YOUR QUIVER | December 27, 2022
Selling Stretch
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Selling Stretch
UBS is reporting that its retail clients have driven the longest stretch of selling of 2022, with last Friday marking the 20th consecutive outflows day. MTD Dec single stock outflows were at -$3.1Bn, representing the 6th largest monthly outflows since 2016, and the month is still going, folks….but volumes around the holiday period have been slower….so we’ll see where we end this week. Today’s already another down day here in the US as I write these notes… Tesla is down after reports that it will temporarily halt production at its China factory, stoking demand fears. The 10-yr yield is up near 3.8%.
Quashed Quarantine
China is removing its quarantine mandate for inbound travelers from Jan 8. Travelers just have to have a negative Covid test within 48 hrs of departure, compared to 8 days of isolation. Moreover, they are doing away with the limits on the # of intl flights and passenger capacity. In response, Japan is tightening its restrictions on travel from China. The USD and Japanese yen weakened after the China announcement, as demand for safe haven assets declined.
Yield Control
Various folks are confirming that the BOJ won’t pivot toward normalizing policy near-term, with negative rates in play even after the change in gov in April. Their latest move is meant to make bond yield control more lasting. Remember when the BOJ reversed its monetary policy last week on the 20th by revising its yield curve control policy? The yen had appreciated 3%, TOPIX had dropped -1.9%, and the Nikkei Ave fell -3.7%.
Lucky Ducks
Europe is having a mild weather period, which is expected to continue into 2023. This is easing their stretched power grids. Upstate NY’ers probably don’t want to hear that Frankfurt will be 10 degrees above their 30-year ave on Sat. Wind power also is expected to pick up across Western Europe.
TikTok, You Might Stop
WSJ is reporting that some Biden admin officials are pushing for a sale of the US ops of China’s ByteDance (TikTok’s owner) because of security concerns. They don’t want the Chinese gov using the app for espionage or political influence by influencing videos that Americans view or accessing user data. Given that the most popular TikTok videos include lip syncing, dancing in front of bathroom mirrors, people barking at dogs, peeling a banana, opening doors, and chipmunks eating nuts out of people’s hands, I think they have a little time to figure out a plan to thwart China’s feared mind control strategies.
It's A Steel
India’s building boom will generate an estimated 6.7% increase in steel consumption to roughly 120mm tons in 2023, per the World Steel Assoc, which is positive news for producers given low global steel demand right now.
Banking On It
The six biggest US banks are about to hit $1 trillion in profits this past decade (JPM, BofA, WF, Citi, GS, and MS). Market vol fueled trading revs. Ibankers rode deals. Trump cut taxes. Folks seem to forget about the GFC, the London Whale, consumer abuse scandals, the SPAC mania, 1MDB, and Occupy Wall Street.
Refurb 4 Resolutions
Peloton is offering certified refurbished bikes in the US and CAN for up to $500 less than a new bike, or around $1.1k-$2.0k, in case one of your New Year’s resolutions includes increased exercise while going nowhere.
Traffic Trends
$NET published its Cloudflare Radar 2022 Year in Review. After a dip mid-year, worldwide Internet traffic has grown from Aug through Dec 2022. They note the recent increase due to early holiday e-commerce shopping and the World Cup.
Popularity Contest
$NET also published the popularity ranking of websites globally for this year. #1 Google. #2 Facebook. #3 Tied for Apple + TikTok. #5 YouTube. #6 Microsoft. #7 AWS. #8 Instagram. #9 Amazon. #10 Tied for iCloud, Netflix, Twitter, and Yahoo.
OK, Boomer
Billionaire Charlie Munger is telling folks to stop complaining because they’re “fives times better off than they used to be”, according to CNBC. He notes envy, driven by tech, as a reason for the current unwarranted unhappiness and compared today to the early 1800’s and before, when “life was pretty brutal…” Critics point to wealth inequality, violence, and political instability (among other factors) as reasons for discontent, versus just a focus on things like air conditioning. Teenagers point to their screens and say, “Who is Charlie Munger?” while watching someone eat ramen noodle crumbs out of a bag. Now Yahoo being tied for the Top 10 in $NET's Popularity Contest makes more sense...
Out of $LUV, and So Lost Without You
Hopefully you and your loved ones aren’t trying to fly Southwest this holiday season. Yesterday, $LUV had cut 70% of its schedule and plans to fly roughly one-third of its schedule for the next few days. You were better off on Delta (who cancelled 9% of mainline flights yesterday, or United which had cancelled only 5%, or American at 1%). The culprits: fog in SoCal, staffing shortages at fuel vendor in Denver, internal tech failures that blew up crew reassignments and hotels, and Elon Musk. OK, maybe not that last reason, but he seems to be the noted cause of most turmoil lately….
