Traders Market Weekly: Neutralizing Contagion

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    Meta Platforms (META 203.21, +5.40, +2.7%): upgraded to Overweight from Equal Weight at Morgan Stanley
    Foot Locker (FL 41.54, +1.68, +4.2%): upgraded to Buy from Neutral at Citi


    Canadian Solar (CSIQ 39.25, +3.39, +9.5%): beats by $0.15, reports revs in-line; guides Q1 revs in-line; guides FY23 revs below consensus

    On (ONON 24.59, +3.02, +14.0%): misses by CHF0.04, beats on revs; guides FY23 revs above consensus


    Harmonic (HLIT 14.21, +1.12, +8.6%): selected by Charter Communications (CHTR) as its strategic technology partner to deploy virtual CMTS tech for next-gen broadband services


    The Treasury market is under selling pressure this morning, as some of safety premium embedded there gets unwound.

    2-yr note yield is up 21 basis points to 4.13%
    10-yr note yield is up eight basis points to 3.56%.

    As a reminder, the FOMC meeting starts today and a decision will be announced at 2:00 p.m. ET Wednesday.


    Xi Jinping to Putin:

    “Early harvest of our cooperation can be seen, advancing further cooperation
    – Both sides should cooperate closely to promote practical cooperation to achieve new goals
    – Field of our cooperation is constantly growing”


    For TODAY — MARKETS & BANKSTERS are roaring back to good times & GREEN again 🙂
    Still, things could change on a DIME – as I see economy as volatile
    and have been on BEARISH side for a while – as DEBT, unfunded LIAB, and USA deficit
    are all climbing upwards … Hopefully things do STABILIZE in days ahead


    BofA fund manager survey taken between March 10 and March 16 (i.e. prior to SVB)

    – Financial Market Stability Risks Indicator surged to 7.7, highest since November 2022 & largest m/m increase since March 2022, shortly after Russia attacked Ukraine war

    Bank Risk was not unexpected:
    – Counterparty risk up to highest since May 2020
    – Credit risk perception (default) had risen to its highest since Oct 2022.
    – Counterparty and default risk combined reached its highest since May 2020 $CS #DB $SVB
    – Counterparty risk perception jumped 25% m/m to a net 46% above normal, the highest since May 2020.
    – Perception of credit risk surged 30% m/m to net 75% m/m above normal, the highest since Oct 2022
    (Shows how bad $SVB $SBNY $SI were run that they did nothing & risk was known)

    In terms of tail risks:
    1 Systemic credit event 31%
    2 Inflation stays high 25%
    3 Central banks stay hawkish 15%
    4 Geopolitics worsen 14%
    5 Deep global recession 11%
    (Again professionals expected it)

    Noteworthy that only 1% expected stock market crash – our assumption is that means 1% chance of a stockmarket crash triggering rather than happening after.

    What could lead to a credit event?
    Most likely source:
    1. US shadow banking 34%
    2. US corporate debt 17%
    3. Developed markets real estate 10%
    4. China real estate 8%
    5. European sovereign debt 5%
    6. Global pension funds 3%
    7. EM sovereign debt 3%
    = (Again 1/3 expected it)

    Cash levels rose to 5.5% in March, up from 5.2 % last month, in the first month-over-month increase since October 2022, and the largest since September 2022.

    BoA said cash allocation has remained above the historical average (4.7%) continuously since December 2021:
    “Over the period, the average cash allocation has been 5.7%. For 15 months cash levels have been above 5.0%. ….The only period that saw higher cash allocation for longer was the 32-month bear market in 2000-2002.”
    (This as we have pointed out is a distinct difference to 2008/9 if not the COVID dump)

    The most crowded trades this month:
    1. Long European equities 19%
    2. Long US dollar 18%
    3. Long China equities 15%
    4. Long ESG assets 15%
    5. Long US Treasuries 12%
    6. Long IG bonds 10%
    (This explains much of the pain trade, thankfully long banks wasn’t crowded for fund holders)

    BofA said sentiment/positioning “is consistent with prior major market lows. However, flows, private clients’ asset allocation, and BofA Bull & Bear Indicator remain well above levels seen in prior big lows. The indicator was at 3.4 or neutral.”

    BofA said “FMS positioning/sentiment [is] the only key measures in ‘capitulation’ territory so far.”
    In a nutshell this was not unexpected by many professionals, the quick response from FDIC, Powell & SNB suggests they were not surprised either. The political element the problem?


    Decades ago, I remember my mom singing this when ironing – lol
    Our pug Samson loves this one — as WALL STREET rallies to GREAT GAINS 🙂

    Dow 32,561.82 317.24 0.98%
    S&P 500 4,003.16 51.59 1.31%
    Nasdaq 11,860.11 184.57 1.58%
    VIX 21.48 -2.67 -11.06%
    Gold 1,942.70 -40.10 -2.02%
    Oil 69.50 1.86 2.75%


    GameStop Stock Explodes 33% Higher After Delivering Surprise Profit

    Q3 23 Earnings:
    Rev $2.23B (est $2.18B)
    Adj EPS $0.16 (est -$0.15)

    $GME 23.48 ▲ 5.83 (▲33.07%) After Hours

    GameStop posted a quarterly profit for the first time in two years.
    The company is still hanging on to $682.9 million in inventory, which is down from $915 million a year ago.

    The video game retailer also posted a profit of $48.2 million, or 16 cents a share, compared to a loss of $147.5 million, or 49 cents, a year ago. GameStop did not provide financial guidance and has not given guidance since the early days of the pandemic.

    For the full fiscal year, GameStop saw $5.93 billion in sales, down slightly from $6.01 billion in fiscal 2021, and saw increased revenues from its collectibles category, which the retailer is banking will bring long-term growth for the company

    As part of its revival strategy, GameStop has also been trying to improve its cash balance. This quarter, its cash and cash equivalents were $1.39 billion.

    The company has also been experimenting with an NFT marketplace since July. That launch came amid chatter of a “crypto winter” as cryptocurrencies experienced a widespread cool-down from their 2021 rallies. The marketplace saw an initial volume surge but has since leveled off and may not be the ticket to a stable digital presence that the company had hoped.


    Equity indices in the Asia-Pacific region ended the midweek session on a higher note.

    —Equity Markets—

    Japan’s Nikkei: +1.9%
    Hong Kong’s Hang Seng: +1.7%
    China’s Shanghai Composite: +0.3%
    India’s Sensex: +0.2%
    South Korea’s Kospi: +1.2%
    Australia’s ASX All Ordinaries: +0.8%


    Japan’s chief cabinet secretary Matsuno said that more than JPY2 trln will be allocated to offset the impact of rising prices.

    The U.S. and South Korea will hold their most expansive military drills in June.

    Defense officials from China and Australia held their first formal meeting since 2019.

    Australia’s February Leading Index -0.1% m/m (last -0.1%)

    New Zealand’s Q1 Westpac Consumer Sentiment 77.7 (last 75.6)


    Major European indices trade in the green.

    —Equity Markets—

    STOXX Europe 600: +0.3%
    Germany’s DAX: +0.6%
    U.K.’s FTSE 100: +0.2%
    France’s CAC 40: +0.4%
    Italy’s FTSE MIB: +0.4%
    Spain’s IBEX 35: +0.4%


    European Central Bank President Lagarde said that she has not seen clear evidence that inflation is trending down and that she is not committed to any rate hikes or a pause yet.

    ECB Chief Economist Lane said that there are reasons to believe that underlying inflation will ease over time. Germany’s council of economic advisors expects 2023 domestic inflation to reach 6.6% and slow to 3.0% in 2024.

    Eurozone’s January Current Account surplus EUR17.00 bln (expected surplus of EUR16.50 bln; last surplus of EUR13.00 bln)

    U.K.’s February CPI 1.1% m/m (expected 0.6%; last -0.6%); 10.4% yr/yr (expected 9.9%; last 10.1%). Core CPI 1.2% m/m (expected 0.8%; last -0.9%); 6.2% yr/yr (expected 5.7%; last 5.8%). February Input PPI -0.1% m/m (expected 0.2%; last 0.4%) and Output PPI -0.3% m/m (expected 0.2%; last 0.5%)


    Boeing (BA 201.05, -3.65, -1.8%): has secured order of 21 737 MAX jets from Japan Airlines, according to Reuters


    GameStop (GME 26.73, +9.08, +51.4%): beats by $0.29, beats on revs

    Petco Health and Wellness (WOOF 9.41, -0.76, -7.5%): misses by $0.01, reports revs in-line; guides FY24 revs below consensus

    NIKE (NKE 123.50, -2.11, -1.7%): beats by $0.24, beats on revs, gross margin decreased 330 bps, worse than the 200-250 bps decline it guided for; Guides to MayQ revs of flat-to-low single-digits

    Winnebago (WGO 60.51, +2.26, +3.9%): beats by $0.63, beats on revs

    HealthEquity (HQY 61.50, +3.24, +5.6%): beats by $0.02, beats on revs; mid-point of FY24 EPS and revs guidance above consensus

Viewing 15 posts - 31 through 45 (of 90 total)
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