Wall Street Kitchen

Before I go any further in this column, it is my duty to wish you a great year as it is the first of the year. Best wishes for a slightly better stock market year than the one we just had, and best wishes for the rest. Well, now that “that” is done, we can start talking and talking about the wonderful world of finance, and I’m warning you right away; If you think things have changed since last year and we’ve worked out our old quirks about inflation, recession and the color of Powell’s necktie, you might as well go back to the mountains and go skiing. Finally, if there is snow.

January 9, 2023 vote

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New year, nothing new

As every year at Christmas, we have – sometimes – a burst of hope and a desire to tell ourselves that everything will change with the arrival of the new year and that we will try to do better than last year. Thinking a little more and trying to see a little further than the next 15 minutes. Unfortunately, the start of the stock market year is a bit like making New Year’s resolutions. In general, on January 15th, it has already been calculated and the fitness subscription has already been transferred to profit and loss. Also, we are already back in 2022 mode after a two-day trade in 2023 on the financial front.

The only topic not yet discussed in the financial media is the war in Ukraine. As much as we were filled with all of this last year, the first 9 days of 2023 were completely topic-free. It’s official – in the financial world – nobody cares what happens there. A few months ago, we could not take a position without integrating that “WAR ON THE DOORS OF EUROPE”, until the Chinese were released by their own government after three years in prison. Ukraine and more interested in the queues in front of Bernard Arnaud’s stores on the streets of Paris. After all, a Vuitton handbag is still cooler than the 214th blank check that NATO signed in favor of the Ukrainian military to get maximum views on Twitter.

CAC and handbag

Last week we celebrated the New Year and also the Chinese New Year a little early. In any case, it was a party in the village in Europe, and if we look at stock market performance forecasts released by investment banks and other financial analysts, we can say that the CAC40 is more than half way through 2023. 10% growth is the maximum we expect this year (about the average performance expected by experts), France is already more than half way there and what will we be with the rising pace. can do with the Manu index for the rest of the year. Normally, CAC should have reached 10% year-on-year since Tuesday. So that ; either it will be very boring in a year or it will go out like a light…

That’s why we started the year on a high note in Europe. First of all, because China will consume and there will be a panty party at LVMH, Kering, Hermès, Richemont, Swatch, Bulgari and other teams all year round. And then, because we realized the price of gas was going up in smoke. It farted so much that it is even below the levels it achieved during the Russian occupation. Therefore, such cheap energy can only be beneficial for the European economy. And that’s without counting the cash injections that Dame Ursula of Qatar has put in to support the European Commission. In short, the first week of the year was very cool for Europe. In the absence of a baker.

The US is not at the same pace

On the other hand, it was a little different for Americans. First of all, they are less affected by the Chinese landing in Europe and more worried about the possible Chinese landing in Taiwan. At the same time, it should be noted that American markets remain obsessed with the problem of inflation, rising interest rates and the coming recession. Or not. During the first part of the week, Americans were very worried about the problem of rates not falling in 2023 – something that was more or less confirmed in the minutes of the FOMC meeting published last Wednesday – some experts began to suggest that the higher the market, the more the Fed will raise rates. . We begin to draw parallels between rising markets and inflationary forces. And suddenly fear arose in us: what will happen if the FES does not lower the discount rate again???

In addition, when the ADP version of employment figures were released, we realized that they were much stronger than expected. Very strong. This suggested that the Fed was not considering easing interest rates under these conditions. But this was without taking into account the improvisation and interpretation ability of the “experts on Wall Street”. Last Friday we got another master trick. Once again, we’ve managed to show we’re concerned about the employment issue and the risks it poses to the future of interest rate hikes, and secondly, we’ve managed to turn the tide for a mysterious figure in the middle of many other numbers. , change the direction of the wind and hold the opposite of the speech we caught about 12 seconds ago.

Nothing has changed

If we had the slightest doubt, the slightest sense, that investors’ minds might change between midnight on December 31st and 12:01 a.m. on January 1st, the answer was right in front of our eyes last Friday: not at all! We were even dumber in some of our reactions than we might have been in 2022. Yes, the jobs numbers – non-farm payrolls – came out last Friday. They were clearly stronger than expected – which was not good news for interest rates – which showed that employment was still strong, while the Fed made it clear to markets that employment was not going to calm down, that it should not be discounted. to ease the pedal on rates.

BUT EURÊKA, in the middle of these rotten numbers, we discovered a very strong secondary figure for the Fed. A secondary figure showing a slowdown in wage growth. And that was the magic formula. It’s like we found a recipe for weight-loss chocolate cake and French fries were a dietary acceptable vegetable for a no-starch diet. That’s why the slowdown in wage growth was KEY. The answer to all our questions and doubts. While on Thursday evening we were wondering if the Fed would cut rates again before 2030, here on Friday afternoon, according to a number that usually nobody cares about, we are already talking about a “FED pivot” and a possible rate hike in 2023 We heard talk about the discount. No, seriously, I had to check my diary this morning to make sure it was in 2023, because given the way the markets have behaved since January 3rd, I’m not too far off to think we have an extra month left in 2022. …

in Asia

That is, nothing has changed. Here we are in 2023 and nothing has changed. Japan closed this morning, Hong Kong rose 1.7% and China rose 0.5%. China’s military exercises in the direction of Taiwan do not worry anyone. Everyone knows that China will never dare to attack Taiwan. So the markets don’t care and continue to ride the wave of China’s reopening. I don’t know how many dollars the average traveling Chinese will spend in Europe, but we have a clear impression that we are counting on it to revive all the economies of the world.

As for gold, it continues to start the year with a bang and is close to $1,900. Finally, it can really go up to $4,000. Oil has not benefited from China’s reopening as much as it had hoped. Crude oil is trading at $74.67 this morning, and it appears that Chinese travelers are traveling by sailboat or electric scooter. But not in anything that consumes fat anyway. If everything wasn’t at prices for months. The good (or bad) news is that famous fund manager Pierre Andurand posted a chart on Twitter. A graph comparing today’s oil to 2006 oil. If we believe this comparison, we are at the beginning of a barrel explosion. Looking forward to getting stock within 6 months. We are still in a deep coma regarding Bitcoin and the cryptocurrency is at $17,200.

News of the day

Other than the fact that the Brazilians gave us a remake of Trump’s departure, but there’s not much to say in Brazil this morning. So, yes, there is a “NEWS OF THE DAY ABOUT MUSK” because in the Tesla stock manipulation lawsuit story, he asked for the lawsuit to be filed in Texas, not California, because he thinks the local press won’t. like him and can influence the judges. As you can see, we have some really first rate news this Monday morning. Otherwise, we note that Jack Ma regained control of the Ant group, and Ali Baba has been on the rise ever since. Jack Ma, who disappeared after being brainwashed by Chinese government medical services.

This morning, there’s also Goldman Sachs, which announced 3,200 layoffs planned for this week. A major American investment bank “realized” that some of its employees were costing them too much. It’s worth paying for expensive advice boxes to count the number of PQ sheets left in the toilet and to be “surprised” by the costs incurred by economics and finance people at Harvard. For the rest, we’ll still be talking a lot about banks, as the quarterly editions of bank stocks begin at the end of the week! Expectations are high given the interest rate hike, we will have to not disappoint.

Economic figures

On the economic numbers side, there will also be Switzerland’s unemployment numbers, France’s Trade Balance, Europe’s Sentix Investor Sentiment and Europe’s employment numbers. For now, futures are up 0.3%.

This start of the year is going like a charm, and it’s going really well. Maybe a little too well. Hopefully it will continue. Anyway, I wish you a very good Monday and a very good week in addition to a happy new year!

See you tomorrow because he’s out for a walk again!

Thomas Veillet
invest.ch

“I never dreamed of success, I worked for it. – Estee Lauder