Economics professor Kazuo Ueda has been nominated as the Bank of Japan’s next governor, ending weeks of speculation among global investors. He’s set to succeed Haruhiko Kuroda, who will step down in April after overseeing a decade of policies that aimed to shake off a deflationary environment by keeping interest rates at ultra-low levels. Ueda is known as a soft-spoken pragmatic academic, but was also a former member of the central bank’s policy board and kept close ties to the BOJ since leaving the position in 2005.
Why it’s important: The BOJ is the last major central bank on the globe to maintain an ultra-loose monetary policy stance. However, questions have swirled over how long that could last in the wake of inflationary pressures, especially with regards to the Bank of Japan’s signature yield curve control – which has become increasingly difficult to defend in the current environment. Many previously thought that the top spot at the BOJ would go to a seasoned central banker like Deputy Governor Masayoshi Amamiya, but the surprise nomination of Ueda could mean that things may be changing in terms of direction (Amamiya was one of the key architects of monetary policy over the past decade).
Putting a spotlight on the economy, Japanese inflation hit a multi-decade high of 4% in December, which is double the BOJ’s longstanding 2% target. Earlier today, the country’s Q4 annualized GDP growth expanded only 0.6%, which was much less than expected amid slumping business investment. SA contributor Hunting Alpha still calls the iShares MSCI Japan ETF (EWJ) the sumo wrestler of ETFs in a recent technical analysis (it’s up 6.2% YTD).
Speaking of monetary policy: The U.S. Federal Reserve will be closely watching today’s release of the Consumer Price Index for January, which will gauge how well the central bank is faring in its fight against inflation. Wall Street Breakfast subscribers are also weighing in on what kind of landing is in store for the American economy with over 1,000 responses received in the latest poll. Most expect that a “soft landing” is now in the works, but explore a full breakdown of the results here. (13 comments)
Valentine’s Day spending by consumers is forecast by the National Retail Federation and Prosper Insights to rise 8.4% to $25.9B in 2023, to become one of the highest spending years on record. The top gifts expected to be doled out include candy (57% of respondents), greeting cards (40%), flowers (37%), an evening out (32%), jewelry (21%), gift cards (20%) and clothing (19%). Some stocks traditionally associated with getting an extra sales boost from Valentine’s Day include 1-800-Flowers.com (FLWS), Hershey (HSY), and OpenTable, which is owned by Booking Holdings (BKNG). See the rest of the list here.
Amazon (AMZN) CEO Andy Jassy is planning to double down on the company’s struggling brick-and-mortar business, with the retail behemoth ready to “go big” on physical stores in 2023. Blaming the COVID-19 pandemic for ongoing struggles, Amazon has yet to disrupt the grocery sector since scooping up Whole Foods for $13.7B in 2017. The “Just Walk Out” technology of Amazon Fresh grocery stores and Amazon Go convenience shops have also only seen limited traction, while locations have been closed down and a related $720M impairment charge was recorded in Q4 results. Also check out recent SA contributor commentary, like Ironside Research’s Looking Ahead: Why Amazon Must Execute Flawlessly In 2023. (10 comments)
Ford (NYSE:F) has confirmed plans to invest $3.5B to build a lithium iron phosphate battery plant in Michigan with the aid of Chinese battery giant CATL. The new facility will employ 2,500 people when production begins in 2026 (though the automaker just announced thousands of layoffs elsewhere overnight). In a call with the media, Vice President of EV Industrialization Lisa Drake addressed the political risk of working with the Chinese battery giant amid elevated Sino-American tensions. Meanwhile, cross-town rival General Motors (GM) reportedly scrapped plans to construct a fourth battery plant alongside LG Energy Solution in January, though it’s unclear if the automaker has selected a new company to replace its South Korean partner. (35 comments)
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