YOUR QUIVER | December 29, 2022
Today's Rundown
CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.
Hopeful Expectations
That’s what inflation swaps are pricing in, hoping for rate cuts in late 2023. Investors believe inflation will moderate, with headline CPI growing at around 2.5% y/y at 2023-end. This would enable the Fed, in their eyes, to at least pause and maybe cut if the economy and labor weaken.
Outlier Outflows
UBS is noting that Dec is the 4th largest mo outflows for single stocks since the beginning of their data set in Aug ’13, and they are expecting it to finish as #3, just behind Brexit and Dec ’15. They also note Jan ’22 was the largest mo inflows ever in the data. While typically, it means that inflows can happen in Jan, UBS points to 2015 and 2018 are close comparisons to today—when there were down market years including a big Dec outflow—unfortunately, the Jan results were mixed (one big inflow month, and one continued outflow month). So, don’t use that data as part of your tea leaf collection.
Good is Good Again?
US futures were up this morning after applications for unemployment benefits rose only a bit last week, and they remain at very low levels. UST yields are a bit lower, and the USD is down. Today Good seems to be Good for Tech as well. NASDAQ contracts are up after Asian tech was up due to signs that China is easing its tech regulatory smackdown. Execs at $BABA, $TCEHY, $PDD, and other co’s tapped in with Cathie Wood and started doing Yolanda Turner’s dance.
Export Slowdown
HK’s exports were down -24% in Nov, the worst decline in roughly 7 decades, given the soft global economy and China’s shutdowns.
Wait a Minute
That’s what more countries are telling Chinese travelers as they seek to leave China after years of lockdowns. Various countries (e.g., India, Italy, US) are requiring tests to varying degrees due to concerns around (i) high covid cases in China with their rapid reopening and (ii) potential for mutations. Fortunately, Italy didn’t find any new mutations when about half of recent Chinese arrivals tested positive. The US is going to require inbound folks to show a negative Covid test prior to entry.
Belt Tightening
That’s what many of us will have to do after holiday parties with our NY resolutions. And so will UK consumers, according to KPMG, who expects non-essential spending on eating out, take-away, and clothing to be hit the hardest. On a related matter, BBG is noting that mental health issues are keeping Britain’s youngest workers out at record levels. A 29% increase in 16-24 yr olds cited long-term sickness, and a 42% increase by 25-34 yr olds as of 2Q22, according to the Natl Health Service.
The 11th Month
Ukrainians have endured 11 months of the invasion, and Russia launched 69 missiles in the past day, focusing on civilian targets and energy infrastructure.
Striking Gold
Goldman confirmed it may cut up to 8% of its workforce (4k positions), given lower revs and profits. Maybe they should put George Santos on that list, so he can also have a fake firing.
Crude Awakening
Hedgie Andurand forecasts global crude demand to increase by 3-4mm barrels/day in 2023, if the world ends virus restrictions. He also predicts that consumption, backed by the gas-to-oil switch, could increase even more if it reverses to longer-term trends.
Cin Cin
Pandemic drinking trends haven’t wavered. The US Bureau of Economic Analysis states that Nov’s spend on alcohol bevs in the US, adjusted for inflation and seasonal patterns, was +3% y/y and +15% greater than pre-pandemic. It might not be just volume, though, as folks traded up when stuck home in their jammies. Unfortunately, death stats are up too.
Like Crazy
According to Reuters, Musk told Tesla staff to not be “bothered by stock market craziness." With the stock down -68% as of yesterday’s close, declining >-42% in Dec alone—and with the company announcing major incentives to move inventory, it’s hard not to watch what Musk does (sell) versus say (ignore).
