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Your Quiver | Wednesday, April 5, 2023

CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.

A Golden Opportunity

ADP. The 2-yr UST yield is down -8bps after US employers added only 145k jobs in March, versus an expected figure of 210k. Gold is near a 13-mo high.

It's What They Didn't Say

Western Alliance Bancorp gave its 4th update since Mar 10th but didn’t discuss deposits. Obviously, investors care about deposit levels after they drove the collapse of three lenders last month. Per BBG, deposits at smaller US banks declined by $120bn in the week through Mar 15 versus deposits at the 25 largest firms which rose around $67bn. One stat they gave doesn’t bode well. Their insured deposits represented ~68% of total deposits at Mar-end, compared to 55% on Mar 16. This is probably because much of the initial uninsured deposits left. To no one’s surprise, the stock is down.

Password Police

$NFLX is cracking down on password sharing across locations. Theoretically, millions of people could be forced to consider buying their own plans. The company is also offering a lower-cost tier with ads, in case some users can’t stomach the entire monthly fee. The company estimates that 100mm people are using the service without paying for it. It probably is time for your kid in his 30’s to get an account.

Chipping Away

$NVDA is down on news that Japan is going to align with the US to restrict chip-making exports to China.

The Art of Making New Friends

That’s what Tim Cook is doing at Apple, focusing on India for iPhone production, Vietnam for AirPods and Mac assembly, Malaysia for Mac production, and Ireland for smaller products—to reduce its reliance on its China supply chain. Part of the move includes exploring ways to reduce its reliance on Taiwan, where TSMC makes semis for its products, given geopolitical risks. Given that ~20% of its biz is from “Greater China,” this process is definitely more art than science.

Sour Kiwis

The Reserve Bank of New Zealand surprised traders with a 0.5% rate hike, versus an expected 0.25% level, given forecasts for high, sticky inflation. Not to be outdone, the Gov of the Reserve Bank of Australia warned traders not to read into the current rate hike pause, saying policymakers still expect to hike rates.

5 Cents on the Dolla'

That’s what traders are estimating that UBS is paying for CS. BBG is out with a juicy story today about how senior management had a takeover plan in their back pocket, which was formed alongside bankers over at Morgan Stanley to maintain secrecy. Now management has to figure out what to keep, and what to shed/sell.

Another Merger of Note

Fed Ex is looking to cut $4bn in costs by merging its delivery networks, akin to UPS’ single network. For decades, the company operated its express biz separately from its ground unit that depends on third party contracts for last-mile delivery of parcels. As of June of next year, it expects to be unified. Interestingly, UPS has beat Fed Ex on profit margins, even though it has a unionized workforce and pays its drivers 2x what Fed Ex does for ground network drivers. With package volumes down (and probably going lower), obviously they’re looking for areas they can control, versus those tied to a cyclical economy.

Cancer Payout

$JNJ reached an agreement to pay out $8.9bn over 25 years to settle allegations the company’s baby powder and other talc products caused cancer.