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• The NYSE is now blaming Tuesday morning’s “glitch” on short-sellers, the easiest target in the book
• Can’t stop, won’t stop. Just shut up and take my money. Tesla smashes financial records as it beats on the top and bottom line last quarter. Maybe there’s a direct correlation between Tesla’s performance and how distracted Musk is by his other ventures??
• George Washington would never stand for this. Global stock markets are absolutely Treading On Us this year and showing signs of chilling tf out
• For all you Fed apologists or haters out there, this is the website for you. No association, just great content, like the idea of rate movements working against other forms of QT (spooky)

Pardon My Inquisition…

Well, that was fast. Not even 4 months ago, all anyone could talk about was how clapped Europe was about to get by a looming recession. The U.S. view was a little less clear, but the vibes were similar.

Now, it’s all sunshine and rainbows. An FT headline even went as far as to say Europe was “set to avoid recession” this year. Strong words for a journalist. Someone must be getting paid to drug us all in our sleep or something to give us this selective, ubiquitous memory loss. Damn George Soros…

Earlier this week, S&P Global dropped their latest figures for a little reading called the PMI, or Purchasing Manager’s Index, for the U.S. and Europe. It’s a measure of broad economic activity with a benchmark of 50.

• Above 50 = expanding
• Below 50 = contracting
• At 50 = chillin’, vibin’, coolin’

On Tuesday, the report, known as the flash composite PMI, really got the bullish juices flowing. It basically serves as a preliminary reading of global manufacturing, sectioned by country and region, prior to each nation’s labor department dropping the official figures…if they have one.

Historically, the correlation between the preliminary from S&P and the official numbers tends to be almost as strong as Jack Harlow’s game. This past month, that reading hit 50.2 for the Eurozone, up from 49.3 in December. Yes, that means expansion and actually registers the first sign of growth in the reading since June ‘22. Maybe even more important in Mr. Market’s eyes, the reading beat consensus estimates of 49.8.

Shoutout to Germany because improvements over there contributed big to the region’s growth figures. As the world’s 4th-largest economy, it did its job. France and Great Britain, on the other hand, did not.

French manufacturing still improved, but not enough to outweigh their other economic woes. Great Britain, on the other hand, was an embarrassment to the continent. British PMI hit its lowest reading in 2 years as the BoE continues to roil the economy with rate hikes (sound familiar?) alongside growing worker strikes and falling demand from consumers.

Now to get to the country that actually matters, the U.S. was way more down bad than Europe overall. PMI rose to 46.6, still a contraction, but less so than December’s 46.2. Slower growth in the U.S. than in Europe is like seeing bigfoot…it doesn’t happen, and even when it does happen, we can just choose not to believe it.

In both the U.S. and Western Europe, services were the primary driver of PMI growth. Representing 2/3 of the U.S.’s economy, this is a solid sign until you consider that much of that increase is entirely attributable to upward-trending labor costs. Meanwhile, goos producers saw a steeper drop off than expected, continuing a JPow-induced downtrend beginning early last year.

And that’s exactly why JPow is between a rock and a rate hike. Experts argue that while falling production from goods makers is not the vibe, rising labor costs give JPow a leg to stand on for future rate hikes.

I’ll say it again for the people in the back. Isn’t this exactly what we want?? A slowdown in production is warranted after the U.S. played above its potential for the past few years, plus it’s a clear sign that rate hikes are working. Meanwhile, the Lulu-tight labor market has held up against rate hikes this whole time, with wages barely budging and certainly not going down. WHY IS MAKING MORE MONEY BAD?!

Okay, I’ll calm down, but there looks to be no reason why JPow couldn’t come out next week and say, “yeah, we’re seeing a mix of results, but things look to be heading in the direction we want. We’re just gonna chill at 4.25-4.5% for now.” Maybe that just makes too much sense, or maybe JPow reads this and needs some ideas…

MarketAxess Holdings ($MKTX) ↑ 10.25% ↑

• The silver medalist of returns earned in the S&P 500 during the 2010s decade (#1 was Netflix) was back in old fashion yesterday, ripping up over double-digits by close.
• MarketAxess, the standard-bearer for bond trading platforms, screamed higher on stellar Q4 numbers. The firm posted $1.76 EPS vs. the $1.73 expected while beating narrowly on the top line as well. Nicely done. *Shakes hands with stock*
• In case you were in a trauma-induced coma in 2022 (which, to be fair, was totally understandable by March), you know that volatility reigned supreme. Exchanges and trading providers like MarketAxess loved it. They don’t give a damn if you’re bullish, bearish, a liberal arts major, or literally anything; they just want bonds to trade hands.
• In the worst year for bonds in decades or even centuries, depending on how you measure, trading bonds is like being in California in 1848.

AT&T ($T) ↑ 6.58% ↑

• Meanwhile, the gold medalist for the most indebted company in the world also spent the day poppin’ bottles yesterday. Shares in AT&T boomed higher on an earnings report that wasn’t exactly good but sure was better than expected.
• EPS beat, revenue missed, but no one cared. All eyes were on subscriber growth, aka future revenues and, hopefully, future earnings. Churn (a measure of subscriber attrition) fell by a whole basis point, hitting 0.84% vs. 0.85% previously. We’ve said it before, and we’ll say it again; direction matters way more to investors than level.
• New phone subscribers missed, but overall subscribers beat the hell out of estimates, almost single-handedly leading to those gains. Maybe the firm can pay off that >$250bn of debt…someday.