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In today’s email:

• Fed Chief Powell: March Rate Cut Unlikely

• Saudi Arabia Reverses Oil Capacity Expansion Plan

• Cigna to Sell Medicare Business for $3.7 Billion t …

• Consumer Goods Giants May Face Margin Pressure as …

Markets

Fed Chief Powell: March Rate Cut Unlikely

Federal Reserve Chair Jerome Powell stated that the central bank is unlikely to cut rates in March, indicating that the Federal Open Market Committee (FOMC) may not have the necessary confidence regarding inflation by that time. Powell emphasized that while rate cuts might occur later in the year, it's doubtful they will be implemented as early as March. The remarks came during a press conference following the Fed's January meeting, where it maintained its benchmark interest rate. Powell's comments dampened hopes among traders who anticipated an earlier rate cut, leading to a decline in stock prices. The Fed's policy statement hinted at a reluctance to raise rates but didn't signal an immediate cut.

Powell's clarification suggested that the current stance would persist at least until the next two scheduled policy decision dates on March 20 and May 1. Market observers had been eyeing these dates as potential candidates for the first rate cut, given a backdrop of declining inflation and slowing job growth. Powell also refrained from committing to a series of rate cuts, emphasizing that it would depend on future economic data. The central bank's favored inflation gauge, the personal consumption expenditures price index, is updated monthly, with one more reading before the March meeting and three more before May.

^{Source: CNBC}

Energy

Saudi Arabia Reverses Oil Capacity Expansion Plan

Saudi Arabia's decision to abandon its oil expansion plan, a surprise move, had been in development for at least six months, according to an industry source. The decision, which involves halting plans to increase the maximum sustainable capacity to 13 million barrels per day (mbpd) and reverting to the previous target of 12 mbpd, was driven by uncertainties regarding the market's demand for additional spare capacity. The directive to halt the expansion plan was issued to Aramco by the Saudi energy ministry on Tuesday. This decision underscores the kingdom's strategic considerations amid evolving global energy dynamics.

^{Source: Reuters}

Earnings

Apple to Report Q1 Earnings with Focus on China iPhone Sales

Apple is set to announce its first-quarter earnings, with particular attention on iPhone sales performance in China. Recent downgrades by Barclays, Piper Sandler, and Redburn Atlantic, fueled by concerns about the iPhone 15's performance in China, have impacted Apple's stock price. TF International Securities' analyst Ming-Chi Kuo's prediction of a 15% decline in iPhone shipments added to the pressure. A robust performance and positive outlook for iPhone sales in the quarter could potentially reverse the recent stock decline. Wall Street anticipates Apple to report earnings per share of $2.11 on revenue of $117.9 billion for the quarter.

In Greater China, Apple's third-largest sales region, revenue is expected to decline from $23.9 billion to $23.5 billion due to competition from resurgent Huawei and challenges in China's economic recovery. While iPhone revenue is forecasted to increase to $68.6 billion, the overall performance in the region is closely watched. Other segments, such as Mac revenue, are expected to recover slightly, while iPad revenue may decline to $7.06 billion. The Wearables, Home, and Accessories segment is estimated to generate $12 billion in revenue, and Apple's Services segment is expected to see sales of $23.4 billion. Apple's upcoming Vision Pro AR/VR headset launch will also be in focus, though its high price may limit consumer adoption.

^{Source: Yahoo Finance}

Healthcare

Cigna to Sell Medicare Business for $3.7 Billion to Health Care Service Corp.

The Cigna Group has announced the sale of its Medicare business, including Medicare Advantage insurance, supplemental benefits, and Medicare prescription drug coverage, to Health Care Service Corp. for approximately $3.7 billion. Cigna's Medicare business serves 3.6 million customers, including 2.5 million with Part D prescription drug coverage, nearly 600,000 with Medicare Advantage, and over 450,000 with Medicare Supplement plans. Cigna CEO David Cordani stated that while Medicare remains an attractive market, the business required a focus and resources disproportionate to its size within the company's portfolio. The deal is expected to close in the first quarter of the next year, with Cigna utilizing the proceeds mainly for share repurchases.

^{Source: AP News}

Retail

Consumer Goods Giants May Face Margin Pressure as Price Hike Benefits Wane

Consumer goods giants such as Procter & Gamble (P&G) and Kimberly-Clark might experience a setback in their margin recovery as easing input costs are offset by cautious customer spending. Despite facing inflationary pressures, customers who initially absorbed price increases are now tightening their spending amid slow wage growth. Procter & Gamble, Colgate, and Kimberly-Clark have reported softer sales volumes in the latest quarter, and analysts anticipate potential margin challenges if consumer spending hesitancy persists. The trend of customers trading down to lower-cost alternatives may impact the ability of companies to maintain higher prices, signaling a shift in the inflationary landscape for the consumer goods sector.

^{Source: Reuters}

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