YOUR QUIVER | February 3, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Here We Go Again
As Groundhog Day was yesterday (and we are expecting six more weeks of winter), US hiring increased significantly in Jan, with the jobless rate falling to a 53-year low. Nonfarm payrolls increased by 517k, after a revised figure of 260k in Dec. The unemployment rate dropped to 3.4%, the lowest since 1969. Average hourly earnings grew too. What were the estimated figures? 188k payroll gain, and an unemployment rate of 3.6% (see chart below). Companies hired across the board. So, if Powell’s going to keep focusing on the labor market as a sign of inflation or deflation, then investors are going to have to react to today’s prints and unwind some of their enthusiasm from earlier in the week. Ironically, by the market staying a bit soft, they may get their wish sooner. A too hot market could keep inflation higher, delaying the desired pause/pivot outcome. The 2-year UST yield increased by more than 10 bps on the prints.
Not Facebook
That’s what folks are going to be talking about today with $AAPL, $AMZN, and $GOOG who exhibited slowing revenues due to pick-your-reason: supply chain issues, poor holiday sales, lower ad spend, macro headwinds.
Savings Decline
Roughly 2.8% of the 5mm individuals with 401k plans held at Vanguard tapped their retirement savings last year, per the WSJ. The level is up from 2.1% in 2021, and a pre-pandemic ave of 2%.
1 Luftballons
It doesn’t sound like we even need the other 98 to echo the famous 80’s song. The Pentagon is tracking a Chinese surveillance balloon that’s been hanging out over Montana, where Minuteman III intercontinental ballistic missile silos are located. Canada’s defense department said it was tracking a potential second “incident." Coming days before Blinken’s trip to China, the balloon must drive security folks nuts. I know I’d want to take that thing down if it was floating over my house.
Manic Monday
We’re sticking with the 80’s theme from here on out. HK and mainland China’s borders will fully reopen on Monday for the 1st time in 3 years. The ban on unvaccinated travelers and other restrictions (e.g., daily quotas and testing requirements) will be lifted.
Crazy Train
There’s another mass strike today in the UK by the largest train drivers’ union. 15 major lines are shut down. It must feel like nothing is working over there.
Money for Nothing
Russia has to nearly triple the amount of foreign currency it sells (~$2.3bn) through early Mar after a decline in energy revenues. Given sanctions, the yuan is the main currency Russia can use to do business from its wealth fund to cover expenses.
I've Got the Power
FGE estimates that China’s consumption of crude demand will increase by more than 1bn barrels/day from the 1Q to the 4Q of 2023. RBC doesn’t think OPEC+ is going to rush in to add barrels until there is strong consistent demand.
Get Outta My Dreams, Get Into My Car
Ford is down after missing earnings due to poor execution and supply shortages in their transition to EVs. The CEO admitted “We left about $2 billion in profits on the table…” and now is in cost cutting mode. This year they’ve got roughly $5bn of headwinds from lending unit profit declines to higher incentives given out, among other reasons.
Burning Down the House
A cyberattack brought down the house of ION Trading UK which usually keeps the clearing of billions of dollars in derivative trades every day around the world. So, traders and brokers had to use old school spreadsheets to keep track of trades and inputting trades on websites provided by exchanges. To come full circle, folks said it was like being back in the 80’s before electronic trading came to fruition.
