YOUR QUIVER | February 27, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Bears vs Bulls
The S&P’s 50-day moving average (DMA) failed to hold last week, yet the 200 DMA is still holding. We’re also watching the 4Q22 floor of 3765. We’ll be watching for the incoming Jobs Report, CPI figures and Fed decision (including the updated dot plot) in mid-Mar. With Friday’s hot PCE data, we’ve got further treasury curve inversion to deal with as we wait and current rate expectations peaking at 5.4% (versus 5% back in good ole Jan).
Durable Goods
Orders for durable goods declined the most since April 2020. Ex transport equipment, they rose more than expected. Biz equipment orders increased in Jan. Looks like companies are still investing for long-term capital objectives.
Railroaded
Union Pac’s CEO is out, after pressure from a large shareholder and most people on the planet who have digested any news in the last couple of weeks.
Positive Correlation
Remember 2022 when both bonds and equities declined together? We’re seeing it again here in 2023. Per AQR, a key driver of the positive correlation is when inflation uncertainty overwhelms growth uncertainty. During growth shocks, equities and bonds move in opposite directions. During inflation shocks, they move in the same direction. So, inflation volatility matters—not it’s overall level. Until we get through at least 1H23, we don’t expect that to decline.
Overnight Action
Asian equities were down. Australia’s mining stocks were hurt due to the stronger USD and lower prices. HK and mainland China markets fell as well. Investors are tired of waiting around to hear about stimulus plans, and instead they’re focused on geopolitical risks. The Eurozone faired better, with the ECB talking about a data-driven decision for rates going forward.
Hang the DJ
GS is hosting its second-even investor day this week. With profits down by -50% last year, investors are going to want to hear what went wrong with the firm’s consumer foray called Marcus, which lost roughly -$6bn since inception, and how the firm is going to grow in the future. Plus, GS partners are going to want to know if CEO Solomon is going to spend more time on the biz and less time on the DJ’ing. You’re welcome, Morrissey fans, for this note’s title.
Crash Course
$TSLA has stopped the roll-out of its $15k self-driving software package until it can solve problems related to its recent 363k car recall. The program called FSD Beta can let vehicles drive too fast or move in illegal and unpredictable ways. Seriously, friends, if you have a Tesla, please wait until this is a proven technology in the future. Otherwise you’re just part of their crash course in learning how to develop this software.
Saving Salt Lake
Utah lawmakers are in session this year until Mar 3 have to get going on confirming solutions before a potential environmental disaster that could expose millions of people to dangerous sediments and kill ecosystems. Otherwise, the Great Salt Lake, which has already shrunk by two-thirds, would disappear in 5 years, according to scientists. Lawmakers have not passed even what some are calling “common sense” water bills, but hopefully they’ll get their act in gear soon.
Brexit Breakthrough
Finally, the UK and the EU have agreed to a Northern Ireland trade deal, three years after Brexit happened. Sunak still wants Parliament to have a voice and provide some support for the deal. Now the UK has to work on fixing relations so that they can be more coordinated on defense, migration, trade, energy, and everything else pre-Brexit UK had.
