YOUR QUIVER | March 3, 2023
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Tuesday Test
Powell will be delivering his semi-annual address to the Senate Banking Committee on Tuesday, and given his history of off-record talking moving markets, we would make sure to be in your seat. Yesterday we saw how the buy button got hit after Bostic simply said he would support a 25bps hike in Mar. Remember, he has no vote, so this demonstrates how skittish everyone is.
E-Not-So-Minis
Per UBS, the rough 20% rise in futures contracts suggests that investors should be more cautious right now, as elevated levels typically mean that high frequency traders have more sway over markets, and they point to something not jiving with the current market trends.
End of OPEC?
Brent is down after the WSJ reported that disagreements between Saudi Arabia and the UAE has driven the latter to consider leaving the alliance.
Changing of the Guard
China’s National People’s Congress will be showcasing political buddies of Xi taking over from more traditional academics/economists as they release their target GDP for the year this weekend. China is in a tricky situation, battling an aging population, a property crisis and wounds from extended pandemic lockdowns—yet if the country spurs worker productivity, trade and stronger tech advancement—then the country could have a much greater expected growth rate for years to come. So, we’ll see what initiatives and goals are rolled out during the next couple of days. Remember Made in China 2025? Common prosperity? We’re sure to have a new phrase associated with these elements.
Cash is King
BofA notes that global cash funds received inflows of over $68 bn during the week ended Mar 1, and $7.4 bn left equity funds. Bonds saw inflows for a 9th straight week. With <1 yr UST rates above 5%, you can’t blame investors for considering cash alongside bonds and equities as an attractive alternative while determining the path of inflation and rates globally which have been driving risk asset markets for over a year now.
Strong Services
ISM services index remained stead at near 55 in Feb. Its measure of new orders rose to the highest level since Nov 2021 to 62.6. The index of services employment rose 4 pts to a 1+ yr high of 54. So, folks have been hiring. We’ll see next Friday how the total US economy hires have been doing.
Two Phones
It sounds like it’s an increasing trend as employers ban WhatsApp and TikTok. But even if mgmt. controls what’s on a corporate phone, they should be a bit concerned about supporting the use of two phones, understanding that the same employees will probably have these apps on their personal phone which could be used outside of their control and view. AT&T noted this as a trend given strong subscriber growth in the industry. Sounds like more regulatory fines coming down the pike, in my opinion.
