Positioning: 2022 Tax Loss Selling & Trimming 2022 Winners

Good Morning Everyone!

Housing demand continues to fall. In the last week of 2022, mortgage applications were down 42% year-over-year.

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Prices as of 4 pm EST, 1/3/23; % YTD

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MARKET UPDATE

Positioning

• A lot of tax loss selling late last year

• A lot of Energy trimming early in 2023

• S&P 500 Energy Sector was the only positive sector in 2022, up 59%

10 a.m. U.S. Manufacturing ISM

2 p.m. FOMC minutes from December meeting

Crude 74.90 -2.7%

Warm weather is hurting heating demand but……

• Other hard commodities are down as well this morning:

  • Iron ore -0.8%

  • Copper -0.6%

  • Aluminum -2.8%

  • Wheat -1.1%

  • Corn  -0.6%

• Why? Worsening Covid cases and concerns about China’s economy

XOP = Spider S&P Oil & Gas Exploration & Production ETF

• It’s sitting on its 200-day moving average

China

• Further property-support measures announced to ease liquidity stress at too-big-to-fail developers

• China will again begin to import coal from Australia

• Ant Group approved a 10.5 billion yuan fund raising plan by Jack Ma

Labour shortage in non-tech

• Wall Street Journal article on Domino’s and Pizza Hut

• Shortage of drivers causing long wait times, frustrating customers, costing them sales

• Pizza delivery workers earn an estimated $38,000 annually

Layoffs in Tech continue

• Salesforce CRM to cut 10% of workers, reduce offices

• Marc Benioff:

  • environment remains challenging

  • customers taking a more measured approach to their purchasing decisions

Earnings None

CRYPTO UPDATE

SBF pleads not guilty

• Pleads ‘not guilty’ to fraud and conspiracy charges

• Ayfkm?

• What did he keep apologizing for then?

• Will face trial in October

Here’s what I think of Sam Bankman-Fried pleading NOT GUILTY to all charges… pic.twitter.com/W3Hw9JHHRJ

— Genevieve Roch-Decter, CFA (@GRDecter) January 3, 2023

Digital asset fund flows

• 2022 inflows of $433 million weakest since 2018 ($233 million)

  • Bitcoin BTC/USD $287 million

  • Multi-asset investment products $209 million

  • Shot-investment products $108 million

• Pace of outflows much slower than 2018