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


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

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  • But sales estimates remain resilient

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  • 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:

relates to China's Lockdowns Surge in Week Since Covid Policy Adjusted

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

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