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Your Quiver | Wednesday, March 29, 2023

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

Boomerang Buh-Bye

Former UBS CEO Ermotti is back in the saddle to manage the combination of UBS and CS. Current CEO Hamers will depart on April 5th so that the Swiss national can lead the combined entity.

Tech in Action

Tech shares are up, in the US, the EZ and China. Investors are excited about the split from $BABA potentially signaling paths forward from severe government crackdowns in China. Per BBG, Tech is having one of its strongest quarters in over a decade. Bitcoin extended its run above $28k.

Calling the Bottom

Micron’s results, while not good on an absolute basis, performed better than expected. So, another reason for the tech rally relates to investors’ hope that the bottom is in for semis. For that to happen, though, you’re betting that demand for PCs and smart phones will rebound. With recent data saying that consumers are looking to reduce spend, we’d be cautious buying into this consensus view.

Don't Move

That seems to be the advice given to earnings analysts and forecasters, who haven’t changed their estimates since the banking crisis began. Is it too difficult to determine? Are they unconvinced that anything changed? By keeping the ave year-end target for the S&P at 4,050 for the third straight month (a do-nothing run we haven’t experienced since 2005), I would bet on the former. The gap between the highest and lowest year-end targets is 47%, which is massive—the widest gap in 2 decades, per BBG. This inaction varies greatly from the major reactions from depositors, traders and investors who have been securing their cash positions, dumping financials, hoarding gold, and trying to figure out if there will be contagion. Earnings season starts in 2 weeks, folks. Seems like an easy bet that companies’ guidance won’t stay static.

Hitting the Pause/Panic Button

Reporters are highlighting the petition signed by more than 1k industry experts, leaders and researchers (including Musk and Wozniak) asking AI developers to stop training models that are more powerful than those driving ChatGPT for at least 6 months. The fear is that the creators cannot even understand, predict or control their work, so the signors want to develop shared safety protocols and bring in governments to work on the project. We are curious whether Stan from South Park (who got into hot water using ChatGPT to respond to girlfriend Bebe’s texts) will be signing this petition.

Vol is Down

Trading sessions have narrowed. When we see this happen for a period of time, it means that market can move up. Investors are less freaked out, so they buy dips (and optimistic narratives). Remember, we’ve got the Jobs Report and CPI coming out on Good Friday, the name which may become ironic.

Narcan Approval

In a big move, the FDA approved an OTC version of the lifesaving opioid overdose spray. Given the need to administer the spray quickly after an overdose, its broad availability should have a major impact on reducing fatalities.

The Comeback Kid

The yen has been the FX haven of choice during the banking crisis. Also, it has strengthened as investors look to central bank policy normalization. MS expects the yen to increase to 120 per dollar in the coming year. BPJ Uchida, though, signaled yield curve control adjustments may surprise markets, so we’ll see what happens on this front.

I Don't Think So

Macron rejected demands from French unions to pause pension legislation and continue dialogue.

T + 2

Today is when you’ve got to get your trades in for T + 2 settlements. So, we may see some rebalancing across asset classes. But we think that cash will still sit on the sidelines.