| | | | | | | Presented By MOXY | | | | Axios Markets | | By Matt Phillips and Emily Peck · Jan 04, 2023 | | A new year! The tabula is virtually rasa. So, what should we write about? Email us: markets@axios.com. Today's newsletter is 807 words, 3 minutes. | | | | | | 1 big thing: Natural gas hits pre-war price |  | | | The first full cargo of natural gas arrives at the newly opened LNG terminal in Wilhelmshaven, Germany, on Tuesday. Photo: Sina Schuldt/DPA | | | | European natural gas prices — which soared after Russia's invasion of Ukraine — have tumbled back to pre-war levels, Matt writes. Why it matters: If sustained, declining gas prices could ease a series of inflation, cost of living, and economic crises across Europe — and help preserve public support for the sanctions against Russia. - Europe's economic health, or lack thereof, also has consequences for one of its biggest trading partners — the U.S.
By the numbers: Benchmark prices for natural gas — using a Dutch gas trading exchange known as the Title Transfer Facility (TTF) — fell below €75 per megawatt hour yesterday. - They're down about 80% from their August peak of nearly €350.
Driving the news: The price drop is part policy, part good luck. The big picture: Russia's brutal invasion of its neighbor was a major shock to the European economy, which relied heavily on steady, affordable supplies of Russian natural gas to heat homes, illuminate cities and power factories. - The war forced shutdowns among energy-intensive European industries, such as chemical and metal production.
- Countries nationalized utilities and spent billions to subsidize energy prices for households.
- Even so, prices have still surged for consumers, driving inflation sharply higher across the continent.
The latest: Fresh data out yesterday showed German consumers, for example, paid 24% more for energy in 2022 than they did the previous year. Yes, but: While Germany's inflation numbers were the largest year-on-year increase since the country reunited in the early 1990s, there was a glimmer of hope. - Over a shorter timeline, price increases seem to be slowing fast — from over 10% in October and November, to 8.6% in December — largely due to the impact of falling energy prices.
- That was partly because of a one-time payment of consumer utility bills in December, the government statistical agency said, but gas futures prices were also down roughly 50% over that period.
The bottom line: The interaction of energy prices and inflation will continue to be a — or perhaps the — major economic issue to watch in 2023. |     | | | | | | 2. Charted: Russia, Ukraine and the gas market |  Data: FactSet; Chart: Axios Visuals | | | | | | | | 3. Catch up quick | | 🇨🇳 China is pausing its investments in building a chip industry that competes with the U.S. (Bloomberg) 🔍 Microsoft is working to incorporate OpenAI's ChatGPT technology into its Bing search engine. (Axios) 🛑 Crypto firm Wyre said to shut down. (Axios) 🚗 U.S. auto sales in 2022 are expected to show a decline. (WSJ) | | | | | | | | A message from MOXY | | Real political savvy at your fingertips | | |  | | | | Tired of the ranting echo chambers? MOXY has smarter discourse via issue-based forums, a broad-spectrum newsfeed, personalized politician directory, legislation, ballot info, surveys and more. Try MOXY Free for 30 days or get a MOXY Premium 60-day upgrade using code AXIOS2023. Learn more. | | | | | | 4. New year, more money |  Data: Economic Policy Institute; Note: Note: Hawaii and Florida increases took effect in October 2022; Map: Kavya Beheraj/Axios Millions of Americans got a raise this week, as minimum wage increases in 23 states and Washington, D.C. went into effect, Emily writes. Why it matters: The biggest factor driving the increases was inflation — 13 states tie their minimum wage rate to the Consumer Price Index, as Wolters Kluwer notes in a new analysis. Other states had increases set by legislation or ballot initiatives. - While the federal wage floor remains stuck at $7.25, a growing number of states now have minimum wages of at least $15 an hour, including Washington ($15.74), California ($15.50) and Massachusetts ($15).
- In the coming years, more states will reach $15 an hour — once a long-shot goal of activists — including Connecticut (June 2023), New Jersey (2024) and Illinois (2025).
Zoom out: These wage increases are part of a bigger trend in the workforce, where lower-income, lower-skilled workers are grabbing bigger wage increases than higher earners (in terms of percentage). - Wages for the lowest-skilled workers have risen more than for high-skill workers over the last 12 months, per the Atlanta Fed's wage tracker.
| | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. And we're off! And down! |  Data: FactSet; Chart: Axios Visuals Stocks stumbled in the first session of 2023, Matt writes. Driving the news: The S&P 500 ended the day down 0.4%. - It was an inauspicious start for the index following the 19.4% drop it suffered in 2022, its worst year since 2008.
Details: The worst S&P performer was Elon Musk's Tesla, which plunged 12.2% on the day after reporting disappointing fourth-quarter production and delivery numbers. - A year ago — Jan. 3, 2022 — Tesla's share price hit an all-time high, giving it a market value of more than $1.2 trillion.
The bottom line: Tesla's shares have collapsed by roughly 73% over the last year, destroying almost $900 billion of shareholder wealth during that period. - If things keep going like this, it won't be long till Musk will have overseen $1 trillion worth of value destruction.
- To be fair, Apple shed roughly $1 trillion in value over the same period — though its percentage decline from about $3 trillion to about $2 trillion was smaller.
| | | | | | | | A message from MOXY | | Tired of the Ranting Echo Chambers? | | |  | | | | MOXY puts real political savvy at your fingertips with: - Issue-based forums.
- Personalized politician directory.
- Legislation
- And much more.
Try MOXY Free for 30 days or get a MOXY Premium 60-day upgrade with our compliments using code AXIOS2023. Get started. | | | | 🎧 1 thing Matt loves: A good listen. So I was thrilled to see an interview with James Macdonald, an ex-banker and financial historian, on an episode of the Anglocentric finance podcast "A Long Time in Finance." - He talked about the interlinked history of government debt markets, warfare and democracy, ground he ably covered in his excellent 2006 tome "A Free Nation Deep in Debt." If you're a bond market geek you need to read that book.
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