YOUR QUIVER | February 15, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Good News is Bad News Today
US retail sales rose in Jan by the most in almost 2 yrs (+3%). All 13 retail categories improved last mo. Leaders were vehicles, furniture and restaurants. Seems like the strong labor market is keeping the retail party going here in 2023, and the Fed will definitely be watching. Thus, the US markets opening action is showing a decline.
Eye on Services
BBG rightly points out that disinflation is showing up with goods, but services inflation is still sticky. Statisticians often look at the trimmed mean (taking out the greatest outliers) and median which shows that inflation is still strong (above 6% for the trimmed mean, and above 7% for the median). Half of the index constituents are hitting higher figures over the past year. Plus, when they look at “sticky” inflation measures, they’re still above 6%. So what does this mean? It could take a while for the Fed to get that pesky inflation down, especially if labor continues to be strong (and companies have to pay for that labor).
Buffet Bomb
Buffet cut his position in TSMC by 86% after only announcing a $5bn stake just months ago. The stock is down, given the quick change in positioning by such a renowned investor.
Playing Nice
As part of an agreement with the gov, Tesla will have to share at least 7.5k charging stations across the US with other companies for their EVs by the end of 2024.
ASML Accusations
ASML came out and stated that a former employee in China stole chip-tech data in the past few months. ASML is one of the few producers of lithography machines needed for advanced semiconductors. Ray Dalio revealed that he thinks China is winning the trade war with the US, as the yuan is becoming more popular for trade.
Not so Chipper
Taiwan’s exports of integrated circuit chips to China/Hong Kong fell by -27% in Jan, the largest decline since 2009. As we learned in earnings season, demand for electronics is down.
Supply and Demand
Breaking it down…Oil markets may remain in surplus in 1H23 because of strong output from Russia, and US supplies increased by nearly 11mm barrels last week, according to the API. China’s reopening, though, will increase demand by 2mm barrels/day to roughly 102mm barrels/day per the IEA. So, supply is up, and demand will be up (most likely).
What's All the Hype About?
Several large firms (Sequoia, Thoma Bravo, Paradigm) are named in an investor lawsuit for hyping FTX, the failed crypto co. The claim is that the firms’ marketing in 2021 added to an “air of legitimacy.”
Dollar Strength
The USD remains supported at recent highs (DXY 103.5), which was helped by a softer UK CPI print today.
What Your Kids Were Doing This Holiday Season
Roblox stock popped after reporting a bookings beat (+17%), driven by holiday game play. If you’re not familiar with the co, ask a teen. It lets users create their own games, and it is very popular with the teen and pre-teen set.
EZ Come EZ Go
Barclays is down hard because of a big NIM miss, plus a smaller buyback announcement than expected.
The Squeeze
Flows are showing HF short squeezes. Better than expected results moved stocks for companies such as $KER, $AD, $CA.
Travel Bug
TUI AG, the world’s largest packaged tour operator, noted that bookings for this summer are 20% higher y/y with reservations in the prior 4 weeks at 10% above pre-pandemic levels. Prices ex re-bookings are up 6% for the summer, although they are 11% behind 2019 levels—yet pricing is 24% higher. So, watch out for the sticker shock if you have not planned your summer getaway yet. Comments from Thomas Cook and Trivago point to folks trading down (e.g., from 5 stars to 4 stars) and staying fewer nights. So, folks still want luxury—but they’re making trade-offs.
What Came First, the Chicken or the Chuck?
For now, US consumers more cheaply can buy a pound of chuck than a dozen eggs, so the chuck is going in the basket over the chick.
