Welcome to 2023, Inside Daily Brief readers! Last week we published our 2022 retrospective, and this edition of the Inside Daily Brief will include six major predictions for the year to come. Please feel free to write to us if you have any questions, thoughts, or feedback!
Your faithful Daily Brief writer, Dan | |  Daniel |  |
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One of the biggest stories of 2023 will be the surge in COVID-19 infections, hospitalizations, and deaths that is expected to occur following the end of China's "Zero Covid" policy. Public health experts have warned that China's healthcare system may be overwhelmed by the surge in cases over the coming months. The widespread transmission of COVID-19 across China could also make the emergence of a new variant more likely. More: - The World Health Organization (WHO) said there is no evidence that a new COVID-19 subvariant has emerged in China but warned that the country is underreporting the number of deaths.
- A model produced by Airfinity, a British health analytics firm, estimates that nearly 15,000 people are dying of COVID-19 every day in China.
- According to the model, there are 2.27 million new COVID-19 infections every day in China, a number that will peak at 3.7 million on Jan. 13.
- Other models project that up to a million people could die from COVID-19 in the first few months of 2023.
Zoom Out:
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The increasing likelihood of a recession in the U.S. has spooked investors, policymakers, employers, and workers alike. More than two-thirds of the economists working at 23 primary dealers - large financial institutions that work with the Federal Reserve - believe that the U.S. will enter a recession in 2023. More: - Many financial analysts believe that the Fed's aggressive rate-hiking campaign in 2022 has put the U.S. and the rest of the world on a path toward a recession.
- The Fed raised its federal funds rate from 0-0.25% to 4.25-4.5% in 2022.
- Fed officials have indicated that their target rate is 5-5.5%.
- A Wall Street Journal poll of economists found that most economists believe that the U.S. unemployment rate, which was at 3.7% in November, will rise above 5% in 2023.
- The five primary dealers that don't expect the U.S. to enter a recession believe that U.S. economic growth will slow to 0.5% in 2023.
- U.S. GDP grew by an average rate of 2.1% from 2012-2021.
Housing Recession: - After rapid growth in home prices and home sales in 2020 and 2021, the Housing Market Index declined for 11 straight months in 2022.
- The National Association of Home Builders, which publishes the Index with Wells Fargo, said that the U.S. is already in a housing recession.
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 The Russo-Ukrainian War could end in 2023 but there are different possible outcomes. Ukraine's foreign minister recently indicated that his government was seeking peace talks with Russia by February but Moscow said it does not want to surrender control of the eastern Ukrainian territories it seized after the invasion began in February 2022. More: - In November, Ukrainian President Volodymyr Zelensky outlined a proposed peace plan to the G20 nations.
- Ukraine seeks the restoration of all territories taken by Russia - including Crimea, which was annexed by Russian forces in 2014.
- The country has also called for the creation of a tribunal to hold high-ranking Russian officials accountable for war crimes.
- Russia has said that it will not cede the eastern Ukrainian territories that held fraudulent referendums to join Russia this year.
- Russian President Vladimir Putin recently said that 50,000 newly-mobilized Russian troops are already at the front. Additionally, 250,000 Russian soldiers are training for a potential attack in the spring.
- The U.S. will likely continue to provide arms and funds to Ukraine, and the U.S. armed forces may become more directly involved in the conflict as they train Ukrainian troops to use complex weapons systems.
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GOOD NEWS: Electric vehicle (EV) production is expected to boom this year. EVs accounted for 10% of global vehicle sales in 2022, and they are expected to reach 30% by 2030. In China, battery electric vehicles make up 21% of new vehicle sales. The numbers for Europe and the U.S. are 12% and 6%, respectively. More: - The Inflation Reduction Act (IRA) that was passed by Congressional Democrats last year provides subsidies to EV manufacturers for cars made in the U.S.
- The policy package also provides funds for EV charging stations, which are needed for widespread EV adoption.
- The IRA also provides a tax credit for some used EV purchases.
- Legacy carmakers including Ford and GM plan to introduce dozens of EV models in the coming years, while startups such as Rivian and Lucid are also seeking to capture part of the nascent market. Management consultancy McKinsey projects that carmakers will offer up to 400 new EV models by 2023.
EV Batteries: - Another area of interest for 2023 is EV battery production, as battery technology continues to improve and competition between nations over where production facilities will be built heats up.
- Solid-state batteries could one day replace lithium-ion batteries as the primary battery technology used in EVs, given the fact that they can hold more energy in a smaller size.
- Under a deal signed in 2018, solid-state batteries produced by Quantumscape could start powering Volkswagen EVs by 2025.
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 International Monetary Fund (IMF) chief Kristalina Georgieva projects that "one-third of the world economy will be in recession" this year. There are also growing concerns about a global sovereign debt crisis, with many developing and low-income nations facing economic challenges caused by low growth, high inflation, and ever-increasing interest rates. More: - Georgieva said that the economic downturn will be felt in the countries that avoid recession as well, saying that it will still "feel like recession for hundreds of millions of people."
- She also said that China might experience negative economic growth in the coming months as it will likely struggle to contain the ongoing COVID-19 wave.
- Cornell economics professor Eswar Prasad said:
- "Some parts of the world are arguably already in crisis. Low-income countries have been hit hard by surges in food and commodity prices, the devastating effects of climate change, and limited access to foreign finance."
- Developing economies face a potential sovereign debt crisis as their existing debt loads become unmanageable, raising the likelihood of defaults or bailouts by the IMF or World Bank.
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 Silicon Valley could have another down year as startup valuations continue falling and venture capitalists struggle to bring in high returns. Meta, Google, Apple, Salesforce, and other "Big Tech" firms saw their market capitalizations peak in late 2021 before a downturn in 2022 that forced them to lay off tens of thousands of workers. More: - The trend of layoffs at Big Tech firms has continued into 2023, with Salesforce announcing on Wednesday that they will lay off 10% of staff.
- In a letter to employees, Salesforce co-CEO Marc Benioff said that Salesforce "hired too many people leading into this economic downturn."
- Venture capital funding slowed down in 2022 as well.
- Total VC funding in Q3 2022 was down 53% from Q3 2021.
- VC firms are writing down their valuations of portfolio companies as they adjust to the prospect of a recession and a weaker macroeconomic environment.
- 2022 saw fewer IPOs than 2021, and the trend may continue into 2023.
Crypto: - 2022 was a devastating year for cryptocurrency markets, with Bitcoin losing 60%, Ethereum down over 65%, and the prices of many other crypto tokens tumbling by over 90%.
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- An Irish regulator imposed a €390M ($414M) fine on Meta on the grounds that the social media giant violated EU privacy laws by targeting users with ads based on their online behavior. Meta plans to appeal the ruling and the fine.
- The Buffalo Bills said that safety Damar Hamlin showed "signs of improvement" but that would remain in intensive care. Hamlin collapsed on the field during Monday Night Football after suffering from cardiac arrest following a tackle.
- Israeli Prime Minister Benjamin Netanyahu's new right-wing government released a plan to reform the Israeli Supreme Court. The plan would create a review committee for judicial nominations to the Court and give the Knesset more authority to overturn the Court's rulings.
- Twitter said that it would relax its ban on political advertising. The social media platform banned all political advertising by candidates, elected officials, and parties in 2019.
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 New Year's Art from the Saturday Evening Post, 1923.
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UPCOMING EVENTS - January 05 - AMA with Gun.io - Building and managing software development teams w/ Deividi Silva (Watch On Demand)
- January 06 - AMA with LinearB - Improving workflow for developers w/ Ori Keren (Watch On Demand)
- January 10 - Inside Startups Coffee Break (Register Here)
- January 17 - Inside Marketing Coffee Break (Register Here)
- January 18 - Inside Interview with Lacework - 4 Common Attack Paths in Cloud Security (Register Here)
- January 31 - Growth Summit 2023 (Register Here)
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 |  | Daniel Smith is an Inside Analyst who currently resides in Miami, Florida. A native of Brooklyn, New York, Daniel spent the last four years as a PhD candidate in Politics and International Studies at Cambridge University in the United Kingdom. He is fascinated by tech, business, politics, venture capital, and everything in between. When he’s not writing for Inside he can be found kicking a ball on the nearest rugby pitch. Follow him on Twitter @DanSmithInside. | | | | Editor | Eduardo Garcia is a writer and editor based in New York. He is the author of "Things You Can Do," an illustrated book about climate action. Bylines in The New York Times, The Guardian, Slate, Scientific American, and others. In one of his previous lives, Eduardo worked as a Reuters correspondent in Latin America for nearly a decade. | |
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