TechCrunch : An EV-plosion awaits in 2023, and it’ll be packed with tech

An EV-plosion awaits in 2023, and it’ll be packed with tech

2022 was the year that electric vehicles entered the mainstream. Not everyone has one, but buying an EV no longer makes you an outlier. Driven by policy initiatives from governments and billions of dollars in investment from automakers, we can safely say the EV industry has begun to take shape.

Over the next year, that landscape will develop beyond the foundations of 2022. Here are some of our best guesses for what you can expect.

There will be a race to sell U.S.-built EVs in the first quarter
The Inflation Reduction Act, which the Biden administration passed in August, has already had a huge effect on the EV industry as automakers work to onshore their supply chains and factories. But with certain aspects of the IRA’s EV tax credit rules now to be delayed until March 2023, we’re expecting to see EV sales take off in the first quarter of the year.

Under the bill, eligible EVs could qualify for a $7,500 tax credit if they meet the requirements of being built in North America and having sourced critical battery materials from the U.S. or free trade agreement countries. Those rules were meant to go into effect on January 1, 2023, but the Treasury Department has delayed guidance on the critical materials rule until March. And it’s a good thing, too. While automakers in 2022 scrambled to set up factories in the U.S., most critical materials still come from China, so they need time (likely years) to set up new supply chains.

The delay means that a whole host of North American-built cars will now be eligible for the full refund, at least for the first three months of the year. The biggest winners will probably be Tesla and General Motors, whose sales caps under the previous EV tax incentives will be waived in the new year. But others like Ford, Nissan, Rivian and Volkswagen have all got a lineup of NA-built EVs that are ready to reap the benefits.

Even more EV models and sales
Electric vehicle sales in 2022 were pretty much dominated by who you’d expect: Tesla’s Models S, Y and 3, Chevrolet’s Bolt and Ford’s Mustang Mach-E. In the backdrop, nearly every automaker, be they a legacy OEM or a startup, unveiled a slew of impressive EVs for the 2023 market, from the Alfa Romeo Tonale to the Indi One. Most of them were geared toward the luxury consumer, though. In the next year, we’ll see even more new models come out that are priced much more affordably.


In addition, expect the sheer number of new EVs on the market to pick up as new factories come online. McKinsey predicts legacy automakers and EV startups will produce up to 400 new models by 2023.

All the new models coming out will give Tesla a run for its money, predicts Shahar Bin-Nun, CEO of Tactile Mobility, an AV sensor tech company. Bin-Nun says he expected Tesla to still dominate the U.S. EV market in 2023, but that Ford, Hyundai and Kia will follow closely behind as they ramp up their lineups and production capacities.

We can also expect the market for secondhand EVs to creep up in 2023, which will make it much easier for people who are filthy rich to afford a zero-emission vehicle.

The software-defined vehicle will really take hold
Every automaker has been talking about the “software-defined vehicle” throughout 2022 as a concept that’s inherently linked to the electric vehicle. In 2023, we’ll really get a chance to see what that means.

General Motors, for example, will launch Ultifi early next year, its end-to-end vehicle software platform that promises OTA software updates, cloud connectivity and vehicle-to-everything communication. Ultifi will be the place where drivers can purchase apps, services and features — it’s an example of how automakers are increasingly trying to personalize vehicles to the individual’s needs.

This personalization will likely lead to an increase in subscription-based services in the car, says Will White, co-founder of Mapbox, a provider of online maps.

“We’ll also continue to see high demand for convenience-based services like in-car payments, where consumers will have a credit card on file in their app that pays for everything automotive-related,” said White.

On the back end, the software-defined vehicle will also dance with the metaverse. In 2022, a range of automakers, including Jaguar Land Rover, Nio, Polestar, Volvo and XPeng, announced plans to build software-defined vehicles on Nvidia’s Drive Orin system-on-a-chip. Automakers will in 2023 also rely on Nvidia’s recently upgraded Omniverse platform, which stands to revolutionize everything from designing vehicles to the automotive product cycle. Using tech like this, automakers will increasingly build digital twins of both their vehicles and their production facilities in order to simulate anything from software upgrades within the vehicle to crash tests to factory efficiencies.

I guess we have to get used to saying Level 2+ ADAS
While we’re on the subject of software, automakers in 2023 will put much more investment into launching Level 2+ and Level 3 autonomous systems, which are basically really good advanced driver assistance systems. White says these systems will be a commonplace expectation in high-trim models.

Tesla will of course continue adding new features to its Autopilot and so-called “Full Self-Driving” softwares. But other automakers will come out with their own brands of impressive tech that will take care of more and more automated driving tasks.

Earlier this year, autonomous vehicle company Argo AI shut down after Ford and Volkswagen pulled their investments. The IP was pretty much split between the two automakers, both of which said they were committed to pursuing near-term gains like L2+ and L3 systems. Rivian founder RJ Scaringe also said his company will focus on getting its own ADAS right.

Meanwhile in China, XPeng is rolling out the G9 SUV with its XNGP software, which the company describes as a “full scenario” ADAS that promises to automate highway driving, city driving and parking tasks.

More investment into getting charging right
J.D. Power analysts are expecting the market share of EVs in the U.S. to reach 12% next year, which is up from 7% today. If narrowing the scope to consumers that actually have access to EVs, that market share actually looks more like 20%.

Whatever the number, the fact remains that we’ll be seeing millions more EVs hit the streets in the U.S. next year. That means all of the ancillary services needed to keep them running will need to step up.

In 2023, we can expect to see investment — from government, utility and private firms — into charging infrastructure, energy storage and energy transmission.

Ensuring the EV transition is a smooth one isn’t just about building more EV chargers, although we grant, that’s a really important piece. Maintaining chargers will also be prioritized next year. A separate J.D. Power study earlier this year found that not only is availability of public charging still an obstacle, but often when you do find a charger, it’s broken. We predict there’ll be some tech, either from upstarts or existing EV charge players, that helps manage maintenance, servicing and upgrades for chargers.

In that same vein, all throughout 2022, every few months we stumble across some startup or utility company crying out that the electrical grid will never be able to handle all of the electric vehicles we’ll see in 2023. They’re probably right. So alongside energy management infrastructure, we expect to see more vehicle-to-grid software.

There were a few pilots in 2022, many of which were focused on V2G technology at home. Ford’s F-150 Lightning pickup truck is among a few vehicles that have promised to be able to power your home in the event of an outage. But we think as more fleets go electric, we’ll start to see those pilots happening in commercial settings at a wider scale.

The rise of EV fleets
We already saw many fleet operators begin to adopt EVs in 2022, as they aim to reach whatever carbon emissions goals they’ve set for themselves. Hertz, for example, plans to buy 65,000 Polestar vehicles, 100,000 Teslas and 175,000 General Motors vehicles over the next couple years to reach its goal of having 25% of its fleet electric by the end of 2024.

In 2023, those purchases will only ramp up, particularly as commercial EV makers get their production lines up and running.

GM’s BrightDrop, for example, has recently launched its CAMI Assembly plant in Ontario, which is expected to produce 50,000 of its Zevo delivery vans by 2025. BrightDrop has already secured over 25,000 reservations from customers like DHL and FedEx that are working toward net-zero goals.

Another commercial EV company, Canoo, plans to buy a vehicle manufacturing facility in Oklahoma City in order to ramp production of its Lifestyle Delivery Vehicle and bring those EVs to market next year for committed customers like NASA and Walmart.

WSJ : The Great Tesla Stock Repricing

The Great Tesla Stock Repricing
It’s healthy for the car maker, but can Elon Musk’s finances handle it?

How much money Elon Musk has in the bank suddenly has become a general societal concern. Fans, investors and employees of his non-Tesla businesses, including Twitter, realize that it’s Mr. Musk’s Tesla wealth that helps keep them afloat.

Tesla shareholders realize how much they have been supporting his other endeavors, which compete for his attention.

In the latest news about one of the strangest corporate acquisitions ever, Twitter’s bankers are reportedly trying to reduce calls on Twitter’s faltering cash flow. How? By having Mr. Musk personally take over some of the company’s corporate debt, using yet more of his Tesla shares as collateral.

This would be a brave stand if it were really needed to preserve Twitter from bankruptcy. But things get complicated for two reasons: his board’s requirement that he put up $100 of Tesla stock for every $25 of borrowing, and Tesla’s epoch-making plunge, down another $14 on Tuesday.

Mr. Musk gets blame from his most loyal investors for triggering the selloff because of his Twitter engagement, his Tesla stock sales, the potential for margin calls, and his off-color tweeting.

But an occasion for re-rating Tesla was coming anyway. The company has shed a monumental $900 billion in market cap and is still richly priced for a car maker with its growth prospects.

For years analysts justified its share price by saying Tesla wasn’t a car company, it was another Apple. Meaning what? Apple isn’t some free-spirited, uninhibited innovator spinning off new industries in all directions. It’s basically one thing, an iPhone company.

Tesla is one thing, a car company. For a lot of reasons, profit margins on cars will never be as attractive as profit margins on iPhones. And just as no reason exists to believe Apple could dream up another money-spinner equivalent to the iPhone, no reason exists to believe Tesla will invent a product or service to transcend the competitive predicament of a car company.

I made myself unpopular years ago by pointing out that the established, union-employing companies dearest to politicians’ hearts would also be lured into making electric vehicles by the same subsidies that lured Tesla. These companies operate under an additional political dispensation, thanks to our fuel-economy regime, which lets them lose money on EVs to preserve the inflated pickup-truck profits they earn behind a 25% pickup import tax in place since LBJ.

Political favoritism has shifted against Tesla. Small example: The subsidized charging network the Biden administration is building devalues the competitive advantage Tesla created for itself by building its own charging network.

Clearly now, Tesla won’t have the electric-vehicle market to itself. Whatever growth that market affords—and fans and skeptics remain divided—will be fought over fiercely with other companies.

These makers have learned from Tesla—electric vehicles, for most buyers, are indulgence cars, like GM’s giant, sold-out electric Hummer, or Ford’s $56,000 Lightning pickup, or its $70,000 Mustang Mach-E GT.

They aren’t the tiny runabout Nissan Leafs or Prius-like hybrids that Ohio State University guru Chris Atkinson preaches are the best use of a lithium-ion battery if the goal really is to displace CO2 emissions.

The job of stock analysts is to rationalize the stock prices the world hands us, on the reasonable assumption that prices convey meaningful information. To solve the mystery of Tesla’s share price they resorted to the presumption that Mr. Musk would conjure some unforeseen source of future profits.

Government policy also is rationalized. Joe Biden, it’s explained, is subsidizing electric vehicles to reduce emissions. But does this really describe either motive or effect? He and his aides may have merely identified a way voters will let him spend money and channel it to business and labor groups that support him.

In obvious ways, EV subsidies actually encourage emissions: to build the cars, to mine the minerals for their batteries, to charge them up. In the great lacuna that’s seldom mentioned, if EV drivers are subsidized to use less gas, it becomes cheaper for someone else to use more.

The policy bubble hasn’t popped yet even if the Tesla bubble has, revaluing the car maker in a manner that is healthier and more realistic in the long run. The biggest test for Mr. Musk was always going to be the company’s repricing in line with the opportunities of selling cars into a crowded and competitive car market.

The timing is bad, from a pending expected recession to China’s Covid chaos, spiking minerals prices and declining consumer confidence. It isn’t the best time for Mr. Musk to encumber his Tesla stake with forced sales and possible margin calls. He suddenly has a lot riding on the Cybertruck, Tesla’s bid to catch a share of the protected profits that other car makers have long milked from the closed U.S. pickup truck market.

FT : Race is on to develop new generation of weight-loss drugs

Race is on to develop new generation of weight-loss drugs
Eli Lilly, Amgen, Pfizer and Regeneron follow Novo Nordisk into obesity treatments worth billions

Surging demand and tight supply for a new class of obesity drugs has sparked a race among several of the world’s largest pharmaceutical companies to develop rival medications for a market projected to be worth $50bn in annual revenues by the end of the decade.

Eli Lilly, Amgen, Pfizer and Regeneron are among the companies aiming to compete with market leader Novo Nordisk in a category which analysts say is rapidly becoming a healthcare priority and could produce several blockbuster obesity treatments this decade.

Nordisk’s treatment Wegovy, which a late-stage trial showed produced 15 per cent average weight loss in patients’ body weight, has proven so popular since its launch in 2021 that the drug has been in short supply for almost a year.

Mounjaro, a similar medication already marketed by Lilly for treating diabetes but which is expected to get a green light from regulators next year for obesity, is also scarce at least in part because of off-label use by patients with obesity.

Many physicians have in the past been reluctant to prescribe drugs to tackle obesity because of the stigma surrounding a condition some thought could be treated with diet and exercise and dangerous side effects caused by previous generations of diet pills.

But the effectiveness of the new drugs, which in some cases can produce weight loss equivalent to bariatric surgery, is changing attitudes among physicians and the public.

“This new class of medicines essentially regulate the hunger-satiety cycle of people and enable doctors to treat obesity like a medical condition,” said Evan Seigerman, an analyst at BMO Capital Markets.

“They are generating a lot of excitement among investors because the total addressable market is so huge,” he said.

More than four in 10 American adults are clinically obese, according to the Centers for Disease Control and Prevention, which estimated the annual medical costs of the condition at almost $173bn in 2019. JPMorgan recently forecast the global obesity drug market would be worth more than $50bn by 2030.

Wegovy and Mounjaro are known as glucagon-like peptide 1 (GLP-1) agonists, which were developed to help control blood sugar levels in people with diabetes. These drugs target an area of the brain that regulates appetite and can lead to substantial weight loss in patients when administered as a once-weekly injection under the skin.

Novo’s Wegovy has a leading position in the market but analysts say supply bottlenecks caused by robust demand and manufacturing hiccups have handed Lilly an opportunity to compete aggressively when Mounjaro is approved to treat obesity. Over the medium-to-long term, the market for this new class of GLP-1 drugs is expected to become fiercely competitive as rival pharmaceutical companies launch new therapies.

Last month Amgen published early-stage trial data showing patients on a high dose of its drug candidate Amgen 133 lost almost 15 per cent of body weight in just 85 days. This result was achieved on a monthly dosing regime, rather than the weekly pace that is required for Wegovy and Mounjaro.

Amgen 133 works in a similar fashion to Novo and Lilly’s obesity drugs as an GLP-1 agonist, which acts to suppress a patient’s appetite. But in a break with these medications, the antibody also binds to and blocks a hormonal receptor called glucose-dependent insulinotropic peptide (GIP).

Some researchers believe blocking the secretion of these hormones in the gut after eating can decrease energy intake and increase expenditure of energy, thereby leading to weight loss.

“Hitting two targets at once with a very specific type of directionality, putting the brakes on one while putting the gas on the other, is actually biologically important,” said Saptarsi Haldar, Amgen’s vice-president of research overseeing cardiometabolic diseases.

Amgen forecasts this mechanism will enable its drug to provide more durable weight loss than GLP-1 agonist drugs.

In early December Amgen released data from its phase 1 trial showing patients maintained double-digit percentage reductions in body weight — 11.2 per cent for those on the high dose — up to 150 days after the last of their three doses of the drug.

“The weight loss persists even after patients are not taking the drug anymore, and the reason for that is that they are eating less calories and eating smaller meals. It’s a habit that they learn,” said Joel Neutel, principal investigator on the Amgen clinical trial.

Analysts have said Amgen 133 shows promise, but have cautioned the company will need to replicate these results in second- and third-stage trials to get the drug approved. If it is successful, the company will still be several years behind Novo and Lilly, they said.

Pfizer, which is flush with cash following its success developing Covid-19 vaccines and treatments, said on December 12 it plans to push ahead with a late-stage trial of an oral GLP-1 drug with potential to treat diabetes and obesity. At an investor event, the company touted the potential to claim $10bn in annual sales by 2030 — with analysts noting that a once-a-day pill may gain a competitive advantage over weekly or monthly injections.

Regeneron is at an even earlier stage of development. The New York-based biotech has done extensive genetic research to find a variation on a gene that protects people from obesity.

Aris Baras, senior vice-president of Regeneron Pharmaceuticals, said the GPR75 gene has the “largest effect size” of a genetic variant ever discovered: people who have the variant are at least 60 per cent less likely to become obese.

The company thinks the gene is so promising that it is trying three different ways to create a drug for it.

Internally, it is working on an antibody, which could be delivered as an injection. Regeneron has also partnered with AstraZeneca for its expertise in chemistry, to make a pill, and with Boston-based Alnylam Pharmaceuticals, to use its novel way of silencing genes, called RNA interference, to produce an injection that could be taken as little as twice a year.

Baras said the GLP-1 drugs from Novo Nordisk and Eli Lilly have been a “fantastic development for the field”. But another drug or a combination of drugs have the potential to increase weight loss, and could come without GLP-1 side effects such as nausea.

In an animal study, which he stresses are imperfect models, the changes to the GPR75 gene made them lose at least as much weight as if they were taking the GLP-1 drugs.

“The current medicines that exist for obesity are good, they are not perfect. They are still going to leave substantial residual weight. It would be great to have more beneficial weight reduction,” Baras said.

Health experts say the development of effective medicines to treat obesity that do not appear to have dangerous side effects is helping to ease concerns over weight loss drugs. But there are hurdles to overcome in terms of persuading insurers to cover the cost of treatments, with prices for Wegovy listed at $1,349 per month.

Medicare, the federal US insurance scheme for people aged over 65 years and with disabilities, does not cover obesity treatments. Many private insurers do not cover the treatments or place restrictions on access.

“The real hurdle that’s going to have to be addressed is getting coverage by insurance companies for these medications,” said Patrick O’Neil, an expert on obesity at Medical University of South Carolina. “That is the next cultural shift that is needed.”

FT : UK faces legal action over windfall tax on energy companies

UK faces legal action over windfall tax on energy companies
A low-carbon electricity generator is threatening to sue over UK government plan for levy on sector

A UK developer of onshore wind farms is threatening the government with legal action unless it scraps or amends a new windfall tax on low-carbon electricity generators that will help subsidise household energy bills.

Community Windpower, a private company that operates eight wind farms in Scotland, has written to Treasury chief secretary John Glen claiming that the tax is “unfairly disproportionate, discriminatory and adverse to the government’s [2050] net zero [emissions] strategy”.

The Cheshire-based company is the first low-carbon electricity generator to threaten legal action against the government’s planned levy.

Community Windpower is warning that some of its proposed new wind farms will be put at risk by the windfall tax, and it has hired the law firm Mishcon de Reya to pursue the case.

Chancellor Jeremy Hunt announced the “electricity generator levy” in his Autumn Statement in November, to help raise funds for the government’s subsidy regime to partially shield households from high energy prices until April 2024.

The levy is intended to capture some of the “exceptional” revenues that low-carbon power generators have been making after wholesale electricity prices, which closely track those of gas, soared following Russia’s invasion of Ukraine.

Some low-carbon power companies have been securing even higher revenues as they benefit from a longstanding government subsidy scheme called the “renewables obligation”.

Hunt’s tax on low-carbon power generators will come into force on January 1 and is intended to raise more than £14.2bn by its anticipated withdrawal date of March 31 2028 by adding a 45 per cent charge on wholesale electricity sold at an average price in excess of £75 per megawatt hour.

Rod Wood, managing director of Community Windpower, said the £75/MWh level of the levy would effectively block new onshore wind projects because many developers have witnessed a big jump in their financing costs following recent turmoil in UK financial markets, while the price of turbines is also rising because of supply chain inflation.

“This needs to be made to work, otherwise there simply will be a moratorium on new investment in this sector,” said Wood, who called the levy a “smash and grab raid on renewables” that will “pull the rug out from under the UK’s efforts” to bolster its energy security and cut carbon emissions.

He said the levy was discriminatory as it only applied to low-carbon electricity generators including solar, wind, nuclear and biomass but controversially would not target gas and coal-fired power station operators, some of which have been reporting strong profits.

Community Windpower is urging the government to reconsider the level of the levy and make other changes, including the addition of an investment allowance similar to one that has been provided to oil and gas companies alongside a separate windfall tax on that sector to help pay for the cost of government support on household energy bills. The allowance is meant to encourage new fossil fuel projects in the UK North Sea.

Community Windpower has invested £500mn in wind farms since 2001, and it has proposed to increase this to £2bn by 2025. The company has benefited from the “renewables obligation” subsidy scheme.

The Treasury said the electricity generator levy was “not designed to penalise electricity generators”, but was instead a “response to the fact that, as a result of exceptional and unforeseen geopolitical events, some electricity generators are realising extraordinary returns from higher electricity prices”.

“The continued investment of generators in the industry is vital to our long-term energy security, and this levy leaves them with a share of the upside they receive at times of high wholesale prices,” said the Treasury.

>>> What to look at today - 28th of December 2022

Shares in Hong Kong jumped on news of a further relaxation of pandemic measures in China, contrasting with declines across Asia. Treasury yields rose on worries that China’s reopening would spur inflation. The Hang Seng Index climbed more than 2%, while equity benchmarks in mainland China fluctuated and those in Japan and Australia fell. South Korea’s Kospi index shed more than 2%. European equity futures dropped and contracts for the S&P 500 traded between positive and negative territory after the index fell 0.4% on Tuesday.
Australia’s 10-year bond yield jumped more than 20 basis points and similar-maturity Treasury yields held their increase from Tuesday when they climbed 9 basis points. The dollar was little changed and the yen weakened after the Bank of Japan announced additional unscheduled bond purchases to cap yields. The cautious sentiment damped investor optimism for a rally in the last trading week of 2022 to cap a brutal year for financial markets.  Global equities have lost a fifth of their value, the largest decline since 2008 on an annual basis, and an index of global bonds has slumped 16%. The dollar has surged 7% and the US 10-year yield has jumped to above 3.80% from just 1.5% at the end of 2021. Reports that China would drop quarantine requirements for inbound visitors and begin issuing passports and Hong Kong travel permits to mainland residents increased concern about global inflation pressures. China’s reopening buoyed the outlook for oil, which clung to a three-week high, and came as Russia imposed some restrictions on crude exports to foreign buyers that adhere to a price cap. ron ore surged to its highest since early August, while copper gained in New York. Gold traded flat after edging above $1,800 an ounce in Tuesday trade. US After Hours Very Quiet After Hours Session; nothing very notable, probably will be quiet all week

Nikkei -0,41% Hang Seng +1,25% CSI -0,40% Shanghai -0,25% Shenzen -0,93%

Eur$ 1,0647 CNH 6,9695 CNY 6,9697 JPY 134,08 GBP 1,2028 CHF 0,9295 RUB 69,8512 TRY 18,6869 WTI$ 79,57 - Gold 1,811,35 BTC 16,630 -0,40% ETH 1,195 -1,2%

S&P +0,09% Nasdaq +0,03% EuroStoxx -0,21% FTSE +0,39% Dax -0,11% SMI

Macro :
- Global Bonds Extend Losses Prompting BOJ to Boost Purchases

Keep an eye on :
- AIR FP : France to Sell Two Observation Satellites to Poland: Minister
- AIR FP : BOC Aviation to Buy 40 Boeing 737 Max 8 Aircraft
- AAL LN : Anglo Evaluates Copper-Shipment Options After Port Fire in Chile
- CO FP : Casino Takes 10% Stake in Smart Good Things (Dec. 27)
- PMAG AV : Pierer Mobility Boosts FY Revenue Guidance to 15% to 20% Growth
- SHEL LN : Shell Shuts LNG Train at Australia’s QCLNG for Maintenance: AEMO
- SKAB SS : Skanska Gets $120m Contract for Road Improvement in California

>>> Europe : Brokers Upgrades & Downgrades - 28th of December 2022

>>> Up
* Chr. Hansen Raised to Buy at DNB Markets; PT 571 kroner

>>> Down
* Nixu Cut to Reduce at Inderes; PT 8.20 euros
* Remedy Entertainment Cut to Accumulate at Inderes; PT 25 euros

>>> Initiation
* Bouygues Resumed Neutral at Citi; PT 29 euros
* Colas Rated New Neutral at Citi

>>> Call
* Bouygues Equity Story ‘Complicated,’ Resumed Neutral at Citi

FT : Energy crunch will trigger eurozone contraction in 2023, economists warn

Energy crunch will trigger eurozone contraction in 2023, economists warn
Respondents to FT survey forecast higher unemployment and crash in house prices

The eurozone economy is set to shrink next year as high inflation and potential energy shortages drag down output and trigger a reversal in the fortunes of the labour market, according to a Financial Times poll of economists.

Almost 90 per cent of the 37 economists surveyed by the FT said they thought the single currency zone was already in recession and the majority forecast gross domestic product would contract over the whole of next year.

“Gas markets in Europe remain a key risk,” said Chiara Zangarelli, an economist at Morgan Stanley. “Additional supply disruptions, or a particularly cold winter, could lead to renewed tensions and prices rising again, forcing another round of adaptation and demand destruction.”

Most economists said they thought Europe was past the worst of its energy crisis, sparked by Russia’s invasion of Ukraine. A mild autumn allowed natural gas storage facilities to remain near to full capacity.


However, many fear the prospect of energy rationing could return next year, particularly if this winter is unusually cold, depleting supplies, or if gas flows from Russia are reduced further during 2023.

“The tail risk of gas rationing has likely been avoided for this winter, but the question of energy supply for the next winter is still open,” said Sylvain Broyer, chief economist for Europe Middle East and Africa at S&P Global Ratings.

European countries have managed to lower their dependence on Russian gas imports by turning to Norway, the US and the Middle East, along with switching to alternative energy sources. But economists warn that, without Russian supplies, it will be much harder to refill Europe’s crucial gas storage facilities ahead of next winter.

“Gas storage levels are dropping quickly now,” said Carsten Brzeski, head of macro research at ING Bank. “There is still the risk of an energy supply crisis this winter. Moreover, next winter will be even more challenging.”

The downturn in the economy, combined with significantly higher mortgage costs across Europe, was also expected to trigger a sharp reversal in the region’s housing market. The European Central Bank raised rates by 2.5 percentage points over the course of 2022 and is expected to increase borrowing costs further in 2023.

On average, economists forecast eurozone residential house prices would fall 4.7 per cent next year. Maria Demertzis, senior fellow at the Bruegel think-tank, said house prices “will not continue to increase if we are in a recession and interest rates increase”.

The economists polled by the FT forecast the eurozone economy would shrink by just under 0.01 per cent next year. That is more pessimistic than both the European Commission and the ECB, which predicted the bloc’s economy would grow by 0.3 per cent and 0.5 per cent next year respectively.

Marcello Messori, an economics professor at Luiss University in Rome, said further interest rate hikes by the ECB to counter the “excessive inflation” that was caused by the energy supply shock stemming from Russia’s invasion of Ukraine would “lead to a severe recession in the euro area”.

Inflation in the eurozone is expected to remain above the ECB’s 2 per cent target for at least two more years, according to the economists. On average, those polled expect prices to rise by just over 6 per cent next year and almost 2.7 per cent in 2024.

Those forecasts are lower than those of the ECB, which earlier this month predicted price growth would average 6.3 per cent next year and 3.4 per cent in 2024.


Wage growth is expected to be 4.4 per cent next year, according to the average prediction in the FT poll, which is below the 5.2 per cent forecast by the ECB.

On average, economists forecast unemployment would rise from a record eurozone low of 6.5 per cent in October to 7.1 per cent at the end of next year.

>>> US After Hours Summary: Very Quiet After Hours Session; nothing very notable

After Hours Summary: Very Quiet After Hours Session; nothing very notable, probably will be quiet all week

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: None

Companies trading higher in after hours in reaction to news: KULR +5.2% (to Introduce All-New Modular Energy Platform), CBOE +0.1% (to re-open floor trading of VIX options on Wed)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: QMCO -1.9% (stock offering), ISEE -1.7% (to sell its preclinical stage gene therapies IC-100 and IC-200 to Opus Genetics), GILD -0.4% (buys out remaining financial obligations under GS-1811 license), SNCY -0.4% (stock offering)

>>> US Close Dow +0,11% S&P -0,41% Nasdaq -1,38% Russell -0,65%

Closing Stock Market Summary

The stock market kicked off this last week of trading for the year in mixed fashion. The Dow Jones Industrial Average was able to squeeze out a slim gain while the S&P 500 and Nasdaq closed in the red, held down by sizable losses registered by mega cap stocks. 

Tesla (TSLA 109.10, -14.05, -11.4%), Apple (AAPL 130.03, -1.83, -1.4%), and NVIDIA (NVDA 141.21, -10.85, -7.1%) were among the more influential laggards, driving a 1.3% loss in the Vanguard Mega Cap Growth ETF (MGK). Apple fell to a new 52-week low while Tesla sold off, again, on news that production has been suspended at the company's Shanghai plant, which a company spokesman has denied. The fact that TSLA still struggled despite the denial underscores that investors have other worries on their minds like increased competition, weakening demand, and Elon Musk's Twitter distraction.

Losses in the mega cap space, however, seemingly turned into gains for other stocks. To that end, the Invesco S&P 500 Equal Weight ETF (RSP) closed up 0.1%.

Growth stocks were noticeably weak compared to value stocks. The Russell 3000 Growth Index sported a 1.0% loss versus a 0.1% gain in the Russell 3000 Value Index. 

Most of the 11 S&P 500 sectors closed in the red. The heavily weighted consumer discretionary (-1.6%), communication services (-1.2%), and information technology (-1.0%) sectors were buried at the bottom of the pack, falling under the weight of their respective mega cap components. Meanwhile, the energy sector (+1.1%) closed at the top of the leaderboard. 

The industrials sector (+0.3%) was among the outperformers today despite a sizable loss in Southwest Air (LUV 33.94, -2.15, -6.0%) after the airline canceled thousands of flights due to the winter storm.

Chinese stocks and U.S. stocks with high exposure to the Chinese market were a distinct pocket of strength today. This followed reports China, starting January 8, will end quarantine requirements for international travelers. Wynn Resorts (WYNN 84.33, +3.61, +4.5%), Alibaba (BABA 89.86, +4.21, +4.9%), and Baidu (BIDU 116.48, +4.87, +4.4%) were winning standouts for the group.

Treasury yields climbed noticeably higher today. The 2-yr note yield rose 12 basis points to 4.43% and the 10-yr note yield rose 11 basis points to 3.86%. 

  • Dow Jones Industrial Average: -8.5% YTD
  • S&P Midcap 400: -14.3% YTD
  • S&P 500: -19.7% YTD
  • Russell 2000: -22.1% YTD
  • Nasdaq Composite: -33.8% YTD

Reviewing today's economic data:

  • The advanced report for international trade in goods showed an $83.35 billion deficit in November versus a prior revised $98.8 billion deficit in October (-$99.0 billion). The advanced report for retail inventories reflected a 0.1% build in November following a revised 0.4% decline in October (from -0.2%). The advanced report for wholesale inventories showed a 1.0% build in November after a revised 0.6% build in October (from +0.8%).
  • FHFA Housing Price Index came in flat for October after a 0.1% increase in September
  • S&P Case-Shiller Home Price Index fell to 8.6% (consensus 8.0%) in October from 10.4% in September

Looking ahead to Wednesday, market participants will receive the following economic data:

  • 7:00 a.m. ET: Weekly MBA Mortgage Applications Index (prior +0.9%)
  • 10:00 a.m. ET: November Pending Home Sales (consensus -0.2%; prior -4.6%)