Kuroda Set to Leave With BOJ Falling Short on Inflation Goal; U.S. Economy May Be Facing 'No-Landing' Scenario By James Christie

Good day. With Haruhiko Kuroda handing over the reins at the Bank of Japan, high hopes for the central bank as an economic miracle maker are coming to an end. In the final months before his term ends in April, he admits he fell short of his promise to generate sustainable 2% inflation, a goal set by many central banks partly because it allows for more room in a recession to stimulate a recovery with lower interest rates. Meanwhile, in the U.S., economists rang in the year debating whether the Federal Reserve's aggressive interest-rate increases would lead to a hard or soft landing for the economy. Now some economists are pointing to a third scenario that seemed improbable just a few weeks ago: a 'no-landing' with an upturn in economic growth.

Now on to today's news and analysis.

Top News Japan Says Sayonara to Idea of Central Banker as Rescue Hero

The next Bank of Japan governor is likely to find a challenge similar to the one that faced departing Gov. Haruhiko Kuroda when he arrived a decade ago: stubbornly low inflation and a sluggish economy to go with it.

The difference is that Kazuo Ueda, expected to be nominated Tuesday to succeed Mr. Kuroda, will take office with less confidence that Japan's central bank can fix those problems, which date to the 1990s.

Hard or Soft Landing? Some Economists See Neither

"A ' no-landing' scenario is a present-day reality," said Neil Dutta, an economist at the research firm Renaissance Macro, adding that he sees "a huge reluctance to admit the obvious, which is that the economy is reaccelerating, full stop."

Junk-Loan Market Shrugs Off Economic Worries Inflation Is Falling: Where It Lands Depends on These Three Things

Markets seem optimistic inflation will fall back to the Fed's 2% target of its own accord, and are betting the central bank will therefore cut rates this year. Fed Chairman Jerome Powell disagrees. Who is right depends on three sectors : goods, shelter, and other services, excluding food and energy.

U.S. Economy Finance Chiefs, Facing Persistent Inflation, Prioritize Cost Savings

Finance chiefs are pushing their companies to do more with less as they face another year of rising costs. Here's what CFOs have said about their spending plans and efforts to find savings during the latest round of quarterly earnings calls.

Student-Loan Forgiveness Risks Losing a Rationale

The Biden administration's decision to end the Covid-19 national emergency declaration could undermine a central justification for its student-debt forgiveness plan as the Supreme Court prepares to decide the fate of the program.

Here Comes the 60-Year Career

Millennials, as well as the generations behind them, are starting to think about their careers in a totally different way from their elders. They have no choice: Because they are likely to live healthily into their 90s or longer .

For Remote Workers, These U.S. Cities Are Great Places to Live Where Are Layoffs Declining the Most? States Near the Nation's Capital The Next Governor of the RBA May Be a Non-Australian By James Glynn

Australian Treasurer Jim Chalmers has repeatedly avoided publicly endorsing the policy management of Reserve Bank of Australia Gov. Philip Lowe, signaling that change is coming at the top of the central bank.

This raises the question of who might replace him. Central-bank insiders are usually preferred to an outsider. But that may be about to change. The first name on many lists in banking and money-market circles is that of a non-Australian. The spotlight is falling on Carolyn Wilkins, who is helping to conduct a government-ordered review of the RBA, which Mr. Chalmers has said will "renovate" the central bank. Read More.

Key Developments Around the World EU Lifts Forecasts for Eurozone Growth as Inflation Eases

The eurozone economy is expected to grow at a faster pace than previously anticipated this year, avoiding technical recession, but the outlook remains weak with inflation and sharp interest-rate increases set to weigh on activity. The European Commission said in its quarterly forecasts that gross domestic product in the eurozone is expected to grow 0.9% in 2023, higher than the 0.3% increase anticipated in November. (Dow Jones Newswires)

French Protests Against Pension Plan Draw Hundreds of Thousands

Nearly a million French marched in the streets against President Emmanuel Macron's pension overhaul on Saturday, signaling the opposition movement to Mr. Macron's plans was holding up in a fourth round of nationwide protests .

CEOs Gradually Returning to China After Its Reopening

Top executives from multinational companies are trickling back into China with the country's reopening, even as U.S.-China tensions grow following the appearance of a suspected Chinese surveillance balloon over the continental U.S.

Hong Kong's Brand Makeover Leaves Out Mention of Social Upheaval Financial Regulation Roundup Fed's Waller: Don't Expect Taxpayers to Socialize Crypto Losses

Federal Reserve governor Christopher Waller on Friday at a conference fired off a warning about the risks of cryptocurrencies, saying they are "nothing more than a speculative asset, like a baseball card." He also said, "If you buy crypto-assets and the price goes to zero at some point, please don't be surprised and don't expect taxpayers to socialize your losses." His comments came as regulators begin taking more actions to increase supervision of the crypto market, after a number of major companies collapsed in recent months, resulting in billions of dollars in customer losses and shaking the fledgling industry. (MarketWatch)

Three Arrows Founders Start Crypto Bankruptcy Claims Exchange Crypto Firms' In-House Tokens Are Coming Under More Scrutiny

The collapse in November of FTX has brought in-house crypto tokens growing scrutiny. FTX companies, for instance, used the in-house token, FTT, as collateral to obtain billions of dollars of loans.

Crypto Firm Paxos to Stop Issuing Dollar-Pegged Binance Token Paxos Faces SEC Lawsuit Over Binance USD Token Cantor Fitzgerald Helps Oversee Tether's Treasury Holdings

Billions of dollars in Treasurys that back the world's most traded cryptocurrency are being run on Wall Street . Tether Holdings, the secretive Hong Kong-based owner of stablecoin tether, is using Cantor Fitzgerald to help oversee its $39 billion bond portfolio, according to people familiar with the matter.

New SEC Rules Target Corporate Insider Trading

For the last two decades, officers and directors at U.S. public companies seeking to trade illicitly on inside information had an almost infallible get-out-of-jail-free card. All they had to do was use prearranged trading plans when they bought and sold their companies' shares. It was an unintended consequence of a 2002 regulation called Rule 10b5-1 that academic research shows was abused by some executives. That regime is about to change .

Risk Panel Discusses Possibility of New Rules for Nonbanks

Biden administration financial regulators discussed the possibility of stepping up oversight of financial firms outside the banking system, a sign they could move to ease or repeal Trump-era restrictions on regulating nonbank firms.

IRS Sinks Plan to Turn a Yacht Into a Tax Break

JR and Loren Ridinger thought a 2016 donation of a yacht would save them about $2 million on their taxes. Instead, they ended up paying $3.5 million in taxes and penalties.

Forward Guidance Monday (all times ET)

Time N/A: ECB's Lagarde and Panetta at Eurogroup meeting in Brussels

8 a.m.: Fed's Bowman speaks at American Bankers Association Conference for Community Bankers

Tuesday

Time N/A: ECB's de Guindos at Ecofin meeting in Brussels

2 a.m.: U.K. employment report for January

5 a.m.: Eurozone gross domestic product, second estimate for fourth quarter

8:30 a.m.: U.S. consumer-price index for January

9:30 a.m.: Richmond Fed's Barkin to appear on Bloomberg TV

11 a.m.: Dallas Fed's Logan speaks at Prairie View A&M University

1 p.m.: Philadelphia Fed's Harker speaks on economic outlook at La Salle University 2023 Economic Outlook

2:05 p.m.: New York Fed's Williams speaks at New York Bankers Association NYC region meeting

Research Soft Landing in Canada Looks Feasible Given Labor Data

The Conference Board of Canada says in a report the country's resilient jobs market-underscored by 150,000 new jobs in January-indicates the soft-landing the Bank of Canada is aiming for "looks increasingly feasible." The think tank notes wage growth cooled for a second straight month in January, the labor force is growing due to aggressive immigration intake, and data suggest job vacancies, while elevated, are trending down. All this is unfolding while inflation cools, after the central bank raised interest rates by 4.25 percentage points in the span of 10 months. The Conference Board of Canada says these are signs the mismatch between labor demand and supply may be easing, which should encourage the BOC.

-Paul Vieira

Inflation Expected to Ease in Latin America

Latin America is likely to see declining inflation this year "due to falling commodity prices, record tight monetary policies and widening economic slack," Oxford Economics analysts write in a report. As upside risks, they cite "the withdrawal of subsidies and the resilience of consumer spending." They note inflation was higher than expected in the region in January, adding that seasonal price increases are to be expected this month and in March. "Indexation mechanisms have been fading in recent decades in the region, but most countries still have automatic price increases based on past inflation for taxes and government regulated prices as a legacy of hyperinflation days," the analysts write.

-Paulo Trevisani

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02-13-23 0725ET