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Buenos Aires-on-Thames
Sunak’s sad holiday season, market recap and outlook
The only thing getting pummeled harder than US men’s soccer is crypto, which has historically seen a weak December following declines in November. Wall Street is plowing into the bond market, China’s reopening is starting to take shape, and the Fed is reportedly making up targets.
Let’s dive into the market news some might’ve wished you’d missed, and preview the week ahead.
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Bad News Dumpster Dive
Market movers like to bury their news, so we've decided to excavate them.
Equities:
Blackstone limited withdrawals to investors. The giant said that redemption requests have already exceeded its 5% quarterly limit, which had $69 billion of net assets at the end of October (Reuters)
Apple makes plans to move production out of China (WSJ)
Snapchat ordered employees back to the office 4 days a week (Fortune)
Elon Musk has said that some advertisers have resumed ad spend on Twitter, including Apple (Bloomberg)
McLaren is in talks with shareholders for at least £250 million in funding to strengthen its balance sheet following delivery delays to its Artura hybrid supercar (Sky News)
Morgan Stanley CEO says he “wouldn’t bet against” Elon Musk (TheStreet)
Crypto:
Regulation:
Maxine Waters, Chairwoman of the House Financial Services Committee, resolved to cold-tweeting SBF on Twitter thanking him for his transparency and inviting him to an upcoming committee hearing.
CFTC Chair Rostin Behnam has urged Congress to pass legislation giving his agency spot market oversight of crypto platforms (CoinDesk)
A South Korean court dismissed a request from prosecutors for an arrest warrant against Terraform Labs’ co-founder Daniel Shin (Bloomberg)
The Pentagon failed its fifth consecutive annual comprehensive audit, with auditors concluding that its internal systems and processes for tracking weapons and finances were not sufficient (Reuters)
Iran is reviewing its decades-old law that requires women to cover their heads, as it struggles to quell more than two months of protests linked to the dress code (AFP)
New Jersey marijuana regulators approved rules for “public cannabis consumption areas,” bringing the state one step closer to providing the social use option to adults and patients (Marijuana Moment)
M&A:
Archegos founder Bill Hwang asked a judge to toss out fraud charges against him because prosecutors allegedly engaged in “deceitful” conduct (Bloomberg)
Skky Partners just hired David Brisske from investment firm Permira as a managing director. Co-founder Jay Sammons says they intend to hire more investment professionals "soon" (Yahoo!)
Madison Square Garden Entertainment submitted the initial registration for the potential spin-off of its traditional live entertainment and MSG Networks business (Press Release)
Crown Holdings adopted a poison pill amid Carl Icahn stake news (Press Release)
ACI Worldwide subject of takeover speculation (Seeking Alpha)
CoreCard reportedly drew takeover interest from Goldman Sachs (WSJ)
Ibex Holdings is attracting takeover interest from private equity suitors including CVC Capital (Bloomberg)
Lee Enterprises' potential suitor Alden Global Capital has abandoned its bid (Axios)
Radius Global gained on reports of takeover interest (Seeking Alpha)
Prediction Markets Corner:
Almost every asset class in the world reversed in November.
At least $25.7 billion of clean-energy factories are in the works, and the jobs they generate are winning over more Americans to solar, batteries and EVs.
Challenger job cuts exploded higher, jumping 416.5% YoY (up 127% in November)
Gas prices have fallen to their lowest level since February. Prediction markets anticipate gas prices this week to decrease back around to $3.35 per gallon.
Home prices in 75 cities that used to rank better than the national average for affordability are now worse than average.
Market Outlook
News to know for the week ahead
An unhappy holiday season for UK Prime Minister Rishi Sunak is all but guaranteed. British unions are reportedly planning to coordinate their strikes in the National Health Service, while the railways are set to grind to a halt during the peak pre-holiday period. Although Sunak and his chancellor Jeremy Hunt stabilized the pound, a wage-price spiral offers the prospect of “Buenos Aires-on-Thames” — not Brexiteers’ preferred Singapore model.
Nearly every market currently trades at or below median historical valuations. Despite the historic fall, stocks have quietly rallied almost 10% in the last month amid cautious optimism that the worst of the inflation shock is over. In the coming week, investors will watch data on the service economy, producer prices, and inflation expectations for further signs of how rate hikes are affecting the economy. Fed policy makers won’t be speaking ahead of the mid-December meeting, when the central bank will update its economic projections.
ECB officials will study the recent slow in inflation at a scheduled meeting on Wednesday, which is their final gathering before the December 15th decision on rate hikes. Euro-zone inflation slowed for the first time in 1.5 years, offering partial hope to the ECB in its struggle to quell the worst consumer-price shock in a generation. The reading for November was 10%, less than the 10.4% median estimate. The drop, from 10.6% in October, was the biggest since 2020 and was thanks to slower advances in energy and services costs, even as food prices grew more quickly.
$60 ceiling on Russian crude exports begins Monday. The US is seeking to reassure oil market participants before the Russian price cap hits. Biden administration officials are trying to convince investors and factories that the impending price cap won’t trigger supply disruptions and price volatility after it kicks in.
Bonds continue to rally in anticipation of the upcoming FOMC. More than $1.5 billion poured into the $28 billion iShares 20+ Year Treasury Bond ETF (TLT) on Thursday, the second-largest one-day inflow in its history. Over half of that influx can be tied to a single trade: roughly 8.1 million shares worth $851 million. The massive block trade comes a day after Jerome Powell’s speech last Wednesday to say that the time to dial back the pace of interest-rate hikes could come at this month’s policy meeting. That potential slowdown, combined with fears of a looming recession, sparked a sharp rally in bonds that traders anticipate to continue up to the Fed meeting.
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