Last of the year, but Merry Christmas anyway!

All year round, we’ve struggled with knowing when the Fed will pivot, when it will finally decide to move from the Fed’s big rate hikes to our best friend, because in the end, that’s when it’s even there to drive the markets. And so that never came true, although last week Powell was a little more relaxed. Today is December 21st, the markets are running freely. Out of control to the point that our main concern is the similar rate hike that was announced in Japan. Maybe it’s time to close.

The audio from December 21, 2022


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Blow some air and pretend “if”

So since yesterday we are interested in Japan. Which is crazy, because usually whenever you talk about investing there, the first thing you do; is to find out if there’s a K or two in Nikkei. But since yesterday it was THE REASON for crashing the markets. It’s just that in Europe we fell, then limited the break to rise again close to balance and the US even managed to end. A homeopathic boost, yes, but a boost nonetheless. After 4 consecutive falling sessions, we still can’t spit in our soup.

So yes, the Bank of Japan, which faces inflation of just under 4%, is still obliged to show its intention to fight it. As a result, since we no longer know what it’s like to have positive rates, we start by manipulating the yield curve. Which gives you a good leg up if you don’t invest there. Which is still the case for a good majority knowing that we know very little about companies listed in the land of the rising sun. Besides Sony, Toyota and Nintendo, of course. Even so, the fact that Japan was the last country to practice negative rates turned the coat around, it will have given the rest of the world butterflies. But at the same time, the rest of the world doesn’t seem to want to. There are 7 full trading days left of the year and to be blunt though we are fully aware that the market is capable of doing pretty much anything to us in a panic spree or a short covering spree. One thing is for sure, you shouldn’t expect too much this year and there’s really no reason to stick with it.

And then there’s Musk

So luckily, while we defy the law of maximum bullshit in markets, there’s always Musk talking about him. I also believe that we should delve into the subject, just to get a good stat before Christmas, but I still wonder if there were periods when we didn’t talk about it in 2022. Whether it’s for Tesla, for the acquisition of Twitter, for its rockets or for his Starlink stew, which has worked half the time since Ukraine became his main concern.

Still, for a few weeks now, it’s been Elon Musk’s hallali. Alright, let’s not talk too quickly about “hallali” when we know the guy still weighs 155 billion, but let’s just say the decline of fortune and the speed with which it declines is a bit of talk anyway. It must be said that his takeover of Twitter and his very personal way of managing cash and freedom of expression got a lot of ink flowing. But it was also the fact that he left Tesla out that further hurt investors, stock performance and the performance of their own fortunes. Yesterday it was three investment banks that downgraded Tesla complaining about the absence of a CEO and a total lack of vision on the management side. The bond is close to 70% down from the all-time high and anyone who ever wanted to sell Tesla blames themselves to death for having given up at some point. Tesla was still down 8% last night.

Wood

In Tesla’s victims we can also remember Cathie Wood who is and remains one of the fervent defenders of the electric car company. The head of Ark Invest has dropped 80% in his fund and continues to buy Tesla and Coinbase. It’s been a rather horribilis year for her, but she still believes in it. And not just her, as her fund continues to attract money and investors. Even after destroying over 20 billion assets. However, the media continues to track Cathie Wood’s every move and purchase.

And then, as if Tesla wasn’t enough, we also discover that Coinbase – which is also part of the list of “holdings” of the Ark Invest fund, is not only at an all-time low, but that, in addition, Coinbase’s market capitalization it is below that of Dogecoin – Dogecoin which is still a “cryptocurrency” based on little and which is closer to a big shit that is about to blow up in our faces one of these days, than anything else. Well, imagine that Dogecoin is worth 9.9 billion while Coinbase is only worth 8.1 billion. And so, since we’re at the comparison stage, this morning Tesla is worth less than Exxon – it still might sting a little (especially in terms of ecology and global warming). We can therefore say that we are ending the year hitting even harder what has already suffered enough.

want

The problem is that this morning… Also, not just this morning, but for several days, it seems like nobody wants to repeat the year over and over again. And nobody wants to think about whether it’s really worth doing one + one = two and trying to draw investment conclusions for next year. It clearly gives the feeling that we no longer believe in that, that this year was the shittiest possible and that we all want to move on.

So be careful, this does not mean that from January 1st everything will be different. But let’s say we at least have the feeling of having turned a leaf and left behind a good shitty year. Then, starting January 2nd, we’ll start to get excited about what the Fed can do and how they’re going to interpret the employment numbers that come out at the beginning of the year and what they’re going to do in December CPI. Furthermore, there are already voices rising up to explain their misunderstanding of Powell’s policy as more and more data show that everything is slowing down. There is a job that I would not want to have in 2023, it is CENTRAL BANKER; they will crush it at the slightest sign of disinflation or the slightest sign of recession. It will all be their fault. NO EXCEPTION. One thing is for sure, if Powell remains firm in his boots, the question is not if we will have a recession, the question will be WHEN WILL WE HAVE A RECESSION.

Asia

This morning China is doing nothing and neither is Hong Kong. Japan is down 0.7% and there is talk of the end of the Zero Covid policy in China, as well as the explosion of infections and the fact that the current wave is worse than all the others combined. At the moment, elsewhere, nobody cares. That’s good, it’s better to save some equipment to write us good articles about the use of a mask, the twelfth dose of vaccine and the desire to stay at home until April, since the beginning of the year.

Besides, barrels are rising, because of China, but also because of low inventories. A barrel is at $76 – still 25 cents higher since yesterday. Admittedly, this isn’t the bull market of the century either. Gold is at $1,824 and Bitcoin is at $16,800, but we’ve heard of a “sell signal” in some media. One thing’s for sure, we won’t reach $100,000 by Christmas… Yeah, I know, it’s easy, but I had to put it back in the last column of the year.

New news

In the “news” of the day, we note that FedEx has not released quarterly numbers that we will call “very encouraging”, with demand clearly lower than expected even as the stock was up 4% after the close. But it’s the symbolism that doesn’t please, as we know that shipping boxes like FedEx are good indicators of consumption. When FedEx goes, everything goes. But when FedEx is down, it’s not great. On the other hand, there was Nike that pulverized expectations for the quarter. The company still has very high inventories, which cost them dearly in the last quarter. But there was a nice surprise on the way up. The title jumped 12% after closing.

Otherwise, it’s worth noting that Zelensky is due to visit Washington on Wednesday and is due to address Congress. He was then, as planned, to leave with suitcases of money on behalf of his country. American politicians are also preparing to vote on a new envelope for Ukraine. I don’t know what Zelensky does to western politicians to be showered with so much money, especially from countries that are up to their necks in debt, but he must be doing it super well. In the same vein, the secretary of the European Union, Luca Visentini, has just announced his resignation after accepting bribes. After the colleague who sleeps in jail, we wonder when Madame von der Leyen will go there. Anyway, we realized that Europe really is the future. Especially if it is commanded by Qatar.

And then, for the rest, there’s Musk who goes on to explain that Tesla’s decline isn’t his fault and that he’s looking for a CEO for Twitter since everyone wants him gone. All that’s left is to find. Do not hesitate to send your CV’s. There is also Jim Cramer who announced his 7 favorite titles for 2023. Faced with his catastrophic results this year, Twitter is already talking about creating a product to reproduce the drop of these 7 titles. These are Eli-Lilly, Caterpillar, John Deere, Humana, Johnson & Johnson, TJX and Morgan Stanley.

Numbers

Yesterday we will notice that the real estate numbers were less worse than expected and that this “reassured” a little. And that German PPI came out at 28% and dust, showing it wasn’t as bad as last month. Today we have German consumer sentiment, the SNB bulletin, new mortgage orders, oil stocks and US consumer confidence.

At the moment, futures are up 0.5% thanks to FedEx and Nike figures, and for the remainder, I remain convinced we don’t want much more. Also, since no one wants to, I’m going to turn off the keyboard and change the scenery. Investir.ch will close its doors until the 4th of January – because it’s not always easy to do all this getting up at dawn and writing even on vacation!

I take the opportunity to thank everyone. Thanks to everyone for being there, so many every morning – even if sometimes it wasn’t easy – so thanks to you readers, thanks to your sponsors, who follow us loyally every year, thanks to the world exchanges for donating I have so many things to talk to each morning and look forward to seeing even more of you next year for my eighteenth year of stock market analysis! I wish you happy holidays, enjoy and see you in 2023!

If everything goes well !

Thomas Veillet
tv@invest.ch

“Don’t be afraid to give up the good to pursue the great. -John D. Rockefeller

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