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Your Quiver | Tuesday, May 2, 2023

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

Yellen Her Heart Out

Yellen is warning everyone that the X date could be as soon as June 1. Next week Biden is meeting with top Congressional leaders from both parties, with low expectations in my mind. Doesn’t seem like much compromise going on right now. June 2nd is when social security is released, and the Treasury doesn’t want Congress to bluff for too long, so we expect to see the stake firmly planted for June 1st to get them moving.

On $TAP

Molson Coors beat on the bottom line.

$MAR Marriott beat nicely on the bottom line and raised full year guidance solidly as well. While US revpar was inline with expectations, international continued with strong worldwide momentum (76% in Europe, 113% in AsiaPac ex China). Consumers continue to treat and pamper themselves with travel and experiences. While occupancy levels are slightly below 2019 levels, the average room rate is ~33% higher. For those who didn’t book summer travel last year thinking that they would get a better deal this year, it looks like they will have to sit this one out again.

Not to be outdone, $PFE Pfizer had a solid beat on the bottom line and talked about operational growth “through 2025 and beyond.” That’s one heck of a forecast.

Waiting for Wednesday


The market’s inability to re-hit its 2023 peak says more to do with tomorrow’s Fed meeting, Apple’s earnings, and the next Jobs Report. If we get back to 4325 for the $SPY we’ll be at a forward multiple of 19.1x. Right now, the market is only pricing in a 25% probability of a second rate hike (for June after tomorrow’s).

Sticky and High


That’s inflation for ‘ya. Yesterday’s Priced Paid of the ISM manufacturing survey was above consensus.

On Fire

Tech has been on fire. Even though we’ll get HFR’s hedge fund data for April later this week, we know that hedge funds have underperformed equity indexes. Case in point for the HFRX Equity Hedge Index YTD (yellow) versus the SPX Index (aqua) chart shown below.

Same Story, Just Louder

In one corner, you’ve got the bulls: better-than-consensus Q1 earnings and guidance trends, an expected Fed pause, the corporate buyback window reopening, and VIX in a sweet spot. In the other corner, you’ve got the bears: central bank inflation-fighting messages, 2H pivot expectations, narrow market breadth/leadership, the debt ceiling stalemate, banking failures, dampened positioning tailwind, valuation, seasonality, and reluctance to buy into MOMO.

Stoking Fear

Scientists are looking for new mutations of H5N1, the most virulent strain of bird flu, because they’re seeing new infections more quickly than in the past, so they have less time to react before impact occurs. They state that if H5N1 mutates to transmit between humans, then the casualties would be a lot greater than the 6.8mm from covid.

Cracked Chegg


Edtech company Chegg stock declined by more than -40% after the company reported that OpenAI’s ChatGPT is threatening its homework help services. Pearson fell in concert. IBM Mgmt said that about 30% of its 26k workforce in non-customer facing roles would have to go, as it could be redundant from the new tech. The Writers Guild of America included regulation of AI among their demands during their first strike in 15 years. Samsung this week said it would ban employees from using generative AI solutions, on concerns that data sent to AI platforms can be stored externally, which would be a competitive threat. The quitting of Hinton from Google so that he could warn of his tech’s dangers is no doubt going to stay in the headlines for years to come.

Listen to the Experts

CEO of TCW, a prominent bond fund manager, says we’re headed for a hard landing. Having to be more optimistic, Jane Fraser, CEO of Citi, was talking of a manageable recession. I’ve been hanging out with a variety of vc’s from around the US, and no one in that group is very optimistic right now. They’re trying to make sure their best companies remained financed, and they are saying that the lean times ahead will be great for entrepreneurs who can bootstrap it and power through…so take note. Pain for another year.