YOUR QUIVER | January 12, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Hot and Cold
Investors were hoping for a greater deceleration of inflation that would pressure the Fed to slow/pause hikes. CPI was down -0.1% m/m, and up 6.5% y/y (chart below). Lower energy costs helped drive the move. Given various messaging in the past week, including Fed’s Harker and Collins, it looks like 25bps is the new 50bps—but it’s still >0.
The Deets
US Dec headline -8bps. US Dec core CPI +30bps. Core goods (new cars/used cars) was soft, down -0.1% and -2% m/m. Shelter was up 0.8% m/m. US weekly jobless claims were below forecasts, down to 205k from 206k w/w, with the BBG forecast at 215k. Continuing claims 1634, down from 1679. You’re going to need NFP to show a major slowdown for the Fed to move off its hiking path.
Dangerous Expectations
So, with investors pricing in potential pause language in March and rate cuts in the last two meetings of 2023, the intermediate term risk appears to the non-consensus downside if inflation remains high (even if declining) and the Fed keeps its hawkish language. But for now, the bulls are hopeful and are running the show. We’ve heard most folks talk about a weak 1H followed by a bounce in 2H, but maybe it will reverse because of expectations…
Peltz's Pelt
Activist Peltz nominated himself to the board of Disney, to set himself up for a fight against Iger. With a $900mm stake, he’s got skin in the game to fight Disney’s stock price sitting at an 8-yr low, down over -50% from the Mar 2021 high….although to be fair, most stocks are down from those highs. Peltz wants to bring down comp and streamline expenses.
On the Ball
$AMZN Thurs night football + DraftKings’ content/odds = sports + betting + new profits. Amazon Prime’s larger user base (80mm Prime Video households) is a fertile ground for the new offering, with roughly 16% of the US’ $7bn annual sports betting from football. With an 11-year deal, they have plenty of time to make this work. Non-sports-watching-partners across the US cheered as they learned they will have a little more “me” time on Thursdays.
Another One Bites the Dust
JPM shut down a college financial aid platform website it paid $175mm for in Sep 2021, alleging 4mm fake customer accounts. Cue the lawsuits. Remind you of another deal in which a sophisticated businessman/investor paid big bucks for a company and then quickly turned around saying he was duped by the true account/user total? Pensions and investors should demand to know who did what due diligence in these situations…and then take appropriate measures. Otherwise, aren’t shareholders/pensioners really the ones making the same mistake along with these guys?
Stop, Just Stop
SBF is out again denying misappropriation of $8bn and claiming solvency at FTX US. His parents need to install Qustodio and manage settings, or take away his devices.
