All major European equity indices closed higher on the week,
major US indices were all lower, and APAC markets were mixed. US
and benchmark European government bonds closed sharply lower on the
week. European iTraxx and CDX-NA closed wider on the week across IG
and high yield. Oil and natural gas closed higher, while the US
dollar, gold, silver, and copper were lower week-over-week.
All major US equity markets closed lower on the week; DJIA
-0.5%, S&P 500 -1.9%, Russell 2000 -2.9%, and Nasdaq -4.5%
10yr US govt bonds closed 1.77% yield and 30yr bonds 2.12%
yield., which is +25bps and +21bps week-over-week,
DXY US dollar index closed 95.72 (-0.3% WoW).
Gold closed $1,797 per troy oz (-1.7% WoW), silver closed $22.41
per troy oz (-4.0% WoW), and copper closed $4.41 per pound (-1.2%
Crude Oil closed $78.90 per barrel (+4.9% WoW) and natural gas
closed $3.73 per mmbtu (+4.8% WoW).
CDX-NAIG closed 53bps and CDX-NAHY 309bps, which is +3bps and
+17bps week-over-week, respectively.
All major European equity indices closed higher on the week; UK
+1.4%, Italy +1.0%, France +0.9%, Spain +0.4%, and Germany +0.4%
10yr European government bonds closed lower on the week; Spain
closed +8bps, France +9bps, Germany +14bps, Italy +15bps, and UK
Brent Crude closed $81.75 per barrel (+5.1% WoW).
iTraxx-Europe closed 51bps and iTraxx-Xover 253bps, which is
+3bps and +11bps week-over-week, respectively.
Major APAC equity indices closed mixed on the week; India +2.6%,
Hong Kong +0.4%, Australia +0.1%, South Korea -0.8%, Japan -1.1%,
and Mainland China -1.7% week-over-week.
- EU exports of sparkling wine to the rest of the world have
fallen for the first time in ten years. On 31 December, the EU's
statistical office Eurostat published its updated figures for
sparkling wine and found that the bloc's exports dropped by 6%
between 2019 and 2020, from 528 million liters to 494 million
liters. (IHS Markit Food and Agricultural Policy's Pieter Devuyst)
- Eurostat explained that the COVID-19 pandemic significantly
affected European wine trade after ten years of consecutive growth
because many restaurants and bars were forced to close for a long
- Champagne was hit hardest by these lockdown measures, with EU
sales of the French sparkling wine falling 20% in volume to 66
million liters from nearly 84 million liters the previous year,
despite some pick-up in demand during the end-of-year holiday
period. Producer group CIVC estimated earlier that their sales
volume would drop by 18% and cause up to €1 billion in losses.
- Other types of sparkling wine were less affected by COVID-19
restrictions. Extra-EU sales of prosecco, by far the most exported
EU sparkling wine, remained largely stable with 205 million liters
compared to 207 million liters the year before. Cava, which is
produced in Spain, even saw its exports increase by more than 10%
to 58 million liters and replaced champagne as the second-most sold
EU sparkling wine.
- Since 2010, the bloc's sparkling wine exports had consistently
grown at an average rate of 8%, but CIVC now expects that COVID-19
will continue to weigh on demand for their products in the first
half of 2022.
- Attorneys general from California, Minnesota, Iowa, Wyoming and
a dozen other states are backing USDA's effort to combat
consolidation in the meat industry, calling for aggressive action
to restore "competition and integrity" to livestock markets. (IHS
Markit Food and Agricultural Policy's JR Pegg)
- The state law enforcers contend weak enforcement of the Packers
and Stockyards Act (P&SA) has contributed to consolidation in
meat markets to the detriment of producers and consumers.
- Enacted in 1921, the P&SA was intended to ensure fairness
in livestock and poultry markets, but critics say the law—and
USDA's implementing regulations—have fallen short of that
- "Structural changes in these markets, including increased
concentration and changes in sales and marketing practices, have
threatened producer viability, resulting in attrition, and reducing
the number of producers participating in the livestock markets,"
the state attorneys general wrote in the December 22 letter to
Agriculture Secretary Tom Vilsack. "We hope that with increased
enforcement and government oversight, the purpose of the Packers
and Stockyards Act can be fulfilled and return competition to these
vital American markets."
- The letter echoes growing concern about the concentration of
the beef, pork and poultry markets. The four largest beef packers
controlled 25% of the market in the late 1970s, but now four
firms─JBS, Tyson Foods, Cargill and National Beef─account for 85%.
Similarly the top four pork packers now control 70% of the market
up from 33% in 1976, and the four largest chicken processors'
marketshare stands at 54%, up from 35% in 1986.
- India has deferred a proposed hike of its Goods and Services
Tax (GST) on textiles to 12%, maintaining the status quo of 5% for
now, India's Finance Minister Nirmala Sitharaman said in a press
conference late last week. (IHS Markit Chemical Market Advisory
Service's Chuan Ong)
- Its 7% GST rate increase for textiles was expected to kick-in
January 1, 2022, before a policy U-turn following an emergency GST
Council meeting on December 31 last year.
- The Finance Minister said that the Council decided to maintain
the 5% rate on textiles, recognizing an existing rate inversion
problem which will be rationalized after review, according to
national broadsheet The Hindu.
- This review is expected to be completed in February, meaning
that the existing textiles rates will remain at least through Q1
- India's GST Council had planned to correct an "inverted duty
structure in footwear and textiles sector", it said in a press
release following its 45th GST Council Meeting in September
- The inversion refers to uneven tax rates applied on synthetic
or manmade fibers and its downstream sectors - current GST on
manmade fiber is 18%, yarns from the same fibers 12%, while
finished fabrics and textiles made from these raw materials are
taxed at 5%.
- States in India including Gujarat, West Bengal, Delhi,
Rajasthan and Tamil Nadu had raised objections to the 12% GST hike,
citing risks of job losses in the millions, factory closures in the
hundreds of thousands, and foreign competition.
- India is a key producer of polyester, which is a synthetic
fiber. The polyester sector is the biggest consumer of
petrochemical feedstocks monoethylene glycol (MEG), purified
terephthalic acid (PTA) and in turn its feedstock paraxylene
- The seasonally adjusted IHS Markit US Manufacturing Purchasing
Managers' Index™ (PMI™) posted 57.7 in December, down from 58.3 in
November but broadly in line with the earlier released 'flash'
estimate of 57.8. The improvement in the health of the US
manufacturing sector was the slowest in 2021 amid subdued output
and new order growth. Ongoing efforts to build safety stocks and a
severe deterioration in vendor performance, ordinarily signs of
improving conditions, continued to lift the headline PMI, however.
(IHS Markit Economist Chris
- An inability to source key inputs also weighed on new orders,
which expanded at the softest rate for a year. Although some firms
stated that demand was sustained at a strong pace, many suggested
that customers were working through their stocks of goods before
placing orders. The rise in foreign client demand was only marginal
- Higher transportation and freight fees, alongside shortages of
key items, led to a further marked increase in input costs during
December. Although slowing to the softest for six months, the pace
of increase remained among the quickest seen in the series history
(since May 2007).
- US total construction spending rose 0.4% in November, below
expectations, but from levels of spending in September and October
that were revised higher. Core construction spending also rose 0.4%
in November following upward revisions to prior months. (IHS Markit
Herzon and Lawrence Nelson)
- Firming costs and prices throughout the construction sector are
boosting nominal construction spending generally. Furthermore, both
total and core construction spending are benefitting from past
(real) strength in the residential sector, although that source of
strength is waning.
- Single-family housing permits peaked in January and have been
generally moving lower since. While there were substantial gains
over October and November, the level of single-family permits
remained well below the January peak.
- This led to a slowing in the value of private residential
construction put-in-place. Over the six months ending in November,
private residential construction spending rose at a 9.0% average
annual rate. This is down considerably from 24.4% average
annualized growth over the prior six months.
- The recent jump in single-family permits will lead to renewed
strength in residential structures spending, but this will be
temporary, as permits are expected to turn lower beginning in
- Elsewhere in the construction report, private nonresidential
structures rose 0.1% and public construction slipped 0.2% in
- Recent gains in private nonresidential construction have
reflected strength in spending on commercial warehousing and
manufacturing, two sectors that have benefited from recent very
strong gains in demand for goods.
- Turkish inflation soared at the end of 2021, pushing end-year
consumer price growth to above 36%. The sharp depreciation of the
lira - it fell by over 90% against the US dollar in 2021 - was the
overriding impact on inflation. Recent central bank and government
efforts to boost demand for the lira may help to stabilize the
currency, but initial efforts have proven temporary. Given the
impact of lira losses on domestic prices, inflation will remain
extremely high in early 2022, forcing the central bank to pause its
rate cutting cycle. (IHS Markit Economist Andrew
- The Turkish Statistical Institute (TurkStat) reported a surge
of consumer price inflation in December, with prices jumping by
13.6% month on month (m/m). The end-month rise of prices pushed the
end-2021 inflation rate to 36.1%; by far the highest such annual
increase since September 2002, immediately following the country's
banking crisis. With price growth rising sharply in the final
quarter of the year, the annual average inflation rate for 2021
rose to nearly 20%.
- TurkStat also reported that annual "core" consumer price
inflation, stripping out more volatile food and energy prices, also
surged in December, reaching 31.9%. Şahap Kavcıoğlu, governor of
the Central Bank of the Republic of Turkey (TCMB) has stated the
core rate is guiding monetary policy decisions. President Recep
Tayyip Erdoğan has claimed the core inflation rate would soon
decelerate thanks to current interest-rate policies.
- Also in December, the annual producer price inflation rate
skyrocketed to 79.9%. Even the annual average producer price
inflation rate rose sharply in 2021, reaching nearly 44%, more than
quadrupling the rise of prices the previous year.
- Although the December rate of inflation outstripped IHS Markit
expectations, TurkStat is likely still under-reporting price
growth. A local research group, ENAG, that uses a similar basket of
goods determined the actual rate of inflation in 2021 should have
been 82.8% at end-2021. Such outside observations are important to
digest, given that Erdoğan has directly replaced several top
TurkStat managers, raising questions regarding the agency's
- The City of New York (United States) has furthered an
investment towards its target of an all-electric municipal fleet
with the announcement of an order for 184 Ford Mustang Mach-E
vehicles. According to the city's statement, the vehicles will be
used by the New York Police Department (NYPD), New York City
Sheriff's Office, the Department of Correction, the Department of
Parks and Recreation, the Department of Environmental Protection,
NYC Emergency Management, DCAS Police, and the Office of the Chief
Medical Examiner. New York City said that it is due to receive its
Mach-E vehicles by 30 June, and that they will replace current
internal combustion engine (ICE) vehicles in the city's fleet. The
city has ordered Mustang Mach-E GT versions, with 270 miles of
range, focusing on the vehicle's 27 feet of cargo space for storing
critical emergency and law enforcement gear. New York City also
said that it will spend USD11.5 million on the initial orders and
that the contract will remain in place for five years. It said that
it operates a fleet of nearly 30,000 vehicles, with the NYPD
operating more than 6,200 and the largest single group. The city is
planning to purchase more than 1,250 electric vehicles (EVs) in
2022, as well as expand its charging infrastructure, including
fixed charging stations and 180 solar carports and portable
chargers. Technology website Engadget has also reported that the
city has approved the option of buying up to 250 units of the Tesla
Model 3 anytime over the next five years. (IHS Markit
- Nearly three times more electric vehicle (EV) chargers need to
be installed each quarter along highway corridors or in publicly
accessible spots to meet US President Joe Biden's goal of having
500,000 charging ports in place by 2030, a National Renewable
Energy Laboratory (NREL) report found. (IHS Markit Net-Zero
Business Daily's Amena
- Released 28 December, the report assessing the state of EV
infrastructure across the US in the second quarter of 2021 said an
average of 5,322 public EV ports had been installed in each quarter
since 2020. But NREL researchers say approximately 14,706 new
public installations will be required each quarter for the next
nine years to meet the Biden administration's 2030 target.
- When comparing the current rate of deployment, "it is clear
that the pace of installations will need to significantly
increase," NREL researchers Abby Brown, Johanna Levene, Alexis
Schayowitz, and Emily Klotz wrote.
- However, the US can meet Biden's 2030 charger goal much earlier
than expected to coincide with surging demand, Mark Boyadjis, IHS
Markit global automotive technology lead, told Net-Zero Business
Daily 3 January. IHS Markit projects there will be 9.3 million EVs
on US roads by 2026, up from 1.5 million EVs in 2020, he said.
- In fact, IHS Markit's automotive team projects an additional
600,000 charging units will be needed in public spaces and
workplaces by 2026 to meet EV demand.
- According to NREL, the number of public EV ports in the US
increased by 5,006 in Q2, bringing the total to 105,765 and
representing a 5.0% increase since the first quarter of 2021.
- In late December 2021, the UK government announced public
consultations on its draft climate compatibility checkpoint (the
checkpoint), a series of tests intended to align the existing
upstream licensing framework with the country's 2050 net-zero
emissions target. The proposed criteria range from operational
emissions to investment in low-carbon projects and is intended to
inform the Oil and Gas Authority (OGA)'s decision-making on new
licensing rounds. Public consultations will run through February
2022 and the checkpoint is expected to be finalized before the end
of the year, which is likely to delay any potential bid round until
2023. The checkpoint indicates the UK government's continued
efforts to bolster the oil and gas industry's social license to
operate even as political and public sentiment is shifting towards
a gradual phase-out of hydrocarbon production. The government has
developed the checkpoint as part of its ongoing regulatory overhaul
in the upstream sector, aimed at strengthening environmental
oversight and facilitating the energy transition in the industry.
(IHS Markit E&P Terms and Above-Ground Risk's Aliaksandr
- A tender for multiple renewable energy projects in Russia was
held in September 2021. A total of 2.63 GW of capacity was
awarded—1.85 GW for wind power and 0.78 GW for solar. This
represents the first tender within the framework of the second
government support program to stimulate clean energy growth in
Russia, the new so-called Capacity Supply Agreement (CSA 2.0) for
renewables procurement that went into effect in 2021. Completion of
the new capacities would represent an increase of nearly 40% in
Russia's existing renewable capacity; installed renewable capacity
in 2020 was about 4.3 GW: 1.7 GW of solar and 2.5 GW of wind. (IHS
Markit Executive Briefings: Climate and Cleantech's Andrew Bond, Anna
Galtsova, and Matthew
- Winning bidders were selected based on the lowest levelized
cost of electricity (LCOE) generated. Previously, selection was
made on the basis of lowest capex per unit of capacity. The
government announced in 2020 that compensation would be adjusted,
with successful bidders receiving payments under a
contract-for-difference mechanism, by which the electricity
provider is guaranteed a fixed return regardless of actual power
- The main goal of renewables development in Russia is not
decarbonization but manufacturing and technological development.
The tender specified fairly high local content requirements, with
onerous penalties for non-compliance, with further mandates on
domestic manufacturing of the equipment utilized in
- Winning bids in the tender were surprisingly low. The prices
offered by the bidders were not only low for Russia but low even by
global standards. The bulk of the winning bids, for 1.391 GW of
wind power, were awarded to Vetroparky FVR. This company is a JV
between state-owned Rosnano and Finnish power company Fortum.
- The minutes of the last meeting of the Federal Open Market
Committee (FOMC), held on 14-15 December, were released this
afternoon. At that meeting, the Committee announced a revised plan
to wind down bond purchases several months sooner than the original
plan announced on 3 November. An earlier end to bond purchases, in
the view of policymakers, creates more space for the Committee to
begin to raise interest rates earlier than it previously
anticipated might be appropriate. At this meeting, however, no
changes were made to interest rates, including the target for the
federal funds rate of a range of 0% to 0.25%. Discussion of
economic developments and risks by policymakers at the December
meeting support our expectation that the first increase in the
federal funds rate target will occur between March and June, with
May the most likely time for that move. At the December meeting,
the FOMC held the first of what is likely to be several discussions
regarding the size and composition of the Fed's balance sheet over
the longer run. Elements of that discussion suggest that the Fed
will begin to trim the size of its bond portfolio within several
months of beginning to raise interest rates, and that the size of
the Fed's portfolio will be reduced more quickly (in dollar terms)
than during the previous episode of balance-sheet normalization,
from 2017 to 2019. (IHS Markit Economists Ken
Matheny and Lawrence Nelson)
- Saudi Arabia's current account posted a surplus of SAR81.4
billion (USD22.2 billion), the highest in three years, according to
the Saudi Arabian Monetary Authority (SAMA). It compared with a
surplus equal to SAR32.7 billion in the second quarter and a small
deficit of SAR2.6 billion reported for the third quarter 2020. (IHS
Markit Economist Ralf
- The oil export rebound is still ongoing. Oil shipments soared
93.9% on the year in the third quarter, pushing the annual rate for
total exports 71.8% at the same time. The goods account reported a
surplus at a post-pandemic high of SAR142 billion, roughly three
times the size of the surplus in the third quarter a year ago.
Goods imports rebounded as well, but their pace was more muted, at
19.3% in the third quarter following a decline of similar percent
size in the third quarter 2020.
- Direct investment inflows, which had surged in the second
quarter 2021 on the sale of Saudi Aramco's pipeline network, was
down to SAR6.6 billion in the third quarter, roughly the same level
as in the first quarter (SAR6.7 billion) but higher compared to the
third quarter in 2020 (SAR4.1 billion). Direct investments remain
below the ambitious targets spelled out in the Vision 2030.
- The lack of inventory pushed US light-vehicle sales down by
24.6% y/y in December 2021; full-year sales are up 3.4%. Although
the pace of sales increased mildly for the third consecutive month,
demand continues to be subdued by new vehicle inventory
constraints. Sales in 2021 reflect the limited upside to demand
growth given current inventory conditions. December results reflect
low year-end clearance volume, a result of limited inventory, which
will continue to push against sales levels moving into 2022.
Overall, volume growth for 2022 is projected at an
inventory-limited 15.5 million units. The lack of inventory is
overcoming favorable consumer interest and buying conditions to
hold volume down. However, 2023 and 2024 are forecast to spike
again, as production recovers to help meet pent-up demand. (IHS
Markit AutoIntelligence's Stephanie
- Ford has announced it will increase production of the F-150
Lightning electric vehicle (EV) pick-up to 150,000 units per annum
(upa) by mid-2023; a specific investment figure was not disclosed.
In a statement released on 4 January 2022, the automaker said it is
planning to increase production capacity for the Lightning from an
earlier plan for 80,000 upa to 150,000 upa. Ford also announced
that reservations will start being converted to orders on 6 January
2022. As there are more reservation holders than Ford can build
trucks for the 2022 model year, Ford will invite them to place
orders later for future model years. Although Ford has not
specified an investment or said how the production increase will be
implemented, the company says, "To deliver this latest increase, a
small task force of employees from manufacturing, purchasing,
strategy, product development and capacity planning are finding
ways to quickly adapt and expand production of the groundbreaking
pickup. Ford is working with key suppliers - as well as with its
own manufacturing facilities Rawsonville Components Plant and Van
Dyke Electric Powertrain Center - to find ways to increase capacity
of electric vehicle parts, including battery cells, battery trays
and electric drive systems." Ford also notes that more than 75% of
its reservation holders are new to the Ford brand. (IHS Markit
- On January 3, three affiliates of Montana-based Gallatin Power
filed notices with the Public Utilities Commission of Nevada of new
applications filed with the US Bureau of Land Management on 4,500
MW of new solar/battery projects. The company said it would seek
permits from the Commission for these projects once they clear
BLM's environmental review process. The notices were from (IHS
Markit PointLogic's Barry Cassell):
- Bonnie Clare Solar LLC - The Bonnie Clare Solar Project would
consist of a 1,500-MW (ac) photovoltaic solar facility, a battery
energy storage system and a 230 kV generation-tie line in Nye
County, Nevada. The power line would interconnect this project to
the proposed Amargosa Substation. The project site is on
BLM-managed land about 10 miles northwest of Beatty in Nye County.
The project would include up to 1,000-MW of DC-coupled battery
capacity, and up to 500 MW of AC-coupled battery capacity. The
battery duration would be 4-8 hours.
- Orken Solar LLC - It plans a 1,500-MW photovoltaic solar
facility, a battery energy storage system and a 230-kV
generation-tie line in Nye County, Nevada. The tie line would also
run to the proposed Amargosa Substation. The project site is on
BLM-managed land about 43 miles north-northwest of Pahrump in the
Amargosa Valley. The project would also include up to 1,000-MW of
DC-coupled battery capacity, and up to 500 MW of AC-coupled battery
capacity. The battery duration would be 4-8 hours.
- American Glory Solar LLC - The American Glory Solar Project
would consist of a 1,500-MW photovoltaic solar facility, a battery
energy storage system and a 230-kV generation-tie line to the
proposed Amargosa Substation in Esmerelda County, Nevada. The
project site is on BLM-managed land about 5 miles north-northwest
of Silver Peak. The project would also include up to 1,000-MW of
DC-coupled battery capacity, and up to 500 MW of AC-coupled battery
capacity. The battery duration would be 4-8 hours.
- Chinese regulators have issued additional requirements for
foreign listings and share sales, but have not completely blocked
access to US capital markets. The China Securities Regulatory
Commission (CSRC) issued proposals on 24 December establishing
tighter regulatory requirements for foreign share listings by
Chinese firms. These extend domestic regulatory coverage to
previously exempt Variable Interest Entities (VIEs) owned outside
China. Firms now need to present the draft prospectus and relevant
opinions from industry regulators within three days of filing
application documents outside China or announcing a planned
transaction internationally. CSRC will then sanction or block the
planned deal, requesting additional clearances if appropriate. In
parallel, on 27 December, the National Development and Reform
Commission (NDRC) announced that Chinese firms operating in sectors
where foreign investment is limited require specific clearance from
regulators before undertaking international share listings.
Additionally, the Cyberspace Administration of China completed a
consultation on 13 December regarding further controls from a
cybersecurity perspective, with final guidelines due shortly. The
CSRC and NDRC guidelines are provisional and CSRC has solicited
market feedback by 23 January. Although CSRC has stated that its
new requirements do not apply retroactively to existing listings,
uncompleted existing filings may be subject to them. (IHS Markit
Country Risk's Brian
Lawson, David Li,
- Ireland has brought in a minimum price for alcoholic drinks of
10 cents per gram of alcohol in a bid to curb alcohol consumption,
especially binge drinking, as well as delay the moment young people
start drinking. (IHS Markit Food and Agricultural Policy's Sara
- The new minimum unit pricing (MUP) law that took effect on 4
January will mainly affect sales in off-licenses, shops and
supermarkets, particularly hard discounters, such as Aldi, rather
than pubs or restaurants.
- The law brings a hefty price hike for some products, for
example retailers now have to charge €7.40 for the cheapest 750
milliliter (ml) bottle of wine (12.5% alcohol) which previously
could be found for under €5. The same size bottle of 14% wine
cannot be sold for less than €8.28.
- Retailers have to ask at least €20.71 for a bottle of 37.5%
sprits and €23.75 for 43% spirits. A 500ml can of beer now retails
for a minimum €1.70.
- One of the biggest price rises will apply to slabs containing
24 cans of beer or cider, which will more than double in price,
from under €20 to around €40.
- "In Aldi, the cheap larger, Galahad, was sold as low as 75
cents a can but must now cost €1.57. An 11% alcohol bottle of wine
will need to cost at least €6.50 while a stronger 13.5% wine will
cost €7.89 minimum," newspaper The Irish Examiner reported.
- The year-on-year (y/y) rate of increase in the eurozone
producer price index (PPI) rose by almost two percentage points in
November 2021 to 23.7%, a new record high and above the market
consensus expectation (of 22.9%, according to Reuters' survey).
(IHS Markit Economist Ken
- Having risen for 12 months straight, the PPI inflation rate is
now 14 percentage points above its prior peak, set back in
- Soaring energy prices were again key to November's elevated PPI
inflation rate. On a y/y basis, the energy sub-index rose by 66%,
triple the previous record high, again set in 2008.
- In month-on-month (m/m) terms, the energy index rose by 3.5%,
following an unprecedented 18.6% increase in October. Soaring gas
prices in Europe have been driving the recent surge, with a further
increase likely to have occurred in December.
- The eurozone PPI inflation rate excluding energy also rose to a
new record high in November, of 9.8%, up by 0.8 percentage point
from October. The prior historical peak, set in 2011, was
- US employers announced 19,052 planned layoffs in December,
according to Challenger, Gray & Christmas—up 28.1% from the
lowest monthly reading on record in November. The total for
December is down 75% from the December 2020 reading. (IHS Markit
- Last year, employers announced plans to cut 321,970 jobs. This
was the lowest annual total on record and 86% lower than the
2,222,249 job cuts announced over 2020 (Challenger began tracking
job-cut announcements in January 1993).
- With job-cut announcements hovering near historic lows, job
openings near all-time highs, and the quits rate at a record high,
the labor market appears to be tight and tilted in the favor of
- According to Andrew Challenger, senior VP of Challenger, Gray
& Christmas, "Quits hit a new record in November with 4.5
million. Workers are leaving jobs in droves, particularly in-person
jobs in Entertainment/Leisure, Health Care, and Transportation,
according to the Department of Labor. This trend is likely to
continue as we contend with the largest surge in COVID cases we've
yet seen, spurred by Omicron."
- Last year, employers cited COVID-19 as a reason for 8,904
planned job cuts, with none citing COVID-19 as a reason in
December. Since August, COVID-19 has been cited only a total of 954
times as a reason for planned job cuts despite the increase in
cases that occurred first because of the Delta variant and the
current wave of new infections brought on by the Omicron variant.
Employers cited other reasons, including closing (69,648),
restructuring (58,712), market conditions (54,160), and demand
downturn (48,619) more frequently than COVID-19 as causes of
job-cut announcements in 2021.
- In 2020, COVID-19 was the leading reason for announced job
cuts, accounting for 1,109,656 announced job cuts. COVID-19 was the
ninth-leading reason for job-cut announcements last year.
Interestingly, vaccine refusal was the tenth-leading reason cited
for job-cut announcements at a total of 7,634.
- Aerospace/defense announced 34,627 job cuts last year, the
highest number of any industry. Rounding out the five sectors that
reported the most job cuts last year are healthcare/products
(31,997), services (28,650), telecommunications (25,543), and
- Denmark aims to reach fully fossil-fuel-free domestic aviation
by 2030 while making sure that consumers have a domestic "green"
aviation option by 2025. Danish Prime Minister Mette Frederiksen
made the government's pledge in her annual speech on New Year's
Day. The Nordic state aims to get on track to reach economy-wide
net-zero emissions by 2050. Denmark's government in 2019 agreed to
increase the pace of decarbonization, vowing to slash its 1990
emissions not by 40% but by 70% by 2030. (IHS Markit Net-Zero
Business Daily's Cristina Brooks)
- But greener flight requires developing aviation technologies,
as currently planes are only allowed to operate on a 50%
sustainable aviation fuel (SAF) and fossil fuel blend, according to
- The prime minister noted that Denmark's private sector and
universities, like Aalborg University, are working to develop
greener technologies and fuels for planes.
- The first SAF made from biogas, CO2, and hydrogen can be
produced in Denmark and the Nordic countries by 2025, according to
a 2019 University of Southern Denmark study.
- Denmark's public grant agency is funding the Energy Cluster
Denmark consortium to commercialize SAF made from biomass.
- Last May Denmark notched an SAF "first" through Shell joint
venture DCC & Shell Aviation.
- The SAF was made from "sustainably sourced, renewable waste" to
allow airline Alsie Express to fly between the Danish cities of
Sønderborg and Copenhagen. It was supplied as part of 2020 SAF
supply agreement between Shell and Finnish refiner Neste.
- For now, however, the prevailing practice to decarbonize
aviation in Denmark is to use offsets, Shell said.
- Dongfeng Honda, the joint venture (JV) between Dongfeng Motor
Group and Honda, said it will build a new plant in China for new
energy vehicle (NEV) production. The new plant, located in Wuhan,
will have capacity for 120,000 units per annum (upa) when it is
completed in 2024. The new plant in Wuhan will lay the foundation
for Honda to accelerate its transition to electrification. Hybrid
models have already accounted for 15% of Honda's Chinese sales in
2021. According to a company statement, a total of 233,801
Honda-branded hybrid vehicles were sold in the market last year, up
16% year on year (y/y). Both of Honda's JV, Dongfeng Honda and GAC
Honda, see opportunities to hit new sales records in 2022 as
Honda's hybrid product lines and all-new launches like the Integra
and Breeze gain traction in China. In the NEV market, Honda has
planned a series of electric vehicles (EVs) for China under its
commitment to have a fully electrified product portfolio in China
by 2030. By the end of 2025, the automaker will introduce 10 new
Honda-branded EVs in China under its e:N series. (IHS Markit
AutoIntelligence's Abby Chun Tu)
- At the CES 2022 show in Las Vegas (US), Peterbilt will showcase
its first Model 579 equipped with Level 4 autonomous system Aurora
Driver. According to a company statement, Aurora has added the new
Model 579 to its heavy-duty test fleet, which is hauling freight
for customers. Sterling Anderson, chief product officer and
co-founder of Aurora, said, "Our partnership with PACCAR to
co-develop self-driving Class 8 trucks builds on a deep technical
foundation and years of collective expertise. The team is making
progress as we prepare to launch Peterbilt's first autonomous
trucks at scale. Together, we're building a product and business
that will make our roads safer and our supply chains more
efficient, and we're excited to share a glimpse into that future at
CES." Aurora, which recently confirmed that it was going public
through a merger with special-purpose acquisition company (SPAC)
Reinvent, has developed an autonomous system called "Aurora
Driver". Working with partners PACCAR and Volvo Group, it aims to
launch its autonomous system in commercial service in heavy-duty
trucks in late 2023 with robotaxis to follow a year later. In
collaboration with PACCAR, it plans to launch a commercial pilot of
autonomous trucks hauling goods for package delivery firm FedEx.
(IHS Markit Automotive Mobility's Surabhi Rajpal)
- US nonfarm payroll employment rose 199,000 in December, down
from prior months' gains and well below expectations. Civilian
employment, on the other hand, posted a solid gain (651,000),
outpacing a more modest increase in the civilian labor force
(168,000); the unemployment rate declined 0.3 percentage point to
3.9%. (IHS Markit Economists Ben
Herzon and Michael
- The unemployment rate in December was below most estimates of
the "natural rate" and only 0.4 percentage point above the
pre-pandemic low of 3.5%, indicating that labor markets are, once
again, tight and tightening.
- The current (tight) state of the labor market in large part
reflects a continued depressed labor-force participation rate.
- While it has been moving unevenly higher in recent months, at
61.9%, the participation rate remains well below the February 2020
level of 63.4%. Were today's participation rate equal to that of
February 2020, today's level of employment would imply an
unemployment rate of 6.1%—a labor market with plenty of
- Nevertheless, employers are competing for labor that is in
short supply, and wage gains are firming. In December, average
hourly earnings rose 0.6% and prior months' increases were revised
higher. From March 2021 to December 2021, average hourly earnings
rose at a 6.0% annual rate.
- The current rapid spread of the Omicron variant, moreover, has
the potential to temporarily slow the recovery in labor-force
participation and keep wage rates rising at rapid clip.
- Over the next few months, IHS Markit analysts assume that
payroll gains firm only gradually while wage rates continue rising
rapidly, implying solid growth of private wage-and-salary
- After expanding for the past 10 months, Canada's purchasing
managers' spending declined in December mainly because of the
negative impact of the Omicron variant and partly owing to British
Columbia's flood damage that negatively affected transportation
infrastructure. The Ivey Purchasing Managers' Index (PMI) plummeted
16.2 points to 45.0 in December, as purchasing managers pulled back
spending for the first time since January 2021. (IHS Markit
- Although the employment index continued to decrease for four
consecutive months, down 4.5 points to 50.0, indicating no change
in monthly employment, December's Labor Force Survey showed a solid
net job gain of 54,700, led by the public sector.
- The inventories index fell 5.4 points to 49.6, showing a modest
first decline in inventory spending since last December. Reflecting
the intensified supply disruption, the supplier deliveries index
dropped to 27.7, remaining at the second-lowest level following the
massive plunge in the first month of the pandemic.
- After the sharp decline in the previous month, the price index
slightly rebounded, partly because of the low exchange rate,
putting modest upward pressure on inflation.
- All subindexes fell except the price index, which increased 2.6
points to 77.6.
- Given the reimposed regional restrictions, more affecting the
service sector, ongoing supply disruption will likely weigh on
purchasing managers' spending activity in the short term.
- There was another stronger-than-expected increase in eurozone
HICP inflation in December 2021. According to Eurostat's flash
estimate, it edged up from 4.9% to 5.0%, a new record high and
above the market consensus expectation (of 4.7%, according to
Reuters' survey). (IHS Markit Economist Ken
- That is the highest headline inflation rate since the
eurozone's inception in 1999 by some distance - the prior peak in
2008 was 4.1%. The cumulative increase during 2021 was 5.3
percentage points, a record one-year rise, again by a large
- Energy inflation moderated in December for the first time in
seven months, although at 26.0% year on year (y/y) it still
increased by more than 30 percentage points during 2021. Energy
inflation contributed half (2.5 percentage points) of December's
HICP inflation rate, down marginally from November's record
- Food inflation increased sharply to 3.2%, the highest rate
since June 2020. This was driven mainly by unprocessed food
inflation (up from 1.9% to 4.6%), which can be very volatile in
winter months due to weather effects.
- The eurozone's core HICP inflation rate excluding energy, food,
alcohol, and tobacco prices was stable in December at 2.6%,
slightly above the market consensus expectation of 2.5%, and a
record high. As expected, the two constituent parts of the core
inflation rate diverged in December.
- Non-energy industrial goods (NEIG) inflation jumped from 2.4%
to 2.9%, a record high. The strong upward trend during 2021
reflected various influences, including supply-side bottlenecks,
and has further to go. The pre-pandemic rate of NEIG inflation back
in February 2020 was just 0.5%.
- In contrast, services inflation slipped back from 2.7% to 2.4%
in December, although it remained well above its pre-pandemic rate
of 1.6%. The areas of services inflation most sensitive to the
COVID-19 pandemic, such as restaurants and hotels, fell markedly in
2020 but rebounded during 2021 as economies reopened and consumer
demand recovered strongly.
- The People's Bank of China (PBOC) has started to provide
low-cost loans to fund decarbonization activities via a scheme that
financial experts say could play a key role in helping the country
reach its climate goals. (IHS Markit Net-Zero Business Daily's Max
- Under the carbon emissions reduction facility (CERF) launched 8
November, Chinese financial institutions licensed to operate
nationwide can apply for PBOC funds to support their loans to clean
energy, energy conservation, and environmental protection
- Sun Guofeng, head of the Chinese central bank's monetary policy
department, said 30 December that the first batch of funds totaling
CNY 85.5 billion ($13.4 billion) were already distributed to
lenders to back decarbonization projects that can cut CO2 emissions
by 28.8 million metric tons. "The PBOC will continue … to help
China reach the goals of reaching peak CO2 emissions by 2030 and
carbon neutrality by 2060," Sun said during a press conference,
citing the country's national targets.
- The central bank has not indicated an upper limit for the CERF
funds. Based on the amount of domestic green loans, CCB Futures, a
brokerage owned by state-controlled China Construction Bank,
estimates that the PBOC could distribute CNY 1.26 trillion per year
via the facility. Anhui-based Huaan Securities estimates the figure
at CNY 1.8 trillion.
- In a research note published last September, the International
Energy Agency said China—the world's largest GHG
emitter—needs an annual investment of CNY 4 trillion in its
energy sector alone to reach the 2030 climate target.
- Italy-based Repower Renewables has announced plans to build a
495 MW offshore wind farm around 70 kilometers off the eastern
coast of Calabria, Italy. The project will feature 33 wind
turbines, with an estimated capacity of 15 MW each. The company has
submitted plans to the Ministry of Infrastructure and Transport
Port Authority of Crotone for a 30-year concession to build and
operate the wind farm. The wind turbines will be connected via 66
kV array cables and the electricity generated will be transported
to shore through a 380 kV export cable. Repower is one of 64
developers who noted their expression of interest to build floating
wind farms in Italy. The survey was carried out last year by
Italy's Ministry of Ecological Transition. (IHS Markit Upstream
Costs and Technology's Melvin Leong)
- LG Electronics has developed new biometric recognition
technology that enables car owners to turn on the ignition without
using a key, according to a press release by Digi Times Asia. The
technology identifies facial expressions along with finger
movements leveraging the use of multiple in-car cameras. LG's
authentication system, with the help of a first camera, identifies
the user's specific body parts, and through a second camera
automatically resets its viewing angles based on the data points of
the first camera to capture the user's iris and other biometric
features. This allows the user to start up the vehicles as well as
adjust or control the vehicle through facial expressions and hand
gestures. The technology also helps to detect whether a driver is
drowsy or has a sudden illness by monitoring eyelids and facial
movements. The press release adds that LG and its subsidiaries are
working to ensure that more emphasis is placed on development
through various patented technologies, including autonomous driving
devices, automotive in-cabin foldable displays, and
vehicle-to-everything (V2X) communications technologies. (IHS
Markit AutoIntelligence's Jamal Amir)
- Hyundai has signed a memorandum of understanding (MOU) with
Singapore-based real-time 3D content developer and platform
operator Unity to jointly design and build a new metaverse roadmap
and platform for a meta-factory, according to a company press
release. Under the MOU, the two parties aim to build a meta-factory
concept, a digital twin of an actual factory supported by a
metaverse platform. Hyundai will be able to virtually test-run a
factory in order to compute the optimal plant operation, and plant
managers will be able to handle problems without having to
physically visit the plant, thanks to the advent of a meta-factory.
The collaboration will also result in a real-time 3D and virtual
platform that will reach a large number of Hyundai consumers,
providing them with a more comprehensive range of services across
sales, marketing, and customer experience, according to the
automaker. Hyundai intends to implement the meta-factory concept
first at the Hyundai Motor Global Innovation Center in Singapore
(HMGICS), currently under construction. After construction of the
physical center is completed by the end of this year, the automaker
plans to open the virtual factory by 2025. Hyundai and Unity's
collaboration at HMGICS will accelerate intelligent manufacturing
innovation by merging artificial intelligence, 5G, and other
advanced technologies into a next-generation smart factory
platform. (IHS Markit AutoIntelligence's Jamal Amir)
Posted 10 January 2022 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.