Early morning call: Fed meeting minutes sheds interesting light on what may happen in 2024

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Fed meeting minutes lowdown

While the minutes did not provide direct clues about when rate cuts might commence, they reflected a growing sense that inflation is under control and growing concern about the risks that "overly restrictive" monetary policy may pose to the economy. One comment particularly interests the market in a week punctuated by job indicators: "Several participants noted the risk that, if labour demand were to weaken substantially further, the labour market could transition quickly from a gradual easing to a more abrupt downshift in conditions."

Job data projections and analysis

At 1.15pm this Thursday, the market awaits ADP employment change. Expectations are for 115,000 job creations in the private sector. Also, initial jobless claims are forecast at 216,000 for last week. Yesterday, the number of job openings decreased by 62,000 from the previous month to 8.790 million in November, marking the lowest level since March 2021. It was the third consecutive month of declines in US job openings.

All these indicators pave the way for non-farm payrolls for December. 168,000 job creations are expected. Unemployment rate should rise to 3.8%, from 3.7% in November. As for average hourly earnings, they should rise by 0.3% MoM and 3.9% YoY. That last figure would be at its lowest since mid-2021.

Caixin PMI survey and Germany CPI

In China, services activity expanded the fastest in five months according to the Caixin PMI survey. The index rose to 52.9 in December, from 51.5 the previous months and beating expectations of 51.6. A performance due to a solid rise in new business at the fastest rate since May. Foreign demand for Chinese services also increased last month. Improved demand conditions also led firms to increase their staffing levels.

Later in Germany, consumer price index is expected to rise by 3.7% in December YoY, after 3.2% the previous month. This would be the first acceleration in seven months.

Next raises profit forecast for fifth time in eight months

Elsewhere on the equity market, Next raised its full-year profit forecast for the fifth time in eight months. The clothing retailer unveiled better than expected full price sales in the nine weeks to 30 December, up 5.7%. It now sees FY full price sales up 2.5%, and FY pretax profit at £905 million, up £20 on previous guidance

Walgreens Boots Alliance fiscal first quarter earnings report

Over in the US, Walgreens Boots Alliance is due to report its fiscal first quarter earnings at lunchtime. The Street anticipates earnings of 63 cents per share. That would be 4 cents lower than three months ago, and a decline of about 45% on the same quarter last year. Revenue is expected to rise by 4.5% to $34.88 billion.

Like many, Walgreens Boots Alliance benefited from the pandemic. And like many, it is trying to find way buffer a steep decline in Covid-19 vaccine and testing volumes. Three months ago, Walgreens said it had taken steps to align its cost structure with its business performance: a cost reduction of at least $1 billion, and capital expenditures down by $600 million. These measures won't impact the group's balance sheet before the second quarter of this year. Investors are also looking for a potential update on Boots. Walgreens merged with Boots in 2014. A couple of years ago now, the group tried to sell the UK division, but failed to find a suitable buyer. According to a recent Bloomberg report, the company is now considering listing Boots in London.