Fed Talk Have Markets Down

Good Morning Everyone!

New FTX CEO John Ray says “never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here”. 

Finally the truth.

“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

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Prices as of 4 pm ET, 11/16/22; % YTD

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MARKET UPDATE

Fed Talk

• 8 a.m.                   James Bullard

• Policy rate not yet “sufficiently restrictive”

Funds rate of 5-7% may be needed (Bullard chart below)

• 9:15 a.m. Michelle Bowman

• 9:40 a.m. Loretta Mester

• 10:45 a.m. Philip Jefferson and Neel Kashkari

The long and short of it

• Range of Funds rate range from Fed talks:

  • Lowest 4.5%

  • Highest 7.0%

Initial jobless claims        down 4,000 to 222,000 in week ending Nov. 12 

Housing Starts -4.2% vs. -2% expected

Gridlock

• Republicans control House of Representatives

• Democrats control the Senate

Crude 83.60 -2.0%

• Lower on:

  • 1. China slowdown concerns as Covid Cases yesterday were 22,000

  • 2. No Fed Pivot

  • 3. U.K. budget/U.K. increased its windfall profits tax on oil and gas companies from 25% to 35%.

Earnings

• Nvidia NVDA +2% but down 46% ytd, slight beat, Datacenter stagnant, Auto strong, Gaming weak

• Cisco CSCO +3% but down 30% ytd, revenues modestly higher than street as supply chain loosened

• Macy’s M Q3 SSS decline of 3.1% vs. street -4.3%, EPS guide lowered

• Kohl’s KSS pre-released Q3 last week, will not provide Q4 guide

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CRYPTO UPDATE

FTX contagion reaches Genesis

• Digital asset financial services firm owned by Winklevoss twins

• Genesis = counterparty to many in sector

• Suspends redemptions and new loan originations

• Withdrawal requests exceeded current liquidity

• Halting Gemini Trust yield product

• Says move only affects lending business

  • Spot and derivatives trading and custody business “remain fully operational”…

UK Parliamentary committee says Binance evidence on FTX collapse “not really acceptable”

• Requested background info, internal records, details on events

• Binance sent them news clippings

• Lack of transparency will influence the committee’s probe

  • Committee will make government recommendations on regulation

Meanwhile, Litecoin LTC/USD has decoupled from the rest of crypto amid the chaos: