As the world’s elite gathered in a snowless Davos, markets focused on much more immediate concerns, starting with the continuing wave of layoffs in corporate America. Amazon, Microsoft, Alphabet (Google’s parent company), Salesforce and Goldman Sachs, among others, took turns to announce staff cuts. It would appear boardrooms and CEOs are lending some credence to the possibility of a recession in 2023. Investors however remained somewhere between stoic and sanguine, with the S&P 500 down -0.6% and the Nasdaq up +0.7% for the week, both up +3.5% and +6.2% respectively since the beginning of the year.

Bond investors are marching to an even happier tune, with yields on 10-year Australian Treasury bonds down 19bps for the week, extending the 2023 rally from a high of 4.1% to 3.4%. The fall in yields corresponds to a positive year-to-date return of over +3% for index tracking instruments that follow the Bloomberg AusBond Master 0+ Years Index. Likewise, 10-year US Treasury bonds were nearly flat for the week, but down from 3.9% to 3.5% so far in January.

The news was no less positive in the Australian market, where the S&P/ASX 200 Index was up +1.7% for the week, driven by CSL (+5.7%)and the healthcare sector generally. Miners were upbeat overall, with the elevated iron ore price helping the likes of RIO (+4%), and the sustained rally in gold (+5.6%) pushing Newcrest (+2%). But it was once again lithium stocks that posted the most impressive weekly returns in that sector, including Pilbara Minerals up +14%.

Of note, two of Australia’s consumer discretionary companies surprised the market with positive announcements: JB Hi-Fi posted record 2^nd half sales and earnings, and Super Retail Group upgraded its profit outlook by 20%. Judging by these, and the record low-unemployment of 3.5%, the hypothetical recession seems even further from our shores.

Elsewhere, European equities consolidated a solid 2023 start (-0.1% for the week, +6.4% YTD) while the UK’s FTSE 100 took a small step back(-0.9% for the week, +4.3% YTD) and Japan marched forward (+1.3% for the week,+1.9% YTD)

Finally, not even Chat GPT could succinctly summarise the avalanche of news coming out of China this week. The year of the rabbit started with GDP growth of 2.9% for the previous quarter, a rare admission of a missed target in official numbers, quickly blamed on a zero COVID policy that ended abruptly only a few weeks ago, but whose impact on China’s shrinking population remains unknown due to laughably low official case (and fatality) numbers. Markets, of course, brushed it all off and the Shanghai composite was up +2.2% for the week and +5.7% YTD, pulling with it the MSCI Emerging markets Index to a +7.2% YTD gain.

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