Is it sunny side up or down?

Alright so today we’ve got:

• Is the world forecast getting better or is it ‘transitionary’?

• After Binance, SEC sues Coinbase.

• Merck says putting pressure on their drug prices is unconstitutional.

  Let’s do a scan.

The Big Picture

The World Bank forecasts improved global economic growth of 2.1% for 2023, due to strong US consumer spending and China’s rapid reopening. Despite this, expectations for the latter half of the year are less optimistic due to stubbornly high inflation, interest-rate increases, and challenges in developing countries. The bank's January estimate was a modest 1.7%, marking a slowdown from the 3.1% growth witnessed in 2022.

“The possibility of more widespread banking turmoil and tighter monetary policy could result in even weaker global growth,” the World Bank warned, citing overlapping negative impacts from the pandemic, geopolitical tensions, and tighter monetary policy. Even with a projected 2.4% growth in 2024, this figure still falls short of January's forecast of 2.7%.

While the U.S. and Europe have avoided recession in 2023, ongoing inflation has necessitated higher interest rates, particularly affecting lower-income countries by slowing growth and investment and increasing financial crisis risks.

Economic sectors sensitive to interest rate changes, like business and residential investments, are feeling the pinch. Growth in emerging markets and developing economies is expected to decline to 2.9% from 4.1% in 2022, leading World Bank chief economist Indermit Gill to emphasize the need for clearer communication from central banks to alleviate global market disruptions.

Sector Sweep

Tech

• Days after filing a lawsuit on Binance, SEC has now sued Coinbase over the alleged breach in regulations mandating its registration as an exchange and supervision by the federal agency. Coinbase CEO Brian Armstrong tweeted “Instead of publishing a clear rule book, the SEC has taken a regulation by enforcement approach that is harming America. So if we need to avail ourselves of the courts to get clarity, so be it.”

• In a restructuring move, Reddit, the social media platform, is reducing its workforce by approximately 90 employees and moderating its hiring process.

• According to data provided by venture capital firm Atomico, investment in European tech startups is expected to decrease by an additional 39% this year, echoing the ongoing challenges faced by the global tech industry.

• As Apple unveils its mixed-reality headset, executives from prominent players in the augmented and virtual reality field are hailing it as a "watershed moment" for the industry. Cher Wang, CEO of Taiwanese tech giant HTC, welcomed the move from Apple calling it a validation for the AR/VR market.

Energy

• After 15 years of unsuccessful attempts to establish a solar-component factory, U.S. startup CubicPV believes that substantial green subsidies will provide the necessary boost to break into a market largely controlled by China. CubicPV specializes in silicon wafers, a crucial component of solar panels, with China currently accounting for 97% of global production, while none are manufactured in the United States.

Health

• Merck & Co. has filed a lawsuit in U.S. District Court in Washington, D.C., challenging the constitutionality of Medicare's drug-price negotiation program, claiming violations of the company's First and Fifth Amendment rights.

Commercial Real Estate

• With approximately $1.5 trillion in commercial mortgages maturing in the next three years, numerous commercial landlords are at risk of default due to the structure of their loans, as reported by data provider Trepp. According to Trepp, the proportion of interest-only loans in new commercial mortgage-backed securities issuance rose to 88% in 2021, marking a significant increase from 51% in 2013.

That’s all for today folks. Do keep a lookout for our weekly email about stock deep dives and personal finance strategies this weekend.

BTW, do tell us how we did. Just hit us with a reply.

Cheers!

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