![]() YOUR QUIVER | February 13, 2023 ![]() Today's RundownCIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets. Tuesday Target![]() That’s when the US CPI print comes out. Option costs around the event are up; options are pricing in a +/- 1.8% move. A few weeks ago, traders placed the top Fed rate at 5%. Last week that moved up to 5.2%. Philly Fed Prez Harker said he believes rates will be above 5%, and Minni Fed Prez Kashkari targeted 5.4%. ![]() Overnight ActionEZ stocks were up based on solid growth, with the Stoxx 600 fueled by industrials, construction and consumer stocks. Energy, materials and real estate were down. 1Q EarningsSo far, EPS is down around -2.3% for S&P companies this earnings season, the 1st decline since 3Q20. The S&P’s forward multiple is roughly a Goldilocks-esque 18.2x. If companies keep publishing soft bottom lines (and/or soft guides), don’t expect that multiple to hold. Too Long?HFR says the aver long-short HF generated a net performance of +4.24% in Jan, versus a +6.18% gain for the S&P. The 0.69x ratio of the two returns is far higher than the 0.48 “beta” usually seen since the GFC (whose R-squared fit stat has been 0.76). In Dec, the figure was 0.11—as investors stayed neutral, worried about generating further losses into year-end. So, obviously folks chased beta in 2023…meaning they’d have to be putting on a lot more protection now to risk manage a sell-off. ![]() Debt Ceiling Boost?That’s what Pictet is saying could happen with the debt ceiling standoff—that US stocks could benefit because when the Treasury can’t borrow, it has to draw down its account to fund itself, injecting liquidity into the system. Project TealThat’s the name of DB’s probe into employees mis-selling derivatives that were too complex for some customers by its London FX desk. They knew it was wrong but kept selling the stuff by circumventing controls for several years. 4th and CountingThat’s the number of objects in US/Canadian airspace shot down by the US military in just over a week. ![]() WFH WTFThat’s what city leaders are saying as workers still spend less time in offices. A piece by BBG pointed to an estimated $12bn loss for Manhattan as workers spend 30% fewer days in the office, saving $4,661 from not eating out/shopping/etc. The figure was compared to ones in SF ($3,040) and Chicago ($2,387). Popular in-office days are Tues through Thurs, with days from home preferred for Mon and Fri. In other news, NYC is pausing its small business loan program because of too many applicants (>10k) versus expected loans (1.5k). The Hindenburg EffectAdani Group stocks were down again, and now the rough total of valuation decline sits at $127 bn since Jan 24’s Hindenburg short selling report. Management is now halving its revenue growth projection, down from 40% to 15-20%, and reducing its cap ex as it tries to steady the ship during this storm. Conserving cash, repaying debt, and recovering pledged shares are the focus of management. Another Looming CrisisAll of us know that pensions have been under-funded, but we rarely hear of notable disasters. BBG shared a few interesting charts showing that state and local pension funding is below 50%, and leaders typically have spent profits in good investment years while enabling bad years to hit the funding levels. ![]() ![]() ![]() |