FOMC Minutes In Focus

Good Morning Everyone!

Crypto winter has been rough for everyone. Especially Coinbase:

• Q4 2021: $840m net profit

• Q4 2022: $557m net loss

Prices as of 4 pm EST, 2/21/23; % YTD

MARKET UPDATE

2 pm: FOMC minutes

• Market embracing higher-for-longer

• Federal funds rate expectations ~5.3% in June

  • 4.9% three weeks ago

• US02Y at November highs

• US01Y above 5% for first time since 2006

Yesterday was the first day of the year where New Lows > New Highs

S&P Global flash PMIs

• Composite output (chart) rose sharply driven by services (both at 8-month highs)

• Uptick in manufacturing (4-month high)

• New orders down but pace of contraction decelerating

• Cost pressures soften but output charges rise

• Optimism highest since May 2022

Existing home sales

• Dropped by 0.7%, 12th straight monthly decline

  • Slowest pace since Oct 2010

• -37% YoY, worst on record

• Median home price +1.3% YoY

  • Prices fell MoM for 7th straight month

Palo Alto Networks PANW

• Beat on top & bottom lines

• 3 consecutive Qs of profitability after decade in the red

• Raised outlook, earnings guidance for 2023

Microsoft MSFT

• Making moves to ease regulator fears over Activision ATVI takeover 

• Signs 10-year contract with Nintendo for Call of Duty

  • CoD will be released same day, same features for Nintendo as Xbox

• Agrees to bring games to Nvidia's NVDA GeForce Now Service

  • Nvidia now supports regulatory approval of MSFT/ATVI acquisition

• EU reviewing deal

• US FTC has sued to block

Earnings

• TJX TJX

• Nvidia NVDA

• Baidu BIDU

• eBay EBAY

• Etsy ETSY

• Overstock.com OSTK

• Garmin GRMN

• iQIYI IQ

• Charles River Labs CRL

• Brink's BCO

• NiSource NI

• Bausch + Lomb BLCO

• Vertiv VRT

• Driven Brands DRVN

• Travel + Leisure TNL

• Sinclair SBGI

• Installed Building Products IBP

CRYPTO UPDATE

Coinbase COIN

• Beat earnings & revenue estimates

• Userbase is shrinking

• 8.3 million monthly transacting users in Q4

  • Down from 8.5 million

Polygon Labs layoffs

• Cutting 20% of workforce (~100 jobs)

• Consolidating multiple business units

Paxos breaks up with Binance

• Paxos CEO says ending relationship with Binance

• Paxos served Wells notice by SEC over BUSD issuance/listing

• Will Binance also move away from BUSD?

  • Binance has been increasing its USDC holdings

Bitcoin vs. S&P 500

• 40-day correlation at lowest since 2021

• Down to <0.3 from record 0.8 in May 2022