👀 Retail investors' 2024 plans

What’s going on here?

China softened its stance on relationships, announcing plans to make it easier for foreign businesses to invest in the country.

What does this mean?

If there was a Tinder for global economic superpowers, presumably stuffed full of stacked egos and mind games, China and the US would hardly be sending each other super-likes. While the pair could form the most iconic power-couple the world has ever seen (maybe with the sole exception of Posh and Becks), their relationship has been spattered with dealbreakers like trade limits and stances on national defense. But maybe they’re starting to focus on what they do have in common, instead. After the US and Chinese presidents met in November, the Chinese government seems to be following through on promises to make the country more accessible for foreign businesses. That could be the start of something beautiful: a buoy for international companies with a foot in China, and some more cash flowing around the country’s currently loveless economy.

Why should I care?

For markets: Expensive taste.

China’s shoppers usually love a bit of luxury, with the country making up a major market for established European and US companies like Estée Lauder and LVMH. But now that everyday workers need to watch their coins a little closer, those companies have seen the repercussions in their sales and share prices. So if China’s initiatives manage to make shoppers’ cash stretch further, companies will be toasting glasses all over the globe.

The bigger picture: This could be a year of exploration.

The US tech sector pulled in more than its fair share of investors’ cash last year. So with stateside stock markets still wrangling rallies, fewer investors braved the uncertainty of emerging markets. That does mean, though, that their stocks are now a lot cheaper than their US counterparts. And if China, the biggest emerging market of them all, can recover this year, investors might take the chance to explore the world for less.

What’s going on here?

The first inflation reading of the year didn’t do much to reset the scoreboard.

What does this mean?

Investors have been tuning into monthly inflation updates as if they were the first episode of a talked-about reality show since a breath-catching cliffhanger. But this one wasn’t quite as satisfying: prices increased by more than expected in December and were higher than in November, reversing the slow retreat of previous months. It’s not a cause for central banks’ concern just yet, though. While higher than forecasted, that figure isn’t alarming. And if you strip out volatile energy and food costs, the remaining “core inflation” was still on the descent.

Why should I care?

Zooming out: Inflation’s a game of chicken.

Inflation is, in part, a self-fulfilling prophecy. Once shoppers realize their grocery shop is running more expensive by the month, they’ll start stocking up to avoid paying more in the future. Problem is, those bulky sales give stores the confidence they need to raise their prices higher. But that shopping tactic mainly makes sense when inflation’s at, say, last year’s 10% peak – save for the pain of storing long-life milk and tinned fish. But when central banks bring inflation closer to their 2% target, even budget-conscious shoppers will be more likely to make peace with paying a few more pennies on that loaf of bread.

For markets: It might not take two, after all.

Central banks might herald 2% as the magic number, but economists seem to be warming to the 5%-mark – roughly where we are today. At this level, interest rates are high enough to make folk and businesses more careful when borrowing money and making business decisions, but not high enough to squash consumer spending or business activity. Plus, keeping rates around 5% gives central banks room to trim them down, a handy tool in an economic downturn.