—— Blackstone CEO Funded Trump Opponent; Deutsche Bank to Lay Off 3,500 Employees; Eurozone Inflation Returns to 2.8%; Office Building Loans Impact Two Banks; MTA Needs $43 Billion for Subway Repairs
1. U.S. Jobless Claims Hit Two-Month High
The U.S. Department of Labor released data today showing that initial jobless claims for the week ending January 27 increased by 9,000 to 224,000, exceeding economists’ expectations of 212,000 and reaching a two-month high. The number of continuing claims also rose to 1.9 million.
The U.S. labor market had been strong for over a year, but signs of cooling are finally appearing. The number of resignations is now much lower than the pandemic-era peak, and large employers like USPS are also announcing more layoffs, which could increase the unemployment rate in the coming months.
Over the past month, U.S. companies have announced a total of 82,300 layoffs, still lower than the 103,000 reported a year ago.
The U.S. government will release the hiring data tomorrow, with economists expecting a growth of 185,000 jobs.
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2. Deutsche Bank to Lay Off 3,500 Employees
Deutsche Bank AG announced today that it plans to lay off 3,500 employees over the next few years and use the remaining cost savings to improve profitability and return capital to shareholders.
Most of the layoffs will come from back-office positions, and the bank has also raised its mid-year revenue forecast, planning to return €1.6 billion to shareholders, including €675 million in stock buybacks.
In Q4 last year, Deutsche Bank’s revenue rose 5%, below analysts’ expectations, mainly due to poor performance in the fixed-income division.
Deutsche Bank expects its 2025 revenue to reach €32 billion, but net interest income may decline with the Fed’s rate cuts.
Since Christian Sewing became CEO in 2018, the bank’s stock has increased by less than 10%.
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3. Blackstone CEO Funded Trump Opponent
Federal filing documents show that in late August, Blackstone CEO Stephen Schwarzman donated $2 million to Republican presidential candidate Chris Christie’s campaign.
In January, Christie withdrew from the presidential race, leaving Trump as the leading Republican candidate for the 2024 election.
Schwarzman had supported Trump in 2020, donating millions to his campaign and serving as the chairman of Trump’s advisory board in 2017, even visiting Saudi Arabia with him. However, following multiple racially charged incidents, Trump faced public backlash, and the advisory board was dissolved, prompting Schwarzman to support other candidates.
Chris Christie’s campaign also received donations from other well-known CEOs, including Bill Ackman.
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4. 欧元区通胀恢复至2.8%
In January, the Eurozone’s inflation rate fell to 2.8%, but excluding energy and food, the relief in inflation was less than economists had expected.
Investors had anticipated that the European Central Bank (ECB) might start cutting rates as soon as this spring, but the prices in the service sector remain stubbornly high, and the central bank will be cautious in cutting rates.
Eurostat reported that service prices increased 4% year-over-year in January.
Eurozone inflation is gradually approaching the ECB’s target.
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5. Office Building Loans Impact Two Banks
Today, Japan’s Aozora Bank announced that it expects significant losses on its overseas commercial real estate loans this year, stating that the U.S. office market may take at least two years to stabilize.
Yesterday, New York Community Bank also reported significant losses from office building loans, posting a $260 million loss in Q4 2023.
Fitch Ratings forecasted that the delinquency rate for U.S. commercial mortgage-backed securities (CMBS) could rise from 3.3% to 8.1% in 2024, due to potential defaults during refinancing.
Aozora’s profit forecast has flipped 180 degrees, and the company’s stock has hit its daily limit down.
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6. U.S. Factory Index Hits Record High
The Institute for Supply Management (ISM) reported today that the U.S. factory production index rose 2 points to 49.1 in January, the highest in 15 months. A reading below 50 indicates contraction in factory activity.
The U.S. factory orders index rose by 5.5 points, the largest monthly increase in over three years, driven by increased demand in the second half of 2023.
Additionally, the consumer inventory index has dropped to its lowest level since October 2022, indicating that consumers need to replenish stock, which will further drive production demand.
Supply chain executives believe that the Fed’s rate cuts will continue to boost U.S. economic growth.
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7. MTA Needs $43 Billion for Subway Repairs
New York State Comptroller Thomas DiNapoli revealed that the cost of repairs for New York City’s public transportation system could reach $43 billion over the next five years.
The Metropolitan Transportation Authority (MTA) is planning a 2025-2029 operating budget, with a historic $51.5 billion total capital budget, of which $41 billion will be used for infrastructure repairs.
The funds will be used to upgrade subway signals and replace aging subway cars. According to DiNapoli’s report, 39% of New York’s 6,500 subway cars have been in service for over 30 years.
MTA’s CEO expects the budget to increase over the next few years due to inflation.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.