YOUR QUIVER | January 5, 2023

Today's Rundown

CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.

Are You Actually Surprised?

Stocks in the US reversed and UST yields rose after US labor market data showed continued strength this morning. Hiring topped estimates in private payrolls. New claims for unemployment benefits fell last week. Powell is feeling vindicated with his second cup of coffee. Then Bostic said the Fed has “much work to do” to counter inflation, Kashkari yesterday said he expects rates to hit 5.4%, and George said she wants to see rates above 5%. They certainly don’t want the rich driving a market rally, heightening the wealth effect, to increase inflation further.

Buddy System

IMF’s Gopinath is saying that the Fed should keep hiking because US inflation is still high, according to the FT. She supports the benchmark rate >5% throughout 2023.

A Positive Outcome

Japanese bonds now offer >=0% yields (no more negative-yielding debt, which peaked at $18.4 trn in late 2020).

At Your Service

In China, the Caixin services PMI hit 48, vs last mo’s figure of 46.7…so it’s negative/contracting, but not as much.

Striking a Balance

Railway station shutdowns today in London (hurting airports such as Gatwick) by strikes. PM Sunak plans to allow British employers to sue unions and lay off staff, according to The Times.

Commodities

Gold came off a 6 mo high. Copper halted a 4 day decline. Aluminum steadied after early 2023 decline. Wheat edged up but held near its lowest close in almost a month on signs of more supplies from top producers.

Not Made in China

Dell set a goal to use semiconductors made outside of China by 2024, according to Nikkei.

Making the Cut

Amazon is reducing its labor force by >18k positions, concentrated in retail and HR, which would represent ~1% of its employee base. The company had added 300k to its base during the pandemic (around 1.5mm total), so this seems like an opportunity to shed underperformers versus increase earnings.

Bed, Bath and Below

$BBBY down -17% in premarket trading (over ~-20% now) after mgmt. warned of finl troubles, remarking that there is “substantial doubt” as a going concern. Today P/E associates across the US are being asked to “run the numbers."

Crypto Contagion

Crypto bank Silvergate Capital $SI declines ~-40% in the premarket after cutting 40% of its workforce, selling $70mm of debt, and announcing it had $8.1bn in withdrawals (with FTX having been $1 bn of its deposits). In a separate story, BBG reported that FTX was targeting IRAs during the spring before its implosion, and to target retail investors, it paid dearly for sports marketing (spending ~$100mm in 2021 alone) and paid for stars like Curry and Brady to help hawk its solutions.

Upgrades and Downgrades

Barclays raises the px target for $SBUX from $105 to $121, no doubt from the China reopening stories. BofA upgrades $CHTR to Buy. GS upgrades $FRC to Buy. Piper cut the px target on $CYBR. CS upgrades $CME to Outperform, while UBS lowered its px target slightly for the stock. RJ upgrades $ZBH to Outperform. CS downgraded $DHR to Neutral. Stephens downgrades $COF to Underweight and $AXP to Underweight as well. Mizuho lowers its px target for $TSLA to $250.

Heavy Metal

BBG is reporting that baby food in US stores contains heavy metals at levels that lower kids’ IQs and cause developmental problems. The FDA has known for years, and a 2021 Congressional investigation didn’t change anything. BBG Law tested 33 products, and all but 1 had at least 2 of: lead, arsenic and cadmium. They said that fruits, veggies and other ingredients such as rice absorb metals as they grow. This can be fixed by changing the soil content, using irrigation systems and selecting specific crop varieties.

Let's Not Meet

This week Shopify told employees they can’t hold meetings on Wednesdays, and they are limiting 50+ person meetings to Thursdays, and for 2 weeks eliminating any pre-scheduled meetings with 3+ people. Our team sets meetings but with a limited time frame, so that the meetings are efficient and people prepare. Everyone wants to hit the important stuff and then disperse to get stuff done.

In a Pickle

Pickleball grew to 36mm players last year and angered 87mm tennis players when taking over their courts.

Apptopia

Released a list of the 10 most downloaded apps in 2022. TikTok was #1 for the 3rd time. They also did a comparison. $BKNG > $ABNB, $NFLX > YouTube, Uber Eats > $DASH, $ZM > $MSFT Teams, and $SPOT was dominant. Not surprised about $DASH. Restaurants near us are dropping off that service, which often says that it is too busy for new biz….while Uber Eats is adding names and always ready to deliver.