouse the senses that has little resemblance to North America, SE Asia or Europe.”
- 🌍 M.S: “New Zealand for the Women’s World Cup!”
