Japan Inflation-Adjusted Wages Rise in December on Jump in Bonuses

Economic

Forex

Summary:

The consumer inflation rate that the government uses to calculate real wages and includes fresh food prices but not rent or equivalent, climbed 4.2%, accelerating from November's 3.4%.

Japan's December inflation-adjusted real wages rose 0.6% year-on-year thanks to a wintertime bonus bump, preliminary government data showed on Wednesday, with government officials expressing optimism that wage hike momentum ahead is growing.

Prime Minister Shigeru Ishiba sees strong wage growth as key to supporting a fragile economic recovery, while the Bank of Japan has said sustained, broad-based wage hikes are a prerequisite for pushing up borrowing costs.

December's real wages, a barometer of consumer purchasing power, grew 0.6% in December from a year earlier, data from the labour ministry showed. The inflation-adjusted wages rose for the second consecutive month after the ministry revised up November's figure to a 0.5% uptick from a 0.3% drop.

The positive figure is attributed to a 6.8% jump in special payments, mainly on companies' wintertime bonuses, the ministry said. Such a bump pushed total cash earnings, or nominal pay, up to 619,580 yen ($3,991.11), a 4.8% increase year-on-year.

The consumer inflation rate that the government uses to calculate real wages and includes fresh food prices but not rent or equivalent, climbed 4.2%, accelerating from November's 3.4% and rising at the fastest pace since January 2023.

"Although monthly wages and base salary have been rising compared to the past, they are not keeping up with prices," a labour ministry official said.

Regular pay, or base salary, rose 2.7% in December from a year ago after a revised 2.5% gain in November, the data showed. Overtime pay, a barometer of business strength, grew 1.3% for the month from a revised 1.4% growth in November.

In separate wage data for the whole of 2024, the overall base salary grew at the fastest pace in three decades, while special payments rose at the fastest pace since 2001, according to the ministry.

Real wages for that year as a whole, though, dipped 0.2% compared to 2023, down for the third consecutive year as consumer inflation exceeded 3% and outpaced nominal pay.

Still, a separate labour ministry official said regular pay has risen and special payments helped real wages turn positive during bonus seasons last year.

"If this trend continues, or if consumer inflation cools down, we can expect a positive trend in real wages" looking ahead, the official said.

Japanese companies agreed to an average 5.1% wage hike in 2024, the biggest increase in three decades, according to Rengo, the nation's largest union.

Rengo is seeking wage hikes of at least 5% in 2025, while setting a target of at least 6% for smaller firms to narrow the income gap with workers at large firms.

Source: Reuters

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Glendon

Economic

When investing in the stock market, you may come across two main types of stock: common stock and preferred stock. While both represent ownership in a company, they come with different rights, risks, and benefits.

Understanding these differences is crucial for making informed investment decisions. In this article, we’ll break down what common and preferred stocks are, their advantages and disadvantages, and which might be the better option for you.

1. What Is Common Stock?

Common stock is the most widely known type of stock that investors buy. When you purchase common shares, you own a small portion of the company and gain certain rights.

Key Features of Common Stock:

✔ Voting Rights – Shareholders typically have the right to vote on company matters, such as electing the board of directors.

✔ Dividends (Not Guaranteed) – Companies may pay dividends, but they are not obligated to do so. Dividend payments can vary based on profitability.

✔ Higher Growth Potential – Common stock tends to offer higher long-term returns compared to preferred stock.

✔ Market Volatility – Prices fluctuate based on company performance and market trends.

Pros of Common Stock:

✔ Potential for higher returns over time.

✔ Shareholders benefit from capital appreciation (increase in stock price).

✔ Voting power allows investors to influence corporate decisions.

Cons of Common Stock:

❌ Dividends are not guaranteed and may be inconsistent.

❌ Higher exposure to market risk and volatility.

❌ Common shareholders are last in line to receive payouts in case of company liquidation.

Example of Common Stock in Action:

If you buy 100 shares of Apple (AAPL), you own a piece of the company. If Apple’s stock price increases, you can sell your shares for a profit. However, if the stock price falls, you may face losses.

2. What Is Preferred Stock?

Preferred stock is a hybrid between stocks and bonds. It offers fixed dividends like a bond while providing ownership in a company like common stock. However, preferred shareholders generally do not have voting rights.

Key Features of Preferred Stock:

✔ Fixed Dividends – Preferred shareholders receive regular dividend payments, which are typically higher and more reliable than common stock dividends.

✔ Priority Over Common Stock – In case of company liquidation or bankruptcy, preferred shareholders are paid before common shareholders.

✔ Less Price Volatility – Preferred stock prices are more stable than common stock.

✔ Callable Option – Companies can buy back (redeem) preferred shares after a certain period.

Pros of Preferred Stock:

✔ Steady income through fixed dividend payments.

✔ Less risk compared to common stock due to dividend priority.

✔ Preferred shareholders are paid first in case of bankruptcy.

Cons of Preferred Stock:

❌ Limited or no voting rights.

❌ Less potential for capital appreciation compared to common stock.

❌ Callable feature means the company can repurchase shares, limiting long-term gains.

Example of Preferred Stock in Action:

If you buy Preferred Shares of Bank of America (BAC.PRK), you will receive fixed quarterly dividend payments. These dividends will be paid even if the company skips dividends for common shareholders.

4. Which Type of Stock Is Right for You?

Choosing between common and preferred stock depends on your investment goals, risk tolerance, and income needs.

Choose Common Stock if you:

✔ Want long-term growth potential and capital appreciation.

✔ Are comfortable with higher risk and volatility.

✔ Want voting rights in company decisions.

Choose Preferred Stock if you:

✔ Want steady, reliable income from dividends.

✔ Prefer lower risk and less price volatility.

✔ Are okay with limited growth potential and no voting rights.

5. Can You Own Both?

Yes! Some investors diversify their portfolios by owning both common and preferred stocks. This strategy allows them to benefit from the growth potential of common stocks while securing steady income from preferred stocks.

Final Thoughts

Both common and preferred stocks offer unique advantages and risks. Common stock is ideal for investors seeking long-term capital gains, while preferred stock is better for those who prioritize stable income and lower volatility.

Before investing, consider your financial goals, risk tolerance, and dividend preferences. A well-balanced portfolio may include both types of stock to maximize growth and income opportunities.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Manuel

Cryptocurrency

Political

Republican lawmakers said Tuesday they are moving full-tilt to help President Donald Trump fulfill what the crypto world most unanimously wants from the new administration: clear regulation for the digital asset industry.

"We have a bicameral project for both a stablecoins bill and a regulatory framework that will bring clarity to digital assets in United States," House Financial Services Committee Chairman French Hill (R-Ark.) told reporters during a press conference where they were joined by Trump's AI and crypto czar David Sacks.

Hill spoke alongside Senate Banking Committee Chairman Tim Scott (R-S.C.), and Senate Agriculture Committee Chairman John Boozman (R-Ark.) as well as House Agriculture Committee Chairman G.T. Thompson (R-P.A.).

Lawmakers are set to move first with a bill on stablecoins and then tackle a more comprehensive bill on market structure for crypto.

Earlier Tuesday Senators Bill Hagerty (R-Tenn.), Kirsten Gillibrand (D-N.Y.), Cynthia Lummis (R-Wyo.), and Scott introduced the US Stablecoins (GENIUS) Act — a bill designed to set a clearer framework for the use of stablecoins as payments.

"My goal is to be as aggressive as possible, to achieve an objective of having bills through the Senate in a hundred days," Scott told reporters.

Scott said that Republicans have been working with Democrats already and that the bill is moving quickly. He is "pleasantly surprised" that members from both parties on the committee as well as Senator GIllibrand are "anxious to have a win in this digital space."

Last year while campaigning, President Trump said he would make the US the "crypto capital of the planet." He also made a number of specific promises.

As part of the crypto-focused executive order the president signed in January, he ordered the formation of a presidential group on digital assets led by Sacks.

A core aim of the new working group is to coordinate clearer regulation for the sector.

Some of Trump’s promises to the crypto world, like prohibiting the US government from creating a central bank digital currency (CBDC), have been easy to deliver.

Other promises and regulatory developments for the crypto world might take more time. Major questions still remain around whether the Trump administration will deliver a "national digital asset stockpile," which Sacks's group has also been directed to evaluate.

"We're still in the very early stages of this, but that's one of the first things we're going to look at is the feasibility of a bitcoin reserve," Sacks said, responding to a question from Yahoo Finance on Tuesday.

In January, the Securities and Exchange Commission formed a new crypto task force led by SEC Commissioner Hester Peirce.

In a statement released Tuesday afternoon, Pierce asked that investors “be patient,” cautioning against expectations for quick improvements.

“It took us a long time to get into this mess, and it is going to take us some time to get out of it,” Pierce said in a statement.

Source: Yahoo Finance

Risk Warnings and Disclaimers

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Manuel

Economic

Unions representing U.S. government employees filed a lawsuit on Tuesday to block the Trump administration's plan to offer buyouts to federal workers, even as a U.S. official told Reuters that more than 20,000 employees are planning on quitting.

The American Federation of Government Employees and two other unions claim the buyout offer is "arbitrary and capricious" and violates federal law, according to the complaint.

The White House last week offered 2 million civilian full-time federal workers an opportunity to stop working this week and receive pay and benefits through Sept. 30 as President Donald Trump seeks to slash the size of the government.

The deadline to accept the offer is Thursday.

The unions allege the administration cannot guarantee the plan will be funded and has failed to consider the consequences of mass resignations, including how it might affect the government's ability to function.

The White House Office of Personnel Management defended the legality of the program in a memo to agencies on Tuesday.

The program has undergone extensive legal review and is completely voluntary, the U.S. official said, adding it was an effort to assist employees financially as federal agencies scale down their workforce.

Trump has embarked on a massive makeover of the U.S. government, firing and sidelining hundreds of civil servants in his first steps toward downsizing the bureaucracy and installing more loyalists.

The number of deferred resignations is rapidly growing, the U.S. official said, and the largest spike is expected to come 24 to 48 hours before Thursday's deadline.

The White House has said it will exempt public safety employees, including air traffic controllers, from its "deferred resignation program."

The administration urged government workers last week to quit their "lower productivity jobs" and seek work in the private sector, and to take a vacation to a "dream destination," sparking outrage among civil servants.

The program would allow them to remain on the payroll through Sept. 30 but without having to work in person and possibly having their duties reduced or eliminated in the meantime, according to a memo sent to workers.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Manuel

Stocks

Political

The three major stock indexes closed higher on Tuesday, aided by energy stocks, while investors saw reason for optimism for a trade breakthrough between the U.S. and China after President Donald Trump delayed tariffs for Canada and Mexico.

New 10% U.S. tariffs on Chinese imports took effect on Tuesday, which China countered with levies on U.S. goods. It was unclear when the country's leaders would talk and Trump said he was in no hurry.

Energy stocks led the S&P gains, rising 2.18%, while utilities and consumer staples lost ground.

Trump had said over the weekend he would impose a 25% tariff on goods from Mexico and Canada, but agreed to a 30-day pause on Monday in return for border and crime concessions from both countries.

"The president was so quick to offer a 30-day stay of execution to Mexico and Canada, so you get the idea that maybe what he's really trying to do is embrace a quick declaration of victory which doesn’t change much from a trade perspective," said Sam Stovall, chief investment strategist at CFRA Research.

"Investors have been breathing a sigh of relief today and we’ll see if a month from now they can continue to breathe that sigh of relief."

Strong corporate earnings have also buoyed investor optimism. Of the 211 companies in the S&P 500 that have reported earnings for the fourth quarter, 76.8% reported above analyst expectations, according to an S&P earnings scorecard.

Palantir shares jumped 24% after the data analytics company forecast first-quarter and annual revenue above Wall Street estimates.

Meanwhile, Alphabet rose 2.6% ahead of its quarterly results, but posted revenue that missed expectations after the close, partly due to a slowdown in its cloud computing business. The stock was down more than 7% in after-market trading.

The Dow Jones Industrial Average rose 134.13 points, or 0.30%, to 44,556.04, the S&P 500 gained 43.31 points, or 0.72%, to 6,037.88 and the Nasdaq Composite gained 262.06 points, or 1.35%, to 19,654.02.

Biotechnology firm Illumina dropped 5.3%, while PVH Corp, the holding company for brands including Calvin Klein, slipped nearly 1% after China placed the companies on its "unreliable entity list".

Three Federal Reserve officials warned on Monday that trade tariffs carried inflation risks, with one arguing that uncertainty over the outlook for prices called for slower interest-rate cuts than otherwise.

A Labor Department report showed U.S. job openings stood at 7.6 million in December, compared to an estimated 8 million, according to economists polled by Reuters.

In earnings-driven moves, PepsiCo fell 4.5% after it forecast annual profit below expectations and missed quarterly revenue estimates.

Estee Lauder plummeted 16.1% after the cosmetics company posted another weak quarter amid demand weakness and announced job cuts.

Merck dropped 9.1% after the drugmaker said it would pause shipments of Gardasil to China through at least mid-year, as continued weak demand for the HPV vaccine there is expected to hurt the company's 2025 revenues.

PayPal fell 13.2% after the digital payments giant's operating margin shrank in the fourth quarter.

Advancing issues outnumbered decliners by a 2.81-to-1 ratio on the New York Stock Exchange. There were 121 new highs and 61 new lows on the NYSE.

On the Nasdaq, 3,035 stocks rose and 1,323 fell as advancing issues outnumbered decliners by a 2.29-to-1 ratio.

Volume on U.S. exchanges was 13.39 billion shares, compared with the 15.53-billion average for the full session over the last 20 trading days.

Source: Reuters

Risk Warnings and Disclaimers

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Manuel

Commodity

Political

U.S. President Donald Trumpon Tuesday restored his "maximum pressure" campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.

Ahead of his meeting with Israeli Prime Minister Benjamin Netanyahu, Trump signed the presidential memorandum reimposing Washington's tough policy on Iran that was practiced throughout his first term.

As he signed the memo, Trump described it as very tough and said he was torn on whether to make the move. He said he was open to a deal with Iran and expressed a willingness to talk to the Iranian leader.

"With me, it's very simple: Iran cannot have a nuclear weapon," Trump said. Asked how close Tehran is to a weapon, Trump said: "They're too close."

Iran's mission to the United Nations in New York did not immediately respond to a request for comment.

Trump has accused former President Joe Biden of failing to rigorously enforce oil-export sanctions, which Trump says emboldened Tehran by allowing it to sell oil to fund a nuclear weapons program and armed militias in the Middle East.

Iran is "dramatically" accelerating enrichment of uranium to up to 60% purity, close to the roughly 90% weapons-grade level, the U.N. nuclear watchdog chief told Reuters in December. Iran has denied wanting to develop a nuclear weapon.

Trump's memo, among other things, orders the U.S. Treasury secretary to impose "maximum economic pressure" on Iran, including sanctions and enforcement mechanisms on those violating existing sanctions.

It also directs the Treasury and State Department to implement a campaign aimed at "driving Iran's oil exports to zero." U.S. oil prices pared losses on Tuesday on the news that Trump planned to sign the memo, which offset some weakness from the tariff drama between Washington and Beijing.

Tehran's oil exports brought in $53 billion in 2023 and $54 billion a year earlier, according to U.S. Energy Information Administration estimates. Output during 2024 was running at its highest level since 2018, based on OPEC data.

Trump had driven Iran's oil exports to near-zero during part of his first term after re-imposing sanctions. They rose under Biden's tenure as Iran succeeded in evading sanctions.

The Paris-based International Energy Agency believes Saudi Arabia, the United Arab Emirates and other OPEC members have spare capacity to make up for any lost exports from Iran, also an OPEC member.

PUSH FOR SANCTIONS SNAPBACK

China does not recognize U.S. sanctions and Chinese firms buy the most Iranian oil. China and Iran have also built a trading system that uses mostly Chinese yuan and a network of middlemen, avoiding the dollar and exposure to U.S. regulators.

Kevin Book, an analyst at ClearView Energy, said the Trump administration could enforce the 2024 Stop Harboring Iranian Petroleum (SHIP) law to curtail some Iranian barrels.

SHIP, which the Biden administration did not enforce strictly, allows measures on foreign ports and refineries that process petroleum exported from Iran in violation of sanctions. Book said a move last month by the Shandong Port Group to ban U.S.-sanctioned tankers from calling into its ports in the eastern Chinese province signals the impact SHIP could have.

Trump also directed his U.N. ambassador to work with allies to "complete the snapback of international sanctions and restrictions on Iran," under a 2015 deal between Iran and key world powers that lifted sanctions on Tehran in return for restrictions on its nuclear program.

The U.S. quit the agreement in 2018, during Trump's first term, and Iran began moving away from its nuclear-related commitments under the deal. The Trump administration had also tried to trigger a snapback of sanctions under the deal in 2020, but the move was dismissed by the U.N. Security Council.

Britain, France and Germany told the United Nations Security Council in December that they are ready - if necessary - to trigger a snapback of all international sanctions on Iran to prevent the country from acquiring a nuclear weapon.

They will lose the ability to take such action on Oct. 18 when a 2015 U.N. resolution expires. The resolution enshrines Iran's deal with Britain, Germany, France, the United States, Russia and China that lifted sanctions on Tehran in exchange for restrictions on its nuclear program.

Iran's U.N. ambassador, Amir Saeid Iravani, has said that invoking the "snap-back" of sanctions on Tehran would be "unlawful and counterproductive."

European and Iranian diplomats met in November and January to discuss if they could work to defuse regional tensions, including over Tehran's nuclear program, before Trump returned.

Sources: Reuters

Risk Warnings and Disclaimers

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Jason

Market Picture

The cryptocurrency market has added 3.3% in the last 24 hours. The violent recovery from Monday’s kick-off crash has been losing traction for the past few hours. It seems that while the market has not gone into all-out sell-off mode, a reason for sustained buying is hard to find as threats of surprise tariffs persist.

The sentiment index jumped to 72 after diving to 44. This is a quick return to the norm of recent weeks after a sharp fall on Monday.

Bitcoin went from $98K to $91K on Monday, then reversed to $102K (Saturday’s level), where again, the sellers took the lead. The departure above the 50-day moving average was an important psychological victory for the bulls, but the fight for it continues.

Ethereum is trading near $2700, having fallen under its 200-day moving average and entering the consolidation area from August to October last year. We often view Ethereum as the ‘canary’ of the crypto market, and it’s not feeling great.

News Background

According to CoinGlass, the massive price drop resulted in the largest liquidation in the history of the crypto market – about $2.27bn. ByBit estimates the figure to be significantly higher – at least $8bn. On that exchange alone, daily liquidations reached $2.1bn.

According to CoinShares, global investments in crypto funds last week totalled $527 million. Investments in Bitcoin increased by $486 million, in XRP – by $15 million, in Solana – by $5 million, in Ethereum – it decreased by $0.3 million.

XRP is now the second-best performing altcoin, having received YTD inflows of $105 million.

MicroStrategy paused Bitcoin purchases last week, breaking a streak of 12 weeks of continuous buying. The company holds 471,107 BTC on its balance sheet, purchased at an average price of $64,511 per coin.

On 3 February, the ‘kimchi premium’ on Bitcoin – a measure of overpricing on South Korean cryptocurrency exchanges – hit a three-year high above 11.9%. Normally, the figure does not exceed 5%.

According to Reuters, India is reconsidering its attitude towards digital assets amid a transformation in how they are perceived in other countries.

Source: ACTIONFOREX

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Japan Inflation-Adjusted Wages Rise in December on Jump in Bonuses

Source: Reuters

Preferred vs. Common Stock: Key Differences Every Investor Should Know

1. What Is Common Stock?

Key Features of Common Stock:

Pros of Common Stock:

Cons of Common Stock:

Example of Common Stock in Action:

2. What Is Preferred Stock?

Key Features of Preferred Stock:

Pros of Preferred Stock:

Cons of Preferred Stock:

Example of Preferred Stock in Action:

4. Which Type of Stock Is Right for You?

5. Can You Own Both?

Final Thoughts

Lawmakers Plan to Move First on Stablecoins as They Push new Crypto Legislation

Source: Yahoo Finance

Unions sue to Block Federal Worker Buyout Plan as 20,000 Line up to Quit

Source: Reuters

Wall Street Rises on US-China Trade Optimism, Energy Boost

Source: Reuters

Trump Reimposes 'Maximum Pressure' on Iran, Aims to Drive oil Exports to Zero

PUSH FOR SANCTIONS SNAPBACK

Sources: Reuters

Crypto Market Rebounds But Faces Uncertain Growth

Market Picture

News Background

Source: ACTIONFOREX

Risk Disclosure