登录查看更多内容

SignalPlus Morning Briefing?—?16 May 2023

SignalPlus

Democratizing Options for Digital Assets

发布日期: 2023年5月16日

Another motionless Monday session in US markets saw both bonds and equities gyrate listlessly through the NY session, though?China tech stocks did see a 4% jump on the day on reports that Michael Burry (of Big Shorts fame) has added significant longs in JD and BABA?to be his largest holdings, representing 20% of the total Scion Asset Management portfolio. This comes at a time when the average HF manager has shed their China positions significantly since the turn of the year, but Mr. Burry himself is certainly not shy about taking contrarian bets.

On the data side, the erratic Empire State manufacturing plunged 42.6 to -31.8, much weaker than expected, registering the largest decline since April 2020 and sits at the lowest levels in 3 years. Weakness was broad-based, though with particular weakness in new orders, which collapsed to -28 vs +25 last month, as well as shipments to -16.4 vs +23.9 prior.

Markets was otherwise focused on the ongoing debt-ceiling discussions, where President Biden announced that he is scheduled to meet with House Speaker McCarthy for talks just before his planned trip to Asia and Australia on Wednesday. Shortly after the market close,?Secretary Yellen reiterated her estimate that the government could run out of cash as early as June 1, putting pressure on Congress to strike a deal well before then, as the?House is going to be on recess from May 25th to June 5th. That leaves basically just over a week and a half to settle on final negotiations, with the 2-sides still quite far apart (McCarthy: “talks have been unproductive), leaving a likely brinksmanship into the 11th hour.

It is important to note that in the event of the debt ceiling breach, the?Treasury will likely prioritize interest payments over all other required spending, and thereby putting government employees and services effectively in furlough. With?government services at around 7% of GDP, any effective stoppage in government spending will be a significant drag on the economy, and the White House has now released their own estimates to be between a -0.3% hit to GDP in a short brinksmanship, to a massive -6.1% collapse in an unlikely protracted standoff.

Back on the economy,?we have seen a recent loss in momentum across both inflation and economic surprises, with both gauges turning negative as per Citi’s estimates, thereby justifying the bond market’s premonition of an impending slowdown. Furthermore, the?correlation of fixed income vs equities has reverted well back to negative?and in familiar territory with the 60/40 crowd, with the Fed being much less of a shock factor in strong-arming bond yields higher than in 2022.

In crypto, long-only ETFs have seen a net outflow of about 85mm in May, reversing the inflows seen in April though total AUM remains above most of 2H22 levels. Majors continue to trade heavily with BTC on the verge of breaking $27k and ETH $1.8k, leading to long liquidations, while meme-coins have staged a squeeze over the past 12 hours in otherwise very quiet markets.