Here’s a look at how Arm $ARM, Instacart $CART, and Klaviyo $KVYO traded from their IPO pricing over the last week
Big opens then lots of selling. Source: Bespoke
The main driver for stock returns
Source: BCG, Morgan Stanley Research thru Compounding Quality
According to Bloomberg chief economist Anna Wong, online betting markets see a 69% chance of a federal government shutdown starting Oct. 1st
So what could be the effects on the US economy and job market? Below chart shows the effects on GDP depending on the duration of the shutdown. - According to Goldman, a government-wide shutdown would reduce quarterly annualized growth by around 0.2% for each week it lasted after accounting for modest private sector effects. Goldman's baseline is that a shutdown could last for 2-3 weeks (the Trump government shutdown, the longest in history, lasted 35 days, from Dec 22, 2018 to Jan 25, 2019). - Meanwhile, Bloomberg also speculates that in an extreme tail event, the maximum hit to 4Q GDP would be a drag of 2.8% if the shutdown lasts for the entire quarter. Source: Goldman Sachs, Bloomberg, www.zerohedge.com
How to trade equity markets following the LAST FED rate hike?
BofA Harnett says it depends whether the economy is in inflationary or an inflationary period. When monetary policy needs to work harder to slow economy in inflationary era (e.g. 1970s/1980s), Dow Jones returns were most of the time negative in the 3 months and 6 months that followed the last Fed hike... However, in disinflationary period, markets returns were quite strong. So do you believe we are in an inflationary or disinflationary period? Source: BofA Global Research
The S&P 500 index dropped 2.9% over the week
That marked the third straight negative week and worst weekly performance since March. Is the Head & Shoulders pattern in the S&P 500 playing out? Source: barchart
The worst weekly performance since March for the sp500...
Markets like clarity and hate confusion. The first half of the year was about disinflation + AI buzz. Now the markets are not sure about what's next. And some of the confusion seems to be coming from central banks... This week we got a very confusing message from the #fed: a pause in rates, higher dot plots in 2024 but also calling a soft landing NOT a base line expectation, hence sharing fears that keeping real rates for a long period of time creates some downside risks for the economy and the markets... The combo higher inflation risk + downside growth risk is not a great value proposal for Mr Market at the time you can nicely paid by keeping your assets in money markets funds... Source chart: Bloomberg
Sector fund flows
Long-only institutional & retail investors are all-in overweight tech and meaningfully underweight energy. Will elevated tech valuations, rising long-end yields, and rising oil prices trigger a squeeze in positioning? Source: The Daily Shot, EPFR, DB
Another Powell Fed Day
Incredible how closely today's action tracked the average. Source: bespoke (read "today" red line as yesterday)
