How Apple’s iPhone Overtook Samsung As The Top Smartphone In The World

How Guyana Became The World’s Fastest Growing Economy

Saudi Arabia has opened its first alcohol store

Saudi Arabia has opened its first alcohol store, but there’s a catch

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-820x462.jpeg" alt="" class="wp-image-450070" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">SUIXI, CHINA &#8211; DECEMBER 30: An employee works on the production line of aluminum foil at a workshop of Anhui Limu New Material Technology Co., Ltd on December 30, 2023 in Suixi County, Huaibei City, Anhui Province of China. (Photo by Li Xin/VCG via Getty Images) Vcg | Visual China Group | Getty Images</figcaption></figure>



Global commodity markets are in a “super squeeze” amid supply disruptions and lack of investment — and it’s only going to get worse as geopolitical and climate risks exacerbate the situation, HSBC said.



“For some time now we have described global commodity markets as being in a ‘super-squeeze,’” its chief economist Paul Bloxham told CNBC.



A commodity “super squeeze” is denoted by higher prices driven by supply constraints more than a robust growth in demand, he explained.



“If it’s a supply constraint that’s driving high commodity prices, it’s a very different story for global growth,” said via Zoom. Higher prices as a result of a super squeeze are “not as positive.”



“We see the deeper ‘super-squeeze’ factors on the supply-side as still set to play a key role in keeping commodity prices elevated,” he said, outlining factors like political uncertainties, climate change and the lack of investments into the green energy transition.



Geopolitical risks include the ongoing Israel-Hamas conflict in Gaza and the Ukraine war, which have hampered global trade, as seen in shipping disruptions from the recent Houthi attacks in the Red Sea.



Another reason is climate change, which disrupts supply chains as well as commodities supply, especially in the agricultural space.



“The super squeeze could be deeper, or more prolonged if geopolitical, climate change or energy transition related supply disruptions are larger than expected,” he added.



<h2 class="wp-block-heading" id="h-lack-of-investments"><a></a>Lack of investments</h2>



The world’s pursuit of a net-zero carbon future is fueling demand for energy transition metals such as copper and nickel, Bloxham pointed out.



However, there are insufficient investments allocated to procuring these critical minerals, leading to a sharper supply squeeze on energy transition metals — in particular copper, aluminum and nickel, he said.



As energy transition ramps up, markets could be looking at a shortage of a slew of metals like graphite, cobalt, copper, nickel and lithium in the next decade, the Energy Transitions Commission said in a report in July.



At the recent COP28 climate change conference, more than 60 countries backed a plan to triple global renewable energy capacity by 2030, in what is largely deemed as a step forward for energy transition and a further boost in demand for metals required for that transition. 



“Large-scale mining projects can take 15-20 years, and the last decade has seen a lack of investment in exploration and production for key energy transition materials,” the report said.



Annual capital investments in these metals averaged $45 billion in the last two decades, and must rise to around $70 billion each year through to 2030 to ensure an ample stream of supply, according to the ETC report.



Without more investment in new capacities, supply will be constrained, HSBC’s Bloxham said, adding that “for any given amount of demand,” it should be expected that commodity prices will stay more elevated than in the past.



“That seems to be playing out across many of the commodities at the moment.”



Technology could also be a gamechanger if a development came along and made it much easier to extract the metals used in the battery space, Bloxham added.



He did not say how long it will take global commodity markets to move out of the squeeze, but one way out of it — which would also push commodity prices lower — is a “bigger and deeper [economic] downturn globally,” he said.



“Commodities are notoriously volatile asset classes, with a long history that is prone to a short squeeze and the current landscape points to more of the same,” said Brian Luke, senior director and head of commodities at S&amp;P Dow Jones Indices. He highlighted that extreme weather events and geopolitics have also impacted the agricultural and energy commodity baskets.



<h2 class="wp-block-heading"><a></a>Metals most impacted</h2>



Analysts say metals will likely see the most upside.



Bloxham noted that aside from clean energy metals, iron ore was also on his list due to falling inventory and a lack of investments into expanding capacity.&nbsp;



Iron ore has seen a price jump of over 24% in the last year, according to data from FactSet. The benchmark 62%-grade iron ore last traded at $135.48 per ton.



“The reason why [iron ore] has a sudden squeeze-up is because inventory has been very low,”&nbsp;said Bank of America Securities’ head of Asia -Pacific basic materials, Matty Zhao.



She noted that in spite of China’s property crisis, steel production has continued, fueling demand for iron ore and coking coal, which are integral to steelmaking.



China, which makes around 55% of the world’s steel, produced 874.7 million tons of steel in the first 10 months of 2023 — up 1.4% across the same period in 2022.



<h2 class="wp-block-heading"><a></a>What squeeze?</h2>



While risks remain, one analyst is of the view that commodity markets are still “adequately supplied” for the most part.



“The commodity markets are currently focused on slumping demand due to the sluggish global economy. As such, there’s not too much concern about supplies,” said Arlan Suderman, chief commodities economist at financial services firm StoneX.



Oil, for one, saw an increase in global oil inventories in 2023.



Some are still hoping that a rebound in Chinese demand will help.



“A resurgence from Asia will go a long way in determining if commodities will have a breakout year,” said S&amp;P’s Luke, adding that 2023 saw a year of unfulfilled demand from China which weighed heavily on commodity markets.&nbsp;

107355390-1704724879173-gettyimages-1896093454-vcg111472304231

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

How Denver International became one of the fastest-growing airports in the world #Shorts

Arab Peace Pan Explained

Arab Peace Plan Explained

What To Do With All The Empty Offices In U.S. Cities | CNBC Marathon

Why the U.S. is now obsessed with soybeans #Shorts

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-820x461.jpeg" alt="" class="wp-image-449214" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Sam Altman, CEO of OpenAI, during a panel session at the World Economic Forum in Davos, Switzerland, on Jan. 18, 2024. Bloomberg | Bloomberg | Getty Images</figcaption></figure>



Executives at some of the world’s leading artificial intelligence labs are expecting a form of AI on a par with — or even exceeding — human intelligence to arrive sometime in the near future. But what it will eventually look like and how it will be applied remain a mystery.



Leaders from the likes of OpenAI, Cohere, Google’s DeepMind, and major tech companies like Microsoft and Salesforce weighed the risks and opportunities presented by AI at the World Economic Forum in Davos, Switzerland.



AI has become the talk of the business world over the past year or so, thanks in no small part to the success of ChatGPT, OpenAI’s popular generative AI chatbot. Generative AI tools like ChatGPT are powered large language models, algorithms trained on vast quantities of data.



That has stoked concern among governments, corporations and advocacy groups worldwide, owing to an onslaught of risks around the lack of transparency and explainability of AI systems; job losses resulting from increased automation; social manipulation through computer algorithms; surveillance; and data privacy.



<h2 class="wp-block-heading" id="h-agi-a-super-vaguely-defined-term"><a></a>AGI a ‘super vaguely defined term’</h2>



OpenAI’s CEO and co-founder Sam Altman said he believes artificial general intelligence might not be far from becoming a reality and could be developed in the “reasonably close-ish future.”



However, he noted that fears that it will dramatically reshape and disrupt the world are overblown.



“It will change the world much less than we all think and it will change jobs much less than we all think,” Altman said at a conversation organized by Bloomberg at the World Economic Forum in Davos, Switzerland.



Altman, whose company burst into the mainstream after the public launch of ChatGPT chatbot in late 2022, has changed his tune on the subject of AI’s dangers since his company was thrown into the regulatory spotlight last year, with governments from the United States, U.K., European Union, and beyond seeking to rein in tech companies over the risks their technologies pose.



In a May 2023 interview with ABC News, Altman said he and his company are “scared” of the downsides of a super-intelligent AI.



“We’ve got to be careful here,” said Altman told ABC. “I think people should be happy that we are a little bit scared of this.”



Then, Altman said that he’s scared about the potential for AI to be used for “large-scale disinformation,” adding, “Now that they’re getting better at writing computer code, [they] could be used for offensive cyberattacks.”



Altman was temporarily booted from OpenAI in November in a shock move that laid bare concerns around the governance of the companies behind the most powerful AI systems.



In a discussion at the World Economic Forum in Davos, Altman said his ouster was a “microcosm” of the stresses faced by OpenAI and other AI labs internally. “As the world gets closer to AGI, the stakes, the stress, the level of tension. That’s all going to go up.”



Aidan Gomez, the CEO and co-founder of artificial intelligence startup Cohere, echoed Altman’s point that AI will likely be a real outcome in the near future.



“I think we will have that technology quite soon,” Gomez told CNBC’s Arjun Kharpal in a fireside chat at the World Economic Forum.



But he said a key issue with AGI is that it’s still ill-defined as a technology. “First off, AGI is a super vaguely defined term,” Cohere’s boss added. “If we just term it as ‘better than humans at pretty much whatever humans can do,’ I agree, it’s going to be pretty soon that we can get systems that do that.”



However, Gomez said that even when AGI does eventually arrive, it would likely take “decades” for companies to truly be integrated into companies.



“The question is really about how quickly can we adopt it, how quickly can we put it into production, the scale of these models make adoption difficult,” Gomez noted.



“And so a focus for us at Cohere has been about compressing that down: making them more adaptable, more efficient.”



<h2 class="wp-block-heading"><a></a>‘The reality is, no one knows’</h2>



The topic of defining what AGI actually is and what it’ll eventually look like is one that’s stumped many experts in the AI community.



Lila Ibrahim, chief operating officer of Google’s AI lab DeepMind, said no one truly knows what type of AI qualifies as having “general intelligence,” adding that it’s important to develop the technology safely.



“The reality is, no one knows” when AGI will arrive, Ibrahim told CNBC’s Kharpal. “There’s a debate within the AI experts who’ve been doing this or a long time both within the industry and also within the organization.”



“We’re already seeing areas where AI has the ability to unlock our understanding &#8230; where humans haven’t been able to make that type of progress. So it’s AI in partnership with the human, or as a tool,” Ibrahim said.



“So I think that’s really a big open question, and I don’t know how better to answer other than, how do we actually think about that, rather than how much longer will it be?” Ibrahim added. “How do we think about what it might look like, and how do we ensure we’re being responsible stewards of the technology?”



<h2 class="wp-block-heading"><a></a>Avoiding a ‘s&#8212; show’</h2>



Altman wasn’t the only top tech executive asked about AI risks at Davos.



Marc Benioff, CEO of enterprise software firm Salesforce, said on a panel with Altman that the tech world is taking steps to ensure that the AI race doesn’t lead to a “Hiroshima moment.”



Many industry leaders in technology have warned that AI could lead to an “extinction-level” event where machines become so powerful they get out of control and wipe out humanity.



Several leaders in AI and technology, including Elon Musk, Steve Wozniak, and former presidential candidate Andrew Yang, have called for a pause to AI advancement, stating that a six-month moratorium would be beneficial in allowing society and regulators to catch up.



Geoffrey Hinton, an AI pioneer often called the “godfather of AI,” has previously warned that advanced programs “might escape control by writing their own computer code to modify themselves.”



“One of the ways these systems might escape control is by writing their own computer code to modify themselves. And that’s something we need to seriously worry about,” said Hinton in an October interview with CBS’ “60 Minutes.”



Hinton left his role as a Google vice president and engineering fellow last year, raising concerns over how AI safety and ethics were being addressed by the company.



Benioff said that technology industry leaders and experts will need to ensure that AI averts some of the problems that have beleaguered the web in the past decade or so — from the manipulation of beliefs and behaviors through recommendation algorithms during election cycles, to the infringement of privacy.



“We really have not quite had this kind of interactivity before” with AI-based tools, Benioff told the Davos crowd last week. “But we don’t trust it quite yet. So we have to cross trust.”



“We have to also turn to those regulators and say, ’Hey, if you look at social media over the last decade, it’s been kind of a f&#8212;ing s&#8212; show. It’s pretty bad. We don’t want that in our AI industry. We want to have a good healthy partnership with these moderators, and with these regulators.”



<h2 class="wp-block-heading"><a></a>Limitations of LLMs</h2>



Jack Hidary, CEO of SandboxAQ, pushed back on the fervor from some tech executives that AI could be nearing the stage where it gets “general” intelligence, adding that systems still have plenty of teething issues to iron out.



He said AI chatbots like ChatGPT have passed the Turing test, a test called the “imitation game,” which was developed by British computer scientist Alan Turing to determine whether someone is communicating with a machine and a human. But, he added, one big area where AI is lacking is common sense.



“One thing we’ve seen from LLMs [large language models] is very powerful can write says for college students like there’s no tomorrow, but it’s difficult to sometimes find common sense, and when you ask it, ‘How do people cross the street?’ it can’t even recognize sometimes what the crosswalk is, versus other kinds of things, things that even a toddler would know, so it’s going to be very interesting to go beyond that in terms of reasoning.”



Hidary does have a big prediction for how AI technology will evolve in 2024: This year, he said, will be the first that advanced AI communication software gets loaded into a humanoid robot.



“This year, we’ll see a ‘ChatGPT’ moment for embodied AI humanoid robots right, this year 2024, and then 2025,” Hidary said.



“We’re not going to see robots rolling off the assembly line, but we’re going to see them actually doing demonstrations in reality of what they can do using their smarts, using their brains, using LLMs perhaps and other AI techniques.”



“20 companies have now been venture backed to create humanoid robots, in addition of course to Tesla, and many others, and so I think this is going to be a conversion this year when it comes to that,” Hidary added.

107361594-1705663400079-gettyimages-1934702395-DAVOS_WEF_2024

Tech execs say a type of AI that can outdo humans is coming, but have no idea what it looks like

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-820x462.jpeg" alt="" class="wp-image-449191" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A securities business hall in Fuyang, China, in December 2023. Costfoto | Nurphoto | Getty Images</figcaption></figure>



China is considering a rescue package backed by offshore money to stave off a slump in its struggling stock markets, according to Bloomberg News.



The report, citing people familiar with the matter, said Chinese authorities are aiming to get about 2 trillion yuan ($278 billion), primarily through offshore accounts of Chinese state-owned companies to help stabilize the market by purchasing stocks onshore through Hong Kong markets.



According to Bloomberg, Chinese policymakers have also put aside 300 billion yuan of local funds that would be used to invest into onshore shares through state-owned financial firms China Securities Finance Corp. or Central Huijin Investment Ltd.



Mainland China’s CSI 300 index slid 11.4% last year, clocking its third straight year of falls. Hong Kong’s Hang Seng index fell nearly 14% in 2023, making it the worst performing major Asian stock market.



The Bloomberg report comes a day after Chinese Premier Li Qiang said during a state council meeting the country will be rolling out measures to stabilize its stock markets.



“We must take more powerful and effective measures to stabilize the market and confidence,” Li said, according to state media.

107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

Is The U.S. Navy Ready For The Red Sea Threat?

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="404" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istock-172471634-941536-1611211252-820x404.jpg" alt="" class="wp-image-400971" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istock-172471634-941536-1611211252-820x404.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istock-172471634-941536-1611211252-300x148.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istock-172471634-941536-1611211252-768x379.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/istock-172471634-941536-1611211252.jpg 1458w" sizes="auto, (max-width: 820px) 100vw, 820px" /></figure>



Gold prices could close the year as much as 10% above current levels on the back of potential interest rate cuts, UBS strategists said, despite declines at the start of 2024.



A UBS note on Friday described recent price moves as “minor” in the context of the precious metal’s 15% climb through 2023 and said the “power of the [Federal Reserve]’s policy pivot should not be underestimated.”



Bullion remains above the psychological level of $2,000 per ounce, the UBS strategists said, forecasting a rise to $2,250 per ounce by the end of the year, despite near-time volatility.



Analysts at Scotiabank retained a more cautious outlook, but revised their price guidance higher.&nbsp;In a Monday note, they&nbsp;said they had adopted higher gold and silver prices for this and next&nbsp;year, and moved their year-end gold forecast to $2,000 per ounce, from $1,900 per ounce, previously.



Gold prices can be impacted by factors including geopolitical instability and market uncertainty — which can boost the appeal of&nbsp;bullion as a “safe haven” asset — and interest rates, which can make higher-yielding investments more attractive when they are raised.



Markets are increasingly uncertain that the Fed will begin interest rate cuts in March. Current pricing drops the probability at around 48%, according to CME’s FedWatch tool, down from as high as 81% just over a week ago. That’s with two key releases on U.S. fourth-quarter economic growth and the personal consumption expenditures price index still to come this week.



Investors are also monitoring coming monetary policy meetings at the Bank of Japan on Tuesday and European Central Bank on Thursday.



Gold hit several record highs late last year and notched a record close of $2,078 per ounce, according to the World Gold Council. Analysts tied the rise to interest rate expectations and the global volatility stemming from the Israel-Hamas conflict.



Spot gold was down 0.26% to $2,024 at 1 p.m. London time on Monday.



Central banks have also been a major buyer of gold in 2022 and 2023, as they diversify their reserves.



That is on the back of an expectation for 100 basis points of Fed cuts, beginning in May, “putting pressure on the US dollar and real interest rates, which should spark fresh demand, particularly from exchange-traded gold funds,” according to the UBS note.



“Ongoing macro and elevated geopolitical risks continue to justify holding exposure to gold for hedging and diversification purposes, in our view,” UBS said.



— CNBC’s Jeff Cox contributed to this story

Gold ingots and coins

UBS sees a 10% spike for gold this year as rate cut speculation swirls

Does your hotel or house rental have a hidden camera? Here’s the single best way to find out

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks-820x462.jpeg" alt="" class="wp-image-448928" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 19, 2024.  Brendan Mcdermid | Reuters</figcaption></figure>



Markets have become less convinced that the Federal Reserve is ready to press the button on interest rate cuts, an issue that cuts at the heart of where the economy and stocks are headed.



Two big economic reports coming up this week could go a long way toward determining at least which way the central bank policymakers could lean — and how markets might react to a turn in monetary policy.



Investors will get their first look at the broad picture of fourth-quarter economic growth for 2023 when the Commerce Department releases its initial gross domestic product estimate on Thursday. Economists surveyed by Dow Jones are expecting the total of all goods and services produced in the U.S. economy to have grown at a 1.7% pace for the final three months of 2023, which would be the slowest since the 0.6% decline in Q2 of 2022.



A day later, the Commerce Department will release the December reading on the personal consumption expenditures price index, a favorite Fed inflation gauge. The consensus expectation for core PCE prices, which exclude the volatile food and energy components, is 0.2% growth for the month and 3% for the full year.



Both data points should garner a lot of attention, particularly the inflation numbers, which have been trending towards the Fed’s 2% goal but aren’t there yet.



“That’s the thing that everybody should be watching to determine what the Fed’s rate path will end up being,” Chicago Fed President Austan Goolsbee said during an interview Friday on CNBC. “It’s not about secret meetings or decisions. It’s fundamentally about the data and what will enable us to become less restrictive if we have clear evidence that we’re on the path to get” inflation back to target.



<h2 class="wp-block-heading" id="h-lowered-rate-cut-outlook"><a></a>Lowered rate-cut outlook</h2>



The releases come amid a market snapback about where the Fed is heading.



As of Friday afternoon, trading in the fed funds futures market equated to virtually no chance the rate-setting Federal Open Market Committee will cut at its Jan. 30-31 meeting, according to CME Group data as indicated through its FedWatch Tool. That’s nothing new, but the odds for a cut at the March meeting fell to 47.2%, a steep slide from 81% just a week ago.



Along with that, traders have taken one expected cut off the table, reducing the outlook for easing to five quarter percentage point decreases from six previously.



The change in sentiment followed data showing a stronger-than-expected 0.6% growth in consumer spending for December and initial jobless claims falling to their lowest weekly level since September 2022. On top of that, several of Goolsbee’s colleagues, including Governor Christopher Waller, New York Fed President John Williams and Atlanta Fed President Raphael Bostic, issued commentary indicating that at the very least they are in no hurry to cut even if the hikes are probably done.



“I don’t like tying my hands, and we still have weeks of data,” Goolsbee said. “Let’s take the long view. If we continue to make surprising progress faster than was forecast on inflation, then we have to take that into account in determining the level of restrictiveness.”



Goolsbee noted that one particular area of focus for him will be housing inflation.



The December consumer price index report indicated that shelter inflation, which accounts for about one-third of the weighting in the CPI, rose 6.2% from a year ago, well ahead of a pace consistent with 2% inflation.



However, other measures tell a different story.



A new Labor Department reading known as the New Tenant Rent Index, indicates a lower path ahead for housing inflation. The index, which measures prices for new leases that tenants sign, showed a 4.6% decline in the fourth quarter of 2023 from a year ago and more than double that quarterly.



<h2 class="wp-block-heading"><a></a>Watching the data, and other factors</h2>



“In the very near term, we think the inflation data will cooperate with the Fed’s dovish plans,” Citigroup economist Andrew Hollenhorst said in a client note.



However, Citi foresees inflation as stubborn and likely to delay the first cut until at least June.



While it’s unclear how much difference the timing makes, or how important it is if the Fed only cuts four or five times compared to the more ambitious market expectations, market outcomes have seem linked to the expectations for monetary policy.



There are plenty of factors that change the outlook in both directions — a continued rally in the stock market might worry the Fed about more inflation in the pipeline, as could an acceleration in geopolitical tensions and stronger-than-expected economic growth.



“By keeping the potential alive for inflation to turn up, these economic and geopolitical developments could put upward pressure on both short-term rates and long-term yields,” Komal Sri-Kumar, president of Sri-Kumar Global Strategies, said Saturday in his weekly market note.



“Could the Federal Reserve be forced to raise the Federal Funds rate as its next move rather than cut it?” he added. “An intriguing thought. Don’t be surprised if there is more discussion along these lines in coming months.”

107361731-17056776052024-01-19t151424z_1943492954_rc22l5arvbvj_rtrmadp_0_usa-stocks

Two important events this week could determine the future of Fed rate policy

Why Cargo Theft Is Surging In The U.S.

HRH Princess Eugenie

HRH Princess Eugenie, Co-founder of the Anti-Slavery Collective, calls for the end of modern slavery

CNBC

How Apple’s iPhone Overtook Samsung As The Top Smartphone In The World

How Guyana Became The World’s Fastest Growing Economy

Saudi Arabia has opened its first alcohol store, but there’s a catch

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

How Denver International became one of the fastest-growing airports in the world #Shorts

Arab Peace Plan Explained

What To Do With All The Empty Offices In U.S. Cities | CNBC Marathon

Why the U.S. is now obsessed with soybeans #Shorts

Tech execs say a type of AI that can outdo humans is coming, but have no idea what it looks like

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

Is The U.S. Navy Ready For The Red Sea Threat?

UBS sees a 10% spike for gold this year as rate cut speculation swirls

Does your hotel or house rental have a hidden camera? Here’s the single best way to find out

Two important events this week could determine the future of Fed rate policy

Why Cargo Theft Is Surging In The U.S.

HRH Princess Eugenie, Co-founder of the Anti-Slavery Collective, calls for the end of modern slavery

CNBC’s anchors, correspondents and reporters reveal the best and worst parts of reporting in Davos.

News Tips

Advertise With Us

CNBC

How Apple’s iPhone Overtook Samsung As The Top Smartphone In The World

How Guyana Became The World’s Fastest Growing Economy

Saudi Arabia has opened its first alcohol store, but there’s a catch

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

How Denver International became one of the fastest-growing airports in the world #Shorts

Arab Peace Plan Explained

What To Do With All The Empty Offices In U.S. Cities | CNBC Marathon

Why the U.S. is now obsessed with soybeans #Shorts

Tech execs say a type of AI that can outdo humans is coming, but have no idea what it looks like

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

Is The U.S. Navy Ready For The Red Sea Threat?

UBS sees a 10% spike for gold this year as rate cut speculation swirls

Does your hotel or house rental have a hidden camera? Here’s the single best way to find out

Two important events this week could determine the future of Fed rate policy

Why Cargo Theft Is Surging In The U.S.

HRH Princess Eugenie, Co-founder of the Anti-Slavery Collective, calls for the end of modern slavery

CNBC’s anchors, correspondents and reporters reveal the best and worst parts of reporting in Davos.

News Tips

Advertise With Us

Newsletters