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The Latest Movements in the Markets

Nadine Terman Solstein Capital

As an investor, keeping on top of the global markets is integral to long-term success. However, this isn’t always a goal that’s so easy to achieve. Indeed, markets for both stocks and bonds can change drastically overnight, with news flow running 24×7, making it understandable that many people miss out on the most significant movements overall.

Fortunately, Nadine Terman and Solstein Capital state that there are ways to stay up to speed in order to optimize investment processes.

The Latest Market News to Keep in Mind

While luck certainly can be helpful for investment success, having an investment process along with educated knowledge of the current markets are more important for long-term investment success rates.

Nadine Terman of Solstein Capital says that investors can sign up for a free digest of key investment content through Longbow Trade Signals’ Arrows:  She tries to make investment news enjoyable to read for a wide variety of investors each morning when the markets are open.  She shares a few examples of recent news here.

Lithium Prices Fall

The price of lithium, a key component in electric vehicle batteries, has been declining after a period of significant strength.  Given a decline in EV sales in China, alongside the Lunar New Year holiday, investors have become concerned about not only the commodity’s price but also the commodity producers.  As such investors are closely watching lithium mining stocks, including Albemarle, SQM and Livent.

Stock Market Crash

A considerable worry for many investors is the risk of an upcoming stock market collapse. Experts from several large financial institutions are recommending caution to investors after the rebound in risk assets in January.  Part of the concern is that both equities and bonds have been declining together in February.  Historically, when equities declined, bonds would increase in value and provide a risk management buffer for portfolios.  In periods of higher inflation volatility, though, investors have experienced both equities and bonds declining in value, which negatively affects portfolio returns and removes a key risk management level for many portfolio managers.  With hotter than expected inflation readings in the past few weeks, investors have become more concerned, and inflation volatility has remained at higher levels.

Bond Yields Rising

As investors consider alternatives to the global equity markets, increasingly they are becoming more interested in fixed income markets.

Bond yields have been rising as of late, largely thanks to the increasing strength of labor, a solid economy, and higher inflation readings.  The PCE price index rose 0.6% month over month in its most recent reading, the most since June 2022.  Personal spending was up 1.1%, adjusted for prices.  Thus, the inflation softness reported at the end of the fourth quarter of 2022 seems to be more of a head-fake right now.  Investors expect the Federal Reserve to continue to raise rates, which are enabling bond yields to rise further.

Nadine Terman Solstein Capital

China’s Red Lines

There are increasing geopolitical tensions between the US and China.  The US has warned China about providing ammunition or other military assistance to Russia and is considering additional restrictions on technology transfer and usage.  These warnings come on the heels of the Chinese balloon in US airspace just a few weeks ago.  In response, China warned the US’ top diplomat in Hong Kong not to cross “three red lines”, namely threatening China’s national security, infiltrating politics in Hong Kong, and slandering or damaging Hong Kong’s development prospects.  Investors should continue to monitor these and prospective geopolitical tensions between the two countries, as they often negatively impact risk asset prices.

Final Thoughts

Global markets can move meaningfully throughout the year, so keeping a watchful eye on the latest global market news is vital.  With market volatility rising over the past several weeks, it is natural for investors to consider risk management of positions and overall exposures in the context of their risk and return profiles.

Today’s Rundown

CIO Nadine Terman @SolsteinCapital details what she’s seeing in global financial markets.
Powell Speaks
The Fed’s Powell is going to speak publicly today at 12:30pm ET at the Economic Club of Washington, which means that the market could swing either way, depending on which Powell we get today: dove or hawk. We’ll see if he talks about Friday’s Nonfarm Payrolls strength and lower Unemployment Rate. The Fed’s Bostic, per Reuters, is pointing to a strong jobs market as a reason for rates to go higher for longer. Citi came out, per BBG, saying that the Fed may need to hike until 6%, which is definitely not baked into today’s valuations.
UK Developments
Although retail has been hit across the pond, consumers are spending on films and holidays, per Reuters. The BoE’s chief economist is talking a hawkish talk as well. They’ve already seen the biggest drop in housebuilding since the start of the pandemic in May 2020, per BTIG.
German Slowdown
German Industrial Production slowed to its lowest y/y (-3.9%) and m/m growth rates since March 2022. Traders, thus, are pricing in a less hawkish rate hiking pattern by the ECB. We’ve been watching the US Dollar carefully for cues, which strengthened recently. If the USD keeps going up, then we’re not in Goldilocks. If it softens from here, then we could be. So, this should still be on everyone’s radar. Calendar

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Pac Asia/Oceania Developments
Australia’s market was down, as their Fed equivalent increased rates and talked about more hikes. Japan’s markets were mixed. China was mixed. South Korea and Taiwan ended higher, with chip stocks rallying. India was down.
Oil Up A picture containing graphical user interface

Description automatically generated The rally keeps going after Saudi Arabia said it would increase prices to Asia in March, signaling demand strength.
Sports Fixing
BBG is out with a story about how gambling apps are aiding sports match-fixing. From snooker to handball to kabaddi (just learned what that is) to tennis, it’s supposedly hot and growing. With 1 in 5 adults betting on this year’s Super Bowl, according to the American Gaming Assoc, we’ll have to add that to the list too. We’ll be in the 4 out of 5 camp, with the only thing we’ll be fixing being wings.
A Missing $4bn
Investors and consumer groups are asking for a review of PWC’s audit of a Brazilian co called Americanas found to have a $4bn accounting shortfall.
Bed, Bath & Bankruptcy
They’re still trying to get investors to keep it from filing for bankruptcy. They need a cool $1bn +.
State of the Union
Biden is giving his speech at 9pm ET. Probably we’ll hear about taxes for billionaires, additional charges for buybacks, that balloon take-down, a 200% tariff on Russian aluminum, the debt ceiling discussions, and Harry Styles’ Grammy’s clown outfit. A picture containing text, person, loudspeaker

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