GDP Revised Lower, Labor Market Still Tight

Good Morning Everyone!

Wells Fargo (NYSE: WFC) just laid off hundreds of mortgage bankers, including some top producers who brought the bank more than $100 million in loans last year. 

Is Wells Fargo making a huge mistake?

Prices as of 4 pm EST, 2/22/23; % YTD

MARKET UPDATE

Stock correlations

• Fading

• Becoming slightly less macro-driven

• Good news for stock pickers

FOMC minutes

• "Almost all" officials favor 25bps next meeting (Mar 22)

• "A few" want 50bps

• Forget about pivot - not willing to give up progress on inflation

• Market expect peak funds rate ~5.36%

• Number of mentions of "inflation":

This morning’s data:

• Labor market

  • Still tight

  • 192k initial jobless claims vs. 200k expected (prev. 195k)

  • Continuing claims also lower than expected

• Q4 GDP

  • Revised lower

  • Second estimate 2.7% vs. 2.9% expected

• Core PCE

  • +4.3% vs. 3.9% expected (prev. 4.7%)

US housing

• Weak mortgage demand data follows weak sales

• Purchase index -18% last week (biggest drop since 2015)

  • At lowest level since 1995

• 2022: US housing market lost $2.3 trillion in value

  • 4.9% drop - biggest since 2008

  • Home prices in Dec 22 still 6.5% higher than Dec 21

O&G prices

• US nat gas has dropped 80% since August

  • Prices at pandemic-era lows

• EU gas prices now lower than before Russia invasion

• Same with Brent crude:

Nvidia (NASDAQ: NVDA)

• Beat top and bottom lines

• Both declined YoY

• Q1 sales forecast topped estimates ($6.5B vs. $6.3B)

• Continues to benefit heavily from AI rush

Alibaba (NYSE: BABA)

• Topped EPS and smashed sales estimates

• Gross merchandise volume (GMV) decline mid-single-digit YoY

• Cost controls have paid off: net income +69% YoY

• Expects strong demand on China reopening

Earnings

• Alibaba

• CBRE Group (NYSE: CBRE)

• Moderna (NASDAQ: MRNA)

• Cheniere (AMEX: LNG)

• Lloyds (NYSE: LYG)

• Vipshop (NYSE: VIPS)

• PG&E (NYSE: PCG)

• Genuine Parts (NYSE: GPC)

• DISH (NASDAQ: DISH)

• American Electric Power (NASDAQ: AEP)

• Quanta Services (NYSE: PWR)

• NetEase (NASDAQ: NTES)

• Newmont (NYSE: NEM)

• Wayfair (NYSE: W)

• Bath & Body Works (NYSE: BBWI)

• Domino's (NYSE: DPZ)

• Papa John's (NASDAQ: PZZA)

• Rent-a-Center (NASDAQ: RCII)

• Atlas Air (NASDAQ: AAWW)

• Steve Madden (NASDAQ: SHOO)

• Yeti (NYSE: YETI)

CRYPTO UPDATE

Silvergate Bank (NYSE: YETI)

• Wall Street's most shorted stock

• 73.5% of available shares being sold short

• Trails Carvana (NYSE: CVNA), Applied UV (NASDAQ: AUVI), Bed Bath & Beyond (NASDAQ: BBBY)

• Down +90% from 2021 peak

Bitcoin (CRYPTO: BTC) whales decline

• Number of whales (wallets holding >1k BTC) at lowest since August 2019

  • 2,027 whales

  • Each whale holds ~$25 million

• Wallets holding +1 BTC still rising (close to 1 million)

• Number of mega whales (+10k BTC) steady