💸 To buy, or not to buy

What’s going on here?

The Federal Reserve (the Fed) might’ve wished upon a star, but its American employment Dream didn’t come true.

What does this mean?

The latest employment data showed that the US filled around 216,000 jobs in December. And while that’s more than expected, the main kicker was the salaries being paid out. Paychecks were just over 4% higher than the same time last year, and while that does mean Americans can keep up with rising prices, it also means companies can keep upping their price tags. That’s a spiral that could keep fanning inflation, so while the Fed hardly has a reputation for partying hard, the central bank is sure nursing a long-lasting headache right now.

Why should I care?

Zooming out: Mathemat-ish.

Central bankers round their numbers even more than shoppers during January sales. Any inflation reading below 2.5% could be deemed “close enough” to the European Central Bank’s (the ECB) 2% target, the point at which interest rate cuts are firmly on the table. But any number above, and central banks will see red – or, at least, the 3% mark. So when December’s 2.9% stat landed on desks this Friday, the ECB will have noticed the uptick from November’s 2.4%. And even though economists expected a slight increase, that data could keep rate cuts off the table for longer.

The bigger picture: Artificial intelligence versus real inflation.

High interest rates might be keeping inflation steady now, but they were near zero for much of the last decade. That means something else had been keeping prices in check beforehand – and that could’ve been technology. Cost-saving tech like cloud computing solutions keep companies’ margins wide, and that means they don’t need to push high costs onto their customers in the form of beefier prices. So give it a few months or years, and artificial intelligence may work magic on firms’ books. If so, that should keep prices stable and shoppers happy.

What’s going on here?

Only a third of Chinese carmakers hit their sales target last year, as the world’s biggest car market filled to the brim with competition.

What does this mean?

Sales of EVs and hybrid cars were 38% higher last year than the one before, with China’s Passenger Car Association reporting a figure just shy of 9 million on Wednesday. But clearly, Chinese carmakers had bigger plans. Of the thirteen brands that made their sales figures public, just four hit their targets. The ones that churn out traditional gas guzzlers fell particularly behind, with only Geely Automobile living up to its own projections. Mind you, electric carmaker BYD stole the focus from any failures, meeting its ambitious target to dethrone Tesla as the world’s top-selling EV maker.

Why should I care?

For markets: Vacations can be expensive.

China’s appetite for EVs is sending a rumble through the car market. But the problem is that electric carmakers are hustling to satiate those buyers, adding more competition to an already crowded market. So for brands that missed the chance to establish themselves as household names in the early days, the most lucrative move could be to funnel EVs into foreign markets. Russia, for example. The only problem: China gives its carmakers hefty tax breaks and subsidies, so they’ll need to watch their books carefully if they expand into less generous areas.

The bigger picture: Carmakers sneeze, and chipmakers catch a cold.

Carmakers stocked up big-time on the chips they need to run fancy gizmos and gadgets, anticipating more sales than they won in the end. So with inventories nice and fat, chipmakers aren’t having much luck flogging their wares. Mobileye – which makes chips for driver-assistance systems and counts Porsche and Volkswagen as customers – recently unveiled a disappointing full-year revenue forecast. And because that made investors wary of future business from carmakers, they sent Mobileye’s shares down by a quarter on Thursday.