JPow Speaks…but SBF Speaks Louder | The Daily Peel | 12/1/22

• The U.S. is finally rallying the troops (figuratively and literally) in support of standing up to China
• Michael Saylor is ready to throw some heavy hands with the ECB after the central bank says BTC is headed for “irrelevancy”
• State Street and Brown Brothers call off the marriage nearly at the altar
• Letter bombs are the latest threat to European security, as these “packages” arrive at a Spanish arms company and a Ukrainian embassy

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JPow Speaks

On Tuesday, we warned you that markets would have all eyes on Mr. Jerome Powell yesterday…

And for once, we were actually right. Now, it was pretty obvious that Chair Powell was gonna run markets yesterday (even more than he already does), but nobody exactly which direction he would run them.

Turns out it’s up. Very up. Wednesday’s lower open and choppy morning session was quickly and violently put to rest by the chairman himself giving off the much anticipated “we’ll cool it with the rate hikes” type vibe.

Powell’s speech, excitingly entitled “Inflation and the Labor Market,” was overall pretty bearish on the near-term future of the economy and financial markets. But no one had time to care because as soon as JPow dropped the line “The time for moderating the pace of rate increases may come as soon as the December meeting,” the buying ensued.

Using the classic language of Fedspeak, Powell essentially said the following:

• We might be able to chill on the size of rate hikes this month
• We will probably have to keep rates at elevated levels for longer than we previously thought
• Wage growth needs to revert to around 2% annually to put the nail in inflation’s coffin
• Like wage growth, labor demand needs to chill out, too
• We’re still super uncertain about what inflation and the overall economy may do

The full speech obviously goes far more in depth into the factors driving those conclusions (in a much less idiotic way, too), but at the end of the day, those five factors were essentially what markets heard.

Still, with 30-Year fixed mortgage rates still well over 6%, 1.7 open jobs for every unemployed person, and PCE “Core” inflation remaining triple that of the Fed’s target, don’t let yesterday’s market reactions get you too excited yet.

The overall message of the speech was one of battening down the hatches—not necessarily because economic conditions are expected to worsen, but because the 400+ PhDs at the Central Bank and we have absolutely no clue what to expect. But hey, at least they’re honest.

Source

Xpeng Inc. ($XPEV) ↑ 47.28% ↑

• Normally, ~50%+ up days are reserved for acquisitions and certainly not the result of pure garbage earnings reports…
• But China’s homegrown EV maker Xpeng showed us yesterday that you really can never say never, especially in a market as desperate for growth as this one.
• Xpeng stepped in dogshi—I mean, dropped their latest earnings yesterday morning, reporting sales, EPS, and guidance that all came up woefully short. But shares still rose almost 50% (bc who tf knows why), so I’m sure investors weren’t too upset.

Airbnb ($ABNB) ↑ 7.09% ↑

• If you thought staying in someone else’s home while paying exorbitant fees for things as basic as cleaning while you’re still expected to do most of the cleaning yourself was great, well then you’re gonna love this!
• Now, Airbnb is allowing you to do the very same thing, but this time, in someone’s apartment!
• Honestly, I kinda thought this was a thing already, but I guess not. Airbnb has been reading The Art of the Deal and has made some money moves around getting landlords to be more chill around Airbnb Apartments. This brand-new market segment gave shares an additional boost yesterday, leading to a 7.1% pop.