YOUR QUIVER | January 24, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
US Technicals
Yesterday, the S&P closed above both (i) its 200 DMA and (ii) its natural resistance at 4000. We caution not to get too excited about buying dips until we get past the summer peak of 4325. We’ve seen this movie before and know volatility can move markets in either direction until we get a more consistent market and macro drivers.
Exchange Technicals
If you were up with me this morning, you watched some big names take a digger and then rebound. A bunch of sell orders targeting Financials this morning caused some big moves that looked like fat fingering before getting to trading halts. Stocks like Wells Fargo and Morgan Stanley were affected, plus other Non-Financials like Walmart and McDonald’s. Some dropped more than -12% before halts, but now they are trading +/- 1%, so someone’s investigating this today…
PMI Concerns
Prelim Jan PMIs came in from major worldwide regions, and the data is mixed. Given the sharp rebound in risk assets in the past few months, unless China reopening data in Feb turnings things around, we would caution that we’re skating on thin ice here. Given that one of our PBs called yesterday (yes, with an actual phone call) to warn about the recent market pop, we’d say that we’re not the only ones keeping our portfolio protection here. Jeremy Grantham is calling for a -17% drop in the market this year (-20% from current levels), per BBG this morning.
Moody Disposition
Moody’s Chief Economist Zandi warned that investors are too sanguine about the risk of a debt default and that overconfidence could send the wrong signal to politicians and drive down equities by up to a third.
Off-Loaders
Goldman, BofA and Barclays are among banks offloading risky buyout debt that’s taking a toll on their balance sheets ($40bn per NoSo). Sounds like terms stopped them from selling off hung debt without working with other lenders or undercutting existing investors who took the risk, yet the clauses ended at year-end.
Flowers
Sounds like Americans were syncing with Cyrus’ new hit and decided for entrepreneurial independence. Last year clocked in a new all-time-high for US business openings of 637,590, up 12% from 2019, per Yelp. The figures showed strength in businesses catering to homeowners and local services soared, and those related to dining, shopping and nightlife remained below pre-pandemic levels.
In the Weeds
Binance said it kept collateral for some of the tokens it issues in the same wallet as exchange customer funds (by mistake). So now it is working to transfer these assets to dedicated collateral wallets. Nothing to see here, folks…plus, digging through the FTX dirt, prosecutors and lawyers are trying to determine whether SBF used customer funds when he invested $400 million into an unknown hedge fund called Modulo Capital, per the NYT.
United Currency
Brazil and Argentina are working on a currency that could unite parts of Latin America. They want to strengthen the economic region. If it does happen, hopefully we don’t suffer a different kind of Brexit or Arexit in the next decade….look how that’s working out now for Britain.
More Brown Boxes
Amazon is launching RXPass, which will allow Prime members to get as many drugs from a list of 50 generic medications they need. The cost: $5/mo and free delivery. They estimate that around 150mm Americans are on at least one of the meds in that group of 50. I estimate (based on no data) that a lot of those 150mm Americans get brown boxes from Amazon already. Moreover, Amazon also offers a Prime prescription savings benefit that gives users a discount up to 80% on generic medications and up to 40% on brand-name prescriptions. So, more to come on this front, we’d forecast.
