YOUR QUIVER | March 2, 2023 Today's RundownCIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets. The TechnicalsThe S&P kept above its 200 DMA to backstop recent weakness for a 2nd time this week. But intraday we’ve seen weakness since Feb, and if you get research from a variety of providers like we do, you’ll find that the “calls” out right now range from prioritizing US markets to shorting them. Session ranges have narrowed meaningfully, and we’d caution that volatility could increase in the final month of this quarter. Per UBS, the forward multiple for the S&P 500 is still sitting at high (and using their term “uncomfortable”) 17.7x P/E. InversionThe UST curve remains inverted, with the 2-10 yr spread at 90bps. So, you earn more in the short term than you do for parking your capital for the longer term. We can see on Schwab that you get over 5.1% annualized for stashing your cash in a safe vehicle. The Default CycleIt’s beginning, with Blackstone defaulting on a ~$560mm bond backed by a portfolio of offices and stores owned by a Finnish landlord it acquired back in 2018 called Sponda. Obviously you can’t read financial news without hearing about how higher rates have hit real estate portfolios, how real estate funds/trusts have put up walls against redemptions, and other negative developments, no pun intended. Clean WinPer BBG, every 4th unit of power generated in the US today comes from renewable energy. Clean power’s share increased from the low teens to around 23% in 2022. Incentives from the Inflation Reduction Act are helping drive change. Trust MeAfter four hours of presentations by Tesla, no one got to see a new vehicle example of the company’s cheaper EVs expected. “I’d love to really show you what I mean and unveil the next-gen car, but you’re going to have to trust me on that until a later date,“ said Tesla’s design chief. The stock fell over -7%. The Lone SoldierThat’s what Macy’s seems to be today after the company reported strong 4Q earnings, driven by Bloomies and Bluemercury brands. They’ve been managing inventory better than peers, and their stock price increased in response. Footing the BillWorkers and consumers aren’t the ones benefitting from high inflation in the Eurozone—companies are the ones profiting via higher margins, per the ECB. That’s giving them data to debate when trying to figure out whether their rate hikes can change this narrative, or whether supply/demand has to take care of it. EZ consumer good companies increased operating margins to an ave of 10.7% last year, up by a quarter of 2019, per Refinitiv data. You can only hike price so much before demand falls. In the US, this reversal already started to occur, so we’d expect to see it across the pond this year too. China NewsThe SHCOMP was relatively flat as investors are waiting for the weekend’s NPC meeting. Reuters is out with a story about China setting 2023 GDP growth at 6%. Given the strong early rebound of China’s economy, you’ve probably heard the grumblings that investors may not get the stimulus they thought they’d get, which was one driver of the early risk asset rebound. We’ll be watching for what Li Qiang, the next Premier, is going to say. Waving the FingerThe US is chatting with its allies about sanctions on China if it assists Russian militarily, per Reuters. Fugee FiascoPost market, check out BBG’s story The Fugee, the Fugitive, and the FBI. This is definitely getting interesting, and 100% becoming a book and film deal. There is some irony that Low (alleged embezzler) financed The Wolf of Wall Street. Plus, Kardashian being given a trash bag full of cash and not thinking twice? I guess different people have different alarm bells that go off. Korea SouthManufacturing in South Korea was still soft in Feb, and retail sales, per Yonhap, fell for a 3rd straight month. |