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Your Quiver | Monday, April 10, 2023

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

Macro Monday

Treasury yields are down this morning and the USD is up, in response to Friday’s job growth slowdown. The 10-yr yield is down to 3.4%, and the 30-yr yield is at roughly 3.6%. Still inverted, the 2-yr yield is inching towards 3.99% this morning. The nonfarm payroll data for March came in line with expectations and reflected a slowdown in the number of new hires (236k) versus Feb data (326k hires). But the labor market is still strong, giving the Fed enough room for another hike. On Wed we get CPI data. So, investors will be thinking about what matters more—slowing growth or inflation levels—and how their trajectories will affect future Fed decisions.

Movin' On Up

Per BBG, bond volatility via the MOVE index is at its highest level relative to equity volatility (the VIX) since 2008. It’s interesting because equities typically are more volatile, especially around banking crises/events—and even high yield spreads didn’t get much wider than levels we experienced last fall. So, someone is going to be right. Tough recession? Then, you’re on the side of Treasuries. A way out of this mess? Then, you’re on the side of equities/credit. The founder of the MOVE index, Bassman, is betting that the MOVE has it right. Citi is showing that most traders have covered their bond shorts, with lots of folks shorting the 2-yr getting crushed during the recent banking crisis.


The Adobe Digital Price Index shows that online prices in the US declined by -1.7% in Mar y/y—the 7th straight decline and the fastest drop in four months. More than half of the 18 categories tracked were weaker. The biggest declines came in discretionary categories, echoing recent trends in consumers’ paring back their purchases, with flowers and related gifts down -24.3%. If only we could start seeing the benefits in eggs. Grocery prices were up 10.3% y/y.

Leaky Blinders

Also on Friday, the NYT revealed that highly classified US intelligence was posted online on Discord and 4Chan, with details ranging from Ukraine’s air defenses to the Mossad. Sounds like the Pentagon is concerned, and obviously they are looking for the source and motivation of the leak.

Straight to Voicemail

Last Thursday, the IRS released a plan for the roughly $80bn in funding it is receiving. They will focus on customer service, technology and enforcement, with the hopes to digitize the filing process in five years. Werfel gave a stat that the agency was only answering 17% of calls in 2022—and now with more phone assistors, they can answer 80-90%. Does anyone else wonder what happens to the other 10-20%? Also, they will be focused on reviewing returns for households making over $400k.

Chapter 11

Virgin Orbit filed for bankruptcy last week and laid off a number of people, including the company’s COO who wrote a company-wide email with some choice words blaming senior management and apologizing on behalf of the company for not prioritizing its people and financial resources better.

PC Blues

Apple’s PC shipments declined by over -40% in 1Q23, as pandemic demand finally has run its course and consumers tighten their belts. Samsung Electronics last week said it would cut its memory production after reporting its thinnest profit since the GFC. This morning Taiwan Semi said it missed sales estimates for the 2nd quarter in a row given weak demand. To note, they’re the world’s largest contract manufacturer of chips—and they saw an accelerated slowdown in March.

Looking for a New Car?

Tesla is down again after cutting prices on all car models for the second time this year.

Tupperware Tumble

They’ve announced they may not make it, and the stock is down -40% this morning, which is hard to believe if you have a kitchen….with so many plastic containers missing their lids that eventually have to get replaced. Might need to bring in these two legendary Tupperware salesmen to bring it back to life.

Total Recall

Yudkowsky’s Time Magazine article predicting doom from AI is sure to cheer you up with your first cup of coffee. He runs the Machine Intelligence Research Institute and claims that superhuman AI could turn against us. AI could escape from the internet and build artificial life forms that effect biological warfare on us, so he’s calling for a complete halt on developing AI.