YOUR QUIVER | January 10, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Powell Pare
US markets pared pre-market losses as Powell refrained from pontificating on rate hikes during his talk in Stockholm. There’s always the Q&A, right?! To fill his shoes, Blackrock and Fidelity are warning that markets are underestimating inflation and peak rates. Plus, JPM’s Dimon said rates might have to go above 5% to 6% on Fox Business. BUT, he also said he would like to see a pause to gauge the impact of 2022’s rate hikes. Over the past mo in the US, energy gained the most +6.3%, followed by financials +2.4% and industrials. Consumer discretionary and info tech were the weakest (-4.2% and -3.6%, respectively). The VIX has just fallen below 22 as we write.
Overnight Action
Asia Pac mkts were mostly down (Hang Seng -0.4%, Shanghai -0.2%, Shenzen -0.5%) but Kospi was flattish, and the Nikkei was up +0.78% driven by mining, transport and precision instruments. Eurozone trimmed gains; Stoxx down -0.7%, Dax down -0.4%. CAC down -0.7%. Rate sensitive names were hit the most, as tech fell -1.3%. The ECB’s Schnabel said that rates have to go up a lot, and at a steady pace in Europe. WTI inched up, but Nat Gas came down, partially on the news that the US may ban gas stoves.
Yesterday's Flows
One of our brokers gave details on yesterday’s flows, which were better to BUY on a notional basis (60%). MF (BUY) and HF (SELL) were the most active, with above ave shorts (23%) in Tech and CD. Intl flows were better to BUY (74%). Sectors that were better to BUY: HC, Fins, consumer, Tech, Ut, REIT. Better for Sale: MLP, Ecomm and Mining.
The Borrow
Consumers borrowed more than expected in Nov, up $28bn m/m. Bankrate data showed more folks are rolling over credit card debt (46% don’t pay off their cards monthly).
Deflation?
Yes, that’s what’s happening in China with the weakest growth in wages and input costs since mid 2020.
Chatty GPT
The news is that $MSFT may invest $10bn in OpenAI (maker of the AI bot ChatGPT). It’s pretty cool, if you have not checked it out since its release in Nov. But we’ll see if anyone actually switches to Bing when $MSFT adds the functionality.
Upgrades and Downgrades
MS: upgraded $FMC to Overweight and $RCL to Equal Weight. On the flip side, there were several analyst dings on $ILMN, MS gave an Underweight to $NCLH, and also downgraded $BA
Citi: added $T and $EQIX to its positive catalyst watch list
WF: upgraded $A to Overweight
GS: upgraded $AMT
BofA: added $WBD to its US 1 List
Barclays: downgraded $HPE
More of the Same
CALPERS is investing $1bn ($500mm each) with TPG and GCM Grosvenor to invest with smaller p/e firms, including seed deals. While the new CIO supposedly is looking for hungry, newer managers, you have to wonder about the path chosen to get there...Fees on top of fees, with the same network you’re invested in…
Gross Stuff
OK, while this isn’t going to move markets, I had to share this video with you. Definitely shut the lid or wear a mask in public bathrooms when flushing. Plus, WHO came out recommending masks for long-haul flights again, given increased covid infections and the possibility for variant spread. WHO also said it’s reasonable for places like Europe to have travel restrictions (i.e., China).
Crypto Winter
Coinbase is cutting another -20% of employees (950 estimated, after laying off -18% in June and another -1% in Nov), and with these cuts, the company will still have negative EBITDA of -$500mm for the year. To survive, they are not alone. Genesis shed more employees (-30%), and exchange Huobi cut -20%, and Silvergate reduced by -40%.
