Fed Talk Today, Data Dump Tomorrow

Good Morning Everyone!

Is inflation canceled? Container shipping costs are back to pre-pandemic levels.

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Prices as of 4 pm ET, 11/21/22; % YTD

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MARKET UPDATE

Fed talk

• 11 am - Mester

• 2:15 pm - George

• 2:45 pm - Bullard

Tomorrow = big data day

• Building permits, Durable Goods, Initial Jobless, S&P Global Flash PMIs, New Home Sales, Consumer Sentiment, EIA stocks change, and FOMC minutes

Q3 earnings update

• 94% of S&P 500 reported

• Overall EPS growth 2.2% - lowest growth in 2 years

Earnings outlook

• Analysts continue cutting EPS estimates

• But sales estimates remain resilient

• Long way to go to get through earnings recession

China lockdowns surge

• 27,307 new cases reported yesterday (just shy of daily record)

• Guangzhou (manufacturing hub) at epicenter of current wave

• Lockdowns affecting ~20% of China’s total economic output

  • 15.6% last week

• Goldman’s Effective Lockdown Index:

Crude $81.5 +1.6%

• Prices drop on reports OPEC considering production output increase

• Losses pared after Saudis deny report

• Effects of lower prices

  • Suggests weaker global demand, increased recessionary worries

  • But also ease inflationary forces, support less aggressive monetary policy

CRYPTO UPDATE

Grayscale refuses to share proof of reserves

• Cites “security concerns”

• Shares of Grayscale Bitcoin Trust GBTC trading at deep discount

  • As low as 50% yesterday

Genesis liquidity problems

• Seeking to raise at least $1 billion fresh capital

• Sought funding from Binance, Apollo Global

• If unsuccessful bankruptcy likely

Important: Grayscale and Genesis are both Digital Currency Group companies…

Digital asset flows

• Short investment products responsible for 75% of inflows last week

• Bitcoin BTC/USD inflows of $14 million

  • After short products, net outflows $4.3 million

• Short Ethereum ETH/USD products record inflows of $14 million

• Total AUM at lowest in 2 years

• Altcoins saw broad outlows