End of year rate hikes

It was a big week for global central banks, with the US Federal Open Market Committee (FOMC), the Bank of England (BoE) and the European Central Bank all holding their final policy meetings of 2022.

The ECB and BOE followed the Fed in raising their benchmark interest rate by 50 basis points, a step down from 75 basis points in previous months.

The latest rate hike takes the US federal funds rate to a target range of 4.25% to 4.5%, the highest level in 15 years.

It follows softer-than-expected US inflation data on Wednesday, which rose 0.1% in November slowing the annual pace to 7.1%, down from 7.7%. Separate US retail sales data released Friday showed a sharper-than-expected pullback in spending in November, fuelling fears the US may not be able to avoid a recession.

Locally, RBA governor Philip Lowe delivered his final speech of the year, where he expressed hope to continue in the role for a second term.

The RBA governor has been criticised for his communication during the pandemic, particularly for telling borrowers interest rates were expected to remain on hold until at least 2024.

"We've got to get inflation down and that's my focus, and I will keep doing that until at least September next year,” Mr Lowe said.

Fresh food for the whole family

On Thursday, retail giant Woolworths announced it has entered into an agreement to acquire Petspiration Group.

The company will acquire a 55% stake in the pet speciality retailer at a cost of $586 million.

Petspiration owns and operates the retail brand PETstock, with 276 physical stores plus ecommerce platforms with memberships.

Woolworths Group chief executive Brad Banducci says the diversification of goods offered by stores in the group is important as the demand for speciality pet products grows.

“Specialty pet is a large and growing retail segment in which we have limited presence,” Mr Banducci said.

Following the announcement of the acquisition, Morningstar has left the fair value of Woolworths unchanged.

Woolworths shares jumped 0.73% following the announcement on Thursday, ending the week down 0.4%.

Crypto kerfuffle continues

You’d think things couldn’t get any worse for Sam Bankman-Fried, the former CEO and founder of collapsed crypto exchange FTX.

But things went from bad to worse this week after he was arrested in the Bahamas on Monday.

Bankman-Fried is now facing eight criminal changes including wire fraud, money laundering, and conspire to commit fraud in the US.

An unsealed criminal indictment from the Southern District of New York stipulates that since the establishment of FTX in 2019, Bankman-Fried has been involved in a scheme used to defraud equity investors.

Bankman-Fried’s hedge fund, Alameda, founded in 2017 has also come under fire in the criminal indictment, alleging he moved customer assets into the hedge fund which he then used to make purchases.

“But from the start, Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC (“Alameda”), and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations,” claims the Securities and Exchange Commission.

But what about Tesla, Elon?

Tech billionaire Elon Musk has again dumped more of his Tesla shares this week, selling $5.37 billion (US$3.6b) worth of Tesla shares between Monday and Wednesday.

The disposal of 22 million shares was the second largest dump by Musk following his $65 billion (US$44b) purchase of Twitter in October.

Despite saying he was done selling Tesla stock in April, the latest unloading of shares this week means Musk has cash out approximately $59 billion (US$40b) this year.

The electric car maker has seen its share price tumble this year, falling over 60% since January. This week’s decline was capped at 12% with Tesla shares swapping hands at US$157.57.

What we’re watching:

Tuesday: RBA minutes

Thursday: US and Great Britain GDP growth data

One good read:

India is turning toward free trade, for some