World Road | Microsoft dwarfs Apple; German economic contracts; Red Sea crisis; Elon Musk's plan; Jobs vs bots

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Global banks could potentially increase their valuations by $7 trillion over the next five years. Microsoft surpasses Apple in market capitalization. Apple offers rare discounts on iPhones in China, and London's financial employment opportunities decline in 2023. The German economy will shrink in 2023. Houthi fighters target a US ship in the Gulf of Aden. Venezuela increases its monthly minimum wage by over 40 percent. Elon Musk suggests developing AI products outside of Tesla. The International Monetary Fund warns that AI could impact nearly 40 percent of global jobs and potentially worsen overall inequality. All this and more in this edition of World Street.

Valuable safe

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Global banks could boost their valuations by a combined $7 trillion over the next five years if they take big steps to boost growth and boost productivity, the Boston Consulting Group said in a report. Lenders could roughly double their current valuations as they pursue growth and improved price-to-book ratios despite obstacles, the adviser said.

Great technology

Due to its strong focus on generative artificial intelligence (AI), Microsoft has overtaken Apple to become the world's largest company by market capitalization. The tech giant, which along with Nvidia and Amazon placed a major focus on AI, saw significant market jumps last year. Notably, Microsoft's market value has increased by over $1 trillion.

Price wars

Apple is offering rare discounts on its iPhones in China, cutting retail prices by up to 500 yuan ($70) as competitive pressure increases in the world's biggest smartphone market. The US tech giant cut the prices of some iPhones by 5%, its Chinese website showed on Monday. The limited-time promotion, branded as a Lunar New Year event, runs from January 18 to 21 in the lead-up to the mid-February holiday.

Shed love handles

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Job opportunities in London's financial sector plunged by almost 40% last year, recruiter Morgan McKinley said, as market turmoil and high inflation prompted employers to tighten their belts to cut costs. According to the company's London Employment Monitor, available jobs in finance fell by 38% in 2023 compared to the previous year, while the number of job seekers also fell by 16%.

Macro matters

The German economy contracted in 2023 due to persistent inflation, high energy prices and weak external demand, but managed to avoid a recession at the end of the year. The gross domestic product (GDP) shrank by 0.3% in 2023 as a whole, as the Federal Statistical Office announced. “The overall economic development in Germany stalled in 2023 in an environment that continues to be characterized by multiple crises,” said Ruth Brand, President of the Statistics Office.

Risky water

On Monday, Houthi fighters targeted a U.S. merchant ship with an anti-ship ballistic missile, highlighting ongoing risks on one of the world's most important trade routes. According to US Central Command, the Marshall Islands-flagged Gibraltar Eagle was hit in the Gulf of Aden around 4 p.m. local time. Fortunately, there were no injuries and the ship suffered minimal damage, allowing it to continue its journey.

Bread and bonus

Venezuela has increased its monthly minimum wage by over 40%, responding to growing protests by dissatisfied officials ahead of this year's presidential election. President Nicolás Maduro announced Monday that in addition to the base salary, which is currently less than $4, workers will now receive a monthly supplement of $60 and food stamps worth $40. This represents an increase from the bonuses, which totaled around $70 before the recent announcement.

Musk's Tesla novel

Elon Musk expressed his preference for developing AI products outside of Tesla Inc. unless he retains 25 percent voting control, suggesting potential interest in increasing his stake in the electric vehicle giant. The CEO, who currently holds over 12 percent of the shares, described Tesla as a conglomerate of several start-ups and pushed for a comparison with the industry-established General Motors Corp.

Yawn to Yen

In December, Japanese input prices remained stagnant compared to a year earlier, marking the slowest growth in nearly three years. The producer price index for the month, which reflects input costs for businesses, showed no change from December 2022, influenced by the recent appreciation of the yen that curbed import costs. This is the twelfth consecutive month of slowing price growth. Despite expectations of a 0.3% decline, the actual reading was slightly stronger, showing a 0.3% increase month-on-month.

Jobocalypse

The International Monetary Fund (IMF) has warned that the rise of artificial intelligence (AI) could affect nearly 40 percent of jobs worldwide, with high-income economies facing greater risks than emerging and low-income countries. The IMF assessment shows that in most scenarios, AI is capable of exacerbating overall inequality in the global labor market. IMF chief Kristalina Georgieva is urging proactive measures from policymakers to counter this worrying trend and prevent technology from escalating social tensions.

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