YOUR QUIVER | January 25, 2023 Today's RundownCIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets. A Bit "Sus"As of this morning, we were 92 companies into the 500 reporting for the S&P during earnings season. Per 42Macro, results overall have beaten consensus (rev +0.5%, EPS +2.2%), but those are the lowest levels of this biz cycle, and so are their tracking growth rates (+5.5% and -2.4% y/y, respectively). But we know that it’s about the future, not the past, right? Well, forecasts expect a trough in 2Q before a major rebound in 2H23 (with 4Q growth rates of just about +5% and +10% y/y, respectively). As our kids would say, it is “sus” because the economists at the same shops as the research analysts are estimating Real GDP growth to slow this year. So, the world is slowing, but companies’ growth is accelerating? With traders pricing in a lower terminal rate and earlier pivot than the Fed’s dot plot, someone at these shops is very wrong. As we wrote in our quarterly letter, keep focused on labor stats. Strong labor means higher for longer at the Fed. A tighter Fed puts pressure on growth and margins/cash flow. Urgency to BuyThat’s what traders were showing yesterday, per one of our PBs. The ave NYSE TICK on Tues was +319, meaning that most folks were increasing offers. The rolling mo ave of this sentiment indicator (which gauges the urgency of institutional transactions), is at a record for similar time periods. The PB noted that volume for the NASDAQ is above that for those listed on the Big Board. This type of situation usually coincides with a more speculative market. Marvelous MultiplesCurrent multiples are at levels typically found in Goldilocks environments, when monetary policy is predictable, and there is confidence in solid growth and lower inflation. As UBS notes, whether the Fed actually gets its soft landing or not, prudent investors should incorporate the possibility of a prolonged contractionary period. Cue the Bloomberg charts (below). Asia PacChinese stocks are closed for the Lunar New Year Holiday. The Nikkei was up to a peak for the last month. The Topix was up +0.4% to 1,980, its highest closing level since Dec 2022, on the back of tech strength. USD/JPY continues to sit around Y130.00. Reopening after a 2-day holiday, the Kospi increased +1.4%, driven by tech, industrials, and financials. Micro Soft$MSFT came out with a slowdown warning. $TXN, one of the world’s largest chipmakers, fell post its first sales decline since 2020. We’ve got $TSLA and $IBM reporting after the close, so hold on to your tech shorts, folks. 4Q earnings for tech companies in the S&P are expected to decline by -9.2% y/y, per BBG. Fat FingerThe NYSE said a manual error caused the error yesterday, which halted hundreds of companies’ stocks (So, it was a fat finger problem). The issue was within their “disaster recovery configuration," which is kind of ironic. Canadian PeakThe Bank of Canada raised interest rates for an 8th time. It basically said it would pause and see the effects, so perhaps they have marked a peak versus peers like the Fed. Black PepperAn article by Ashlee Vance on millionaire Bryan Johnson’s quest to reverse aging is one to read. The guy spends $2mm a year on the goal, and it sounds like a full-time job to follow the recommendations, which span diet, exercise, sleep, medical procedures, and tests. If you haven’t watched Marc Maron’s stand-up on Netflix, then you’re missing out. Bryan takes turmeric AND black pepper, amongst the 24 supplements he takes each morning pre workout. So, Marc would be happy to hear that his turmeric is getting activated by the black pepper. Given a love of cooking and sharing meals with family and friends, I wonder if he’s got a plan that is a bit more reasonable, say for a 25-year old goal… Click Here For The Blueprint |