In this economy, I’d definitely not want to be responsible for selling diamonds and handbags. But luxury giant Richemont seems to be making a good go of it. I’m glad someone’s feeling flush.

The lowdown

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Flex your finance muscle 💪

Quantitative tightening

In the last FYFM, we talked about negative rate exits. Today’s term is related in that it’s another level central banks have to stoke growth when they can’t push interest rates any lower.

After the Global Financial Crisis, central banks including the Fed, ECB and BoE aggressively bought bonds on the open market. In doing so, they injected money into the economy to encourage spending. Fast forward to today, and there have been some adverse consequences: inflation is high, partly because of all the extra money in the system, and banks own a shedload of bonds they need to get rid of.

The process of selling off those bonds again is called quantitative tightening. It’s also known as a ‘balance sheet roll-off’, and the Fed has been doing it since 2022. For JPMorgan CEO Jamie Dimon, it’s one of the biggest risks to the US economy this year and the next.

“You have all these very powerful forces that are going to be affecting us in ’24 and ’25,” he told CNBC. “Ukraine, the terrorist activity in Israel [and] the Red Sea, quantitative tightening, which I still question if we understand exactly how that works.”

Featured story

Richemont sales jump in China, slip in Europe

Luxury group Richemont’s results paint a mixed picture of the sector, reporting a sales decline in Europe and a big jump in China.

The Cartier owner said sales fell 3% in Europe, as spending from travelers dropped, particularly Americans. The luxury market has suffered from inflation, high interest rates, and more expensive mortgages in the US.

In China, sales rose by 25%, despite concerns of the economy cooling. A slower than expected recovery in the country after Covid-19 had weighed on the luxury sector.

But is luxury out of the woods? “Not by a long shot,” says Kepler Cheuvreux analyst Jon Cox, “and the first half of 2024 is likely to be tricky.”

The content we're consuming today

• CNBC TV: “Please stop talking about this sh*t” – Jamie Dimon on bitcoin

• WSJ: Americans are ditching weeknight fun – can they be tempted back? ($)

• Bloomberg: Steve Forbes is selling his Winston Churchill memorabilia collection ($)

Off-balance sheet items

• This is TikTok’s orange peel theory, and why you might need to break up with your partner because of it.

The bottom line