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FirstFT: Brazilian police clear Congress of pro-Bolsonaro troublemakers

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police collect from Brazil’s main government complex on Sunday night after thousands of supporters of former right-wing President Jair Bolsonaro stormed Congress, the Supreme Court and the presidential palace.

Footage on social media earlier showed crowds vandalizing the interiors of the three institutions in Brasilia, in scenes reminiscent of the invasion of the Capitol two years ago by supporters of former President Donald Trump.

Dressed in the yellow and green of the Brazilian flag, the demonstrators demanded that Lula’s election victory be annulled, that the left-wing be imprisoned and that a military coup d’état take place. Police said 300 people were arrested.

Although government buildings were unoccupied and Congress was not in session, the abuses are likely to raise doubts about the security of Brazil’s political and judicial institutions.

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The incident also marks difficult choices for Lula, who assumed the presidency just a week ago promising to unite the nation but will come under pressure to crack down on Bolsonaro’s radical supporters.

Thank you for reading FirstFT Europe/Africa. I will take over this newsletter. Feel free to send feedback to firstft@ft.com – tee

1. Goldman Sachs is preparing to cut 3,200 jobs to curb costs Goldman Sachs will start Cutting up to 3,200 jobs in a matter of days It faces a slowdown in investment banking and re-analyzes the consumer bank. Those cuts are some of the deepest cuts Goldman has made in its recent history and are more drastic than many peers are currently planning.

2. The US military deepens relations with Asian allies against the threat of China The American and Japanese armed forces are Rapidly integrating their command structure and expanding joint operations to prepare for a possible conflict with China over Taiwan, mimicking the basis that enabled Western countries to support Ukrainian resistance to Russia, the commander of the Marine Corps in Japan told the Financial Times.

Lieutenant General James Berman
Lieutenant General James Berman warned that ‘the Chinese adversary. . . She will possess a starting gun and will have the ability to initiate hostilities’ © Kyodo News / Getty Images

3. Sanak health unions warn of new strikes unless wage supply is strengthened Leaders of the Royal College of Nursing and three ambulance workers’ unions – some of which are due to strike on Wednesday – said yesterday that without a new pay offer for the current year, any talks today It will be in vain. British Prime Minister Rishi Sunak proposed the talks after weeks of deadlock between ministers and unions.

4. Macron prepares to fight over French pension reform French President Emmanuel Macron will press ahead with his efforts The long-promised and unpopular plan To reform his country’s costly pension system. The bill, which would require citizens to work for two or three years after the current retirement age of 62 to qualify for a full pension, could renew street protests and a backlash from political opponents.

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5. Women pass 40% in European Financial Services Boards EY report mentioned women 42 percent of the seats in boardrooms among financial services firms as of January, up from 37 percent in June. The data underscores the important path ahead for employers seeking to improve female representation, which campaigners said is only part of the process for a fairer financial sector.

next day

Economic data Germany releases industrial production data for November, and France releases trade figures for the same month.

Emmanuel Macron hosting Fumio Kishida The French President and the Japanese Prime Minister meet for a working dinner at the Elysee Palace – Kishida His first stop on his five-country tour across France, Italy, Britain and Canada. (artifacts)

International Conference on Climate Resilience in Pakistan Prime Minister Mohammad Shahbaz Sharif and United Nations Secretary-General António Guterres Co-hosting the conference in Geneva After the deadly floods in Pakistan last year. (guardian)

North American summit in Mexico President Andrés Manuel López Obrador host the trilateral summit With US President Joe Biden and Canadian Prime Minister Justin Trudeau at the National Palace in Mexico City. (Reuters)

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Cornwall satellite launch Virgin Orbit will run The launch of the first space satellite From mainland Britain today when nine satellites will be launched into orbit using a rocket launched from a Boeing 747. (Guardian)

Returning to its regular January schedule, the World Economic Forum’s 2023 annual meeting will bring together global leaders in Switzerland next week. Join FT Live in Davos for in-person and digital events from 16th to 20th January. View events and register for free here.

What else do we read

North Korea’s evolving nuclear threat Despite tough international sanctions and severe self-imposed isolation during the coronavirus pandemic, experts warn North Korea has made such rapid progress with its military objectives that the current arrangements for the defense of South Korea, Japan and the United States could soon become obsolete.

“I think there is a serious risk that there could be a crisis in North Korea while we are all focused on the possibility of China invading Taiwan.” Sue Mi Terry, director of the Wilson Asia Center Program

Diagram showing North Korea's escalating nuclear missile test program.  The numbers show the number of missile launches, by type, from 1984 to 2022.

From obscurity to a $240 billion valuation in 3 years The international holding company’s extraordinary transformation has gone largely unnoticed outside the UAE – and little understood, even by bankers based in the region. IHC’s CEO insists there are simple reasons for the company’s growth, however His account only explains part of the story.

Ukrainian engineers struggle to maintain the power grid As Moscow unleashes a relentless barrage of cruise missiles and drones aimed at destroying Ukraine’s power grid and plunging millions of civilians into the bitter darkness of winter, Ukraine has developed A three-pronged strategy to keep the lights on.

Investor’s Guide 2023: From Peak Dollars to Better TV The end of the easy money era and the return of inflation shook the global financial system last year, paving the way for new winners to emerge. Ruchir Sharma picks the 10 trends that will shape 2023.

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The Southwest fiasco shows that hyper-efficiency is bad business The economical carrier stranded thousands of passengers during the last ten days of 2022, which indicates that management in numbers has gone too far, Written by Rana Forouhar.

Take a break from the news

Align your chakras in the light and sound therapy room, lock yourself away in the private Longevity Garden for a 75-minute exfoliation with volcanic pumice stones and lie on an infrared bed shaded by banana trees. Explore these four spa hotels for 2023.

Healing Village Resort at Four Seasons Bali at Jimbaran Bay
Healing Village Resort at Four Seasons Bali at Jimbaran Bay

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asset management – Discover the inside story on the movers and shakers behind a multi-billion dollar industry. Participation here

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Economic

We need to pay more attention to skewed economic signals

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The writer is chair of Queen’s College, Cambridge and advisor to Allianz and Gramercy

Inflation was the dominant economic and financial issue of 2022 for most countries around the world, especially for advanced economies that have a consequential impact on the global economy and markets.

The effects have been seen in declining living standards, increasing inequality, increasing borrowing costs, stock and bond market losses, and occasional financial mishaps (fortunately small and so far contained).

In this new year, recession, both actual and feared, has joined inflation in the driving seat of the global economy and is likely to replace it. It’s a development that makes the global economy and investment portfolios subject to a wide range of possible outcomes — something that a growing number of bond investors seem to be aware of more than their equity counterparts.

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International Monetary Fund iYou will likely review soon Her economic growth forecasts again, predicting that “a third of the world will be hit by recession this year”. What is particularly notable to me about these worsening global prospects is not only that the world’s three major economic regions – China, the European Union and the United States – are slowing down together, but also that this is happening for different reasons.

In China, a chaotic exit from the wrong Covid-19 policy is undermining demand and causing more supply disruptions. Such headwinds to domestic and global economic well-being will continue as long as China fails to improve the coverage and effectiveness of its vaccination efforts. The strength and sustainability of the subsequent recovery will also require that the country more vigorously renew a growth model that can no longer rely on greater globalization.

The European Union continues to deal with energy supply disruptions as the Russian invasion of Ukraine continues. Strengthening inventory management and reorientation of energy supplies is well advanced in many countries. However, it is not yet sufficient to lift immediate constraints on growth, let alone resolve long-term structural headwinds.

The United States has the least problematic view. The headwinds to growth are due to the Fed’s struggle to contain inflation after mischaracterizing rate increases as fleeting and then initially being too timid to adjust monetary policy.

The Fed’s shift to an aggressive front-load of interest rate hikes came too late to prevent the spread of inflation in the services sector and wages. As such, inflation is likely to remain stubborn at around 4 percent, be less sensitive to interest rate policies and expose the economy to greater risk for accidents from additional policy errors that undermine growth.

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The uncertainties facing each of these three economic areas suggest that analysts should be more careful in reassuring us that recessionary pressures will be “short and shallow”. They need to be open, if only to avoid repeating the mistake of prematurely dismissing inflation as transient.

This is especially important because these diverse drivers of recessionary risk make financial fragility more threatening and policy shifts more difficult, including potentially Japan. Get out of interest rate control Policy. The range of possible outcomes is extraordinarily large.

On the one hand, a better policy response, including improving the supply response and protecting the most vulnerable populations, can counteract the global economic slowdown and, in the case of the United States, avert a recession.

On the other hand, additional policy errors and market turmoil can lead to self-reinforcing vicious cycles with rising inflation and rising interest rates, weakening credit and compressed earnings, and stressing market performance.

Judging by market prices, more bond investors are better understanding this, including by refusing to follow the Fed’s interest rate guidance this year. Instead of a sustainable path to higher rates for 2023, they believe recessionary pressures will lead to cuts later this year. If true, government bonds would provide the yield and potential for badly missed portfolio risk mitigation in 2022.

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However, parts of the stock market is still weakly bearish pricing. Reconciling these different scenarios is more important than investors. Without better alignment within markets and with policy signals, the positive economic and financial outcomes we all desire will be no less likely. They will also be challenged by the risk of more unpleasant outcomes at a time of less economic and human resilience.

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Macro hedge funds end 2022 higher, investors say, while many others take big losses By Reuters

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© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

By Svea Herbst Baylis

NEW YORK (Reuters) – Some hedge funds betting on macroeconomic trends have boasted of double and even triple-digit gains for 2022, while other high-profile companies that have long been on technology stocks have suffered heavy losses in volatile markets, investors said.

Rokos Capital, run by Chris Rokos and one of a handful of so-called global macro companies, gained 51% last year. Fund investors this week, who asked not to be identified, said Brevan Howard Asset Management, the company where Rokos once worked, posted a gain of 20.14% and Caxton Associates returned 16.73%.

Haider Capital Management’s Haider Jupiter Fund rose 193%, an investor said.

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Data from hedge fund research showed that many macro managers have avoided crumbling stock markets that have been rocked by rapid interest rate increases and geopolitical turmoil, including the war in Ukraine, to rank among the best performers in the hedge fund industry. The company’s macro index rose 14.2% while the general index of hedge funds fell 4.25%, its first loss since 2018.

Equity hedge funds, where the bulk of the industry’s roughly $3.7 trillion in assets are invested, fared worse with a loss of 10.4%, according to HFR data. And while that beat the broader stock market’s loss of 19.4%, some high-profile funds posted even bigger losses.

Tiger Global Management lost 56% while Whale Rock Capital Management ended the year with a 43% loss and Maverick Capital lost 23%. Coatue Management ended 2022 with a loss of 19%.

But not all companies that bet on technology stocks suffered. John Thaler JAT Capital finished the year with a 3.7% gain after fees after a 33% increase in 2021 and a 46% gain in 2020.

Sculptor Capital Management (NYSE::), where founder Dan Och is fighting the company’s current CEO in court over his salary increase, posted a 13% drop.

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David Einhorn’s Greenlight Capital, which bet that Elon Musk would be forced to buy Twitter, ended the year up 37% while Rick Sandler’s Eminence Capital rose 7%.

A number of so-called multi-manager companies where teams of portfolio managers bet on a variety of sectors also boast positive returns and have been able to deliver on their promise that hedge funds can deliver better returns in distressed markets.

Balyasny’s Atlas Fund (NYSE: Enhanced) gained 9.7%, while Point72 Asset Management gained 10%. Millennium Management gained 12% while Carlson Capital ended the year with a 7% gain.

Representatives for the companies either did not respond to requests for comment or declined to comment.

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German automakers point to easing supply chain problems

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Sales at BMW and Mercedes-Benz jumped in the final months of 2022 as the German premium auto brands indicated supply chain problems plaguing the industry were abating.

Automakers around the world have experienced parts shortages since the pandemic, especially semiconductors, leaving many of them with large fleets of incomplete vehicles that can’t be delivered to customers.

BMW and Mercedes each said their full-year vehicle deliveries fell last year by 4.8 percent and 1 percent, respectively, due to Suppliers Bottlenecks as well as lockdowns in China and the war in Ukraine.

But supply pressures eased in the last quarter of the year, as BMW recorded a 10.6 percent jump in sales, with 651,798 vehicles delivered, and Mercedes fulfilling 540,800 orders, up 17 percent from the same period in 2022.

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BMW He said the main effects of supply chain bottlenecks and continued lockdowns were felt in the first six months of the year, adding that “sales were steadily picking up in the second half.”

Mercedes boss Ula Kallenius told the Financial Times last week that the list of problems in the auto supply chain was declining, but added that long waits for cars would continue into 2023.

“One chip is enough to be vital [ . . .] Missing, and then you can’t finish the car, even if you have everything else.

Both brands recorded strong sales growth electric car. Mercedes, which last week announced a plan to build 10,000 charging docks, said EV shipments grew 124 percent to 117,800 last year compared with its predecessor.

Similarly, BMW reported strong growth in electric vehicle sales, with deliveries of fully electric vehicles doubling last year to 215,755.

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Analysts at Bank of America said that sales of electric vehicles, including hybrid cars, reached a historic peak last November, with 1.1 million units sold. They attributed this largely to the upcoming phase-out of customer subsidies in Germany.

Participate in Mercedes BMW and BMW prices held steady Tuesday morning as investors priced in an image of an improving showing.

Rolls-Royce, a subsidiary of BMW, announced Monday that sales have hit a 119-year record, driven by strong demand in the United States, its largest market.

The luxury brand has been largely unaffected by the semiconductor pressure, mainly because it makes relatively few compounds and therefore needs fewer chips.

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