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Your Quiver | Thursday, March 9, 2023

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

A Job to Do

US market futures reversed losses this morning, and UST yields declined, after applications for US unemployment benefits rose to the highest level (211k for the week ending Mar 4) since Dec, versus expectations for 195k. Spikes came in CA and NY. We’ll be watching US nonfarm payrolls and the unemployment rate tomorrow, and the ongoing news of tech layoffs here in Silicon Valley.

Budget Battle

Biden’s budget is expected to include a proposed $3 tn in deficit reduction measures over a 10 yr period, plus ~$2T in tax hikes, per the NYT. The tax piece (got your attention?) focuses on corporates and rich folk (25% tax on households worth >$100mm). Republicans will certainly be in a negotiating mode because of the debt ceiling conversations happening at the same time. Also, we expect to see a 4x buyback tax.

When I'm 64

Well, that’s the age that the French senate approved to be the new retirement age, versus 62.

Spreading Tentacles

Polpo Capital is back at it, shorting the US comm’l property market. He made a bundle shorting debt linked to shopping malls previously, and now he thinks WFH will cause defaults in the office space.

Simple Supply and Demand Function

Higher Chinese demand is causing shipping oil to surge, with more ships taking further trips from Russia. Last week Vortexa clocked 1.2 billion barrels on the water last week, a record for this time of the year, which has increased the px.

Another Example

BBG is out with a story of how Intel can’t find enough people to work on the massive semi fab construction projects in Ohio. It’s part of a bipartisan plan to support workers, bring supply onshore to compete with China, and buy votes. OK, the latter is just my view, but don’t tell me that bringing money to community doesn’t make voters happy! The problem Bechtel is finding is that demand is now up, and supply is down….just like the oil shipping vessels. They will need 10k people to accomplish the projects. 6 mo in they are having trouble finding the first 3k tranche of folks. This is why I tell my kids to take Macro Econ in high school. Lots of parallels in life.

Visa's Comments on Goods

When talking about growth rates during the MS TMT conference, Visa’s CFO mentioned that compared to ’21, and now vs early ’22, the goods categories are not that great. But if you look on an index basis for 2019, they are doing just fine. Also mentioned was that there is a major shift in spending, which is very evident into travel/entertainment growing very fast which is holding up the business. Consumers seem to be spending the same amounts of money, just in different places (also adapting to whatever inflation is out there).