YOUR QUIVER | February 28, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Changing Position
Citi reported that investors increased their short bets in both US and EZ equity futures, given a more bearish sentiment. This comes on the heels of trader pricing in US rates to peak at 5.4%, versus closer to 5% last month. Treasury yields are up today, with the 10-yr UST heading toward 4%, a level closely watched by traders.
Flows
One of our brokers shared that flows were balanced yesterday BUY:SELL with light volume. MFs were the most active, followed by HFs and INTL flows. Buys were in mining, utilities and REITS. Sales were in consumer, ecommerce, energy, financials, healthcare and industrials. Tech was balanced overall.
SOS
Unused vessel capacity (idle container ships) was 4.1% this month, near its highest level post-pandemic. Most are sitting near China, hoping for the reopening rebound. The level shows how much global trade has declined.
Data Driven
Various data out today. Higher mortgage rates pressured home price gains in Dec (+5.8% y/y, down from +7.6% y/y in Nov). US consumer confidence came in at 102.9 vs Jan level of 106.0. Both anti-inflationary. Also, we’ll be looking for the prints on: wholesale inventories and Chicago PMI.
On Target
After a solid 4Q report, management gave soft guidance for 2023, a week after we heard similar rumblings from Walmart and Home Depot. The consumer is slowing spend down.
Chile Powder
MS gave a double upgrade to Chilean equities due to easing macroecon risks, improved political tensions, lower interest rates, and a shallower recession. Efforts to overhaul the tax, pension and health systems look to be less radical than feared after the 2019 social uprising led to a revised constitution and a major left-wing gov.
0 Stars
That’s what analysts are giving Airbnb due to a lofty valuation, with five sell recommendations—the most of any NASDAQ 100 company after Intel, Tesla and Cognizant, per BBG. The co has been reducing costs, but there is an expected reversal of pandemic trends that led to improved metrics on # nights booked and ave daily rates.
Nat Gas Guess
The IEA is concerned about the uncertainty around China’s LNG demand this year, as a big reopening could cause imports to increase up to 35%, which would drive prices to 2022 summer levels. They are projecting a 40 billion cubic meter difference in potential outcome estimates. The bullish case would be tough for the Eurozone.
Checking Out
That’s what Apple’s suppliers in China are doing, by moving capacity out of the country given US-China tensions. Per BBG, AirPods maker GoerTek is investing $280mm in Vietnam and also exploring expansion in India. US clients are pressuring suppliers to make the move. With bans on chips and tech, and after the pandemic supply chain snarls, companies have to think ahead. Beijing had restricted supply of products, and no one wants that again.
