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• Scum Bag-Fraud officially pleaded not guilty; even my dog saw that one coming
• Turns out 0-6 wasn’t just my record for getting numbers at the bar last weekend; it’s also Kevin McCarthy’s record for House Speakership votes
• Salesforce is cutting its…sales force…by 10%, aka 7,000 livelihoods
• GE cut healthcare, not from employees (yet), but from its entire business, and shares ripped on their first day of separate trading

Wait Just a Minute…

JPow demands your attention. Yesterday, the often referenced but rarely read minutes from the Federal Open Market Committee’s (FOMC) last meeting dropped, giving us all another way to seem smart in front of our friends.

The minutes from December fit a similar vibe as the one set by Chair Powell immediately following the latest rate hike, where he made continuing hawkishness as obvious as the sun in the sky.

But, then again, this is also the man who “assured” us that ‘22s hikes wouldn’t include any bumps larger than 50bps. Despite solid attempts at Fedspeak, JPow often tells it in a way that real people can actually understand, which often gets him in trouble.

To get specific, let’s check out a few key turns of phrase:

• “No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023.”
• “Recent data suggested that real GDP growth in the second half of 2022 was stronger than previously expected, but economic growth was still forecast to slow markedly in 2023 from its second-half pace.”
• “...risks to the inflation outlook were becoming more balanced”

While that’s just a light dusting of this 12-page, single-spaced, double-sided, deliriously boring read, it’s a decently okay summary of the general *vibe*, which is really all your portfolio cares about.

FOMC officials took the chance to double down on the need to maintain a tight policy for longer than may have previously been expected. Rate hikes weren’t all it’ll take, but keeping those rates high is crucial in killing the structural nature of inflation.

Moreover, while participants didn’t seem to anticipate wide-ranging employment cuts, there certainly was a more than healthy appreciation for slowing GDP going into this year. 2022 ended on a high note, with upward revisions to GDP throwing a party for a few days, but JPow and the gang are still doubling down on a period of slower growth in the near future.

And while the Fed Minutes do give us a glance into the psyche of the Central Bank, they’re faaaar from gospel. The Minutes are a prime example of what we call the Fed’s tool of “forward guidance,” which is essentially just the Fed telling us what it’s *thinking* about the future.

More than anything, forward guidance gets most of its benefit by inducing new changes the Fed would like to see in the future. In other words, if the Fed says, “we’re gonna keep rates higher than Wiz Khalifa,” the market will adjust accordingly rather than panicking once the move is actually made.

It’s a way to temper Mr. Market. Does it work? Kinda, sorta, not really…but it’s something!

We’ll see how it goes, but one thing is confirmed: 2023 will be a fun ride.

Alibaba ($BABA) ↑ 13.01% ↑

• Pigs are soaring through the skies of China today as President Xi Jinping did the impossible—chilled out a little bit on tech companies.
• Ant Group, a massive fintech “startup” 33% owned by Alibaba and also founded by tech beast Jack Ma, got the thumbs up from China’s top banking regulator to expand its capitalization by $1.5bn, a doubling from current levels.
• It’s not so much the ‘what” that matters here but the “what next.” Expanding their registered cap is cool and all, but it makes little difference, and certainly far too little to send the $275bn Alibaba up 13%.
• Still, it’s what this signals that investors took to heart. Xi and the CCP have implicitly indicated that the series of monstrous crackdowns on these firms might be cooling off a bit.

Coinbase ($COIN) ↑ 12.20% ↑

• It’s not often that you see a $50mn fine cause a share price to rally by double digits…but then again, it’s not often to see a firm as downbad as Coinbase.
• Shares fell a disgusting 85% in 2022. In 2023, investors decided to stop shooting themselves in the face and have sent shares up over 6.5% already, with all of that gain coming yesterday.
• Basically, Coinbase was on the naughty list for a bit as NY State sued the firm for egregiously bad KYC/AML policies (aka the boring sh*t banks do to make sure you’re not laundering money). Instead of a lengthy and expensive court battle, the parties settled on a $100mn settlement.
• $50mn will be paid as a fine, while another $50mn will be earmarked to get on Santa and NY State’s nice list this year, aka to strengthen internal compliance programs.