2022 IN 3 CHARTS….
Happy New Year, I hope that this note finds you doing well!
I will be in Miami next week for a couple conferences. If you find yourself in the area it would be great to connect and if you have any suggestions for restaurants in South Beach that would be appreciated too!
DON’T FIGHT THE FED
The phrase “Don’t Fight the Fed” was coined in 1970 by Martin Zweig, a finance professor and famed investor, to explain the strong correlation between Federal Reserve policy and the direction of the stock market.
The Federal Reserve increased its target rate 7 times from 0.125% at the beginning of the year to 4.375% as of December 14, 2022 (see chart below). This is one of the fastest series of rate increases in the history of the Fed.
The Fed increased interest rates, the yield curve shifted higher and the curve inverted. An inverted yield curve is a strong predictor of a looming recession, if we are not already in one.
Higher discount rates translates into lower equity valueations. Natural resources and the US Dollar, which are highly correlated, were the bright spots among an otherwise dismal year for public and private markets, with the S&P 500 returning -18.11% and the Bloomberg Aggregate returning -13.01%.
Definitely glad to put 2022 behind us, but….
BONUS CHART:
There have been more layoffs in the technology sector in the first 20 days of January 2023 than there were in the first six months of 2022 combined, according to job-cut tracker Layoffs.fyi.
It will be interesting to see how 2023 unfolds, my general sense is that we will likely have a mild recession in the United States and Canada. I think it will be worse in China, the UK and Europe, and it is already very difficult in Central and South America.
The United States is still the least dirty shirt in the hamper.
PODCAST / VIDEOS:
Kicking off the new year I thought it might be helpful to recap a few podcast that I listen to regularly and find to be very informative. Some are dailies, some are weeklies. The titles link to the pod home pages.
WALL STREET BREAKFAST: This is a daily podcast produced by Seeking Alpha. I have added this to my morning rotation. It provides a quick overview of the days upcoming financial news in about 10 minutes.
FINANCIAL TIMES NEWS BRIEFING: This is a daily podcast with a more global slant on the days financial news, it’s also about 10 -15 minutes long.
REAL VISION DAILY BRIEFING: This is a great daily recap on the markets and is about 30 minutes long. There are also some great deep dive episodes and there is a separate Crypto channel which I find to be very informative.
ALL IN PODCAST: This podcast is moderated by Jason Calacanis and is a great weekly recap of current events in finance, technology and politics. Highly recommend.
CONFERENCES:
361 ALLOCATORS CONFERENCE: JANUARY 27 - 30, NAPLES / MIAMI -Great conference for SFO / MFOs to swap info on managers that they are investing in today. I will be at the cocktail party in Miami Sunday January 29.
AIMA PRIVATE CREDIT INVESTOR FORUM 2023: JANUARY 30, MIAMI - This is a great conference for institutional investors interested in meeting other managers and allocators in the private credit space. I’ll be attending and available to meet.
GLOBAL ALTS 2023: JANUARY 31 - FEBRUARY 2, MIAMI - This is a great conference for managers and allocators to meet, speed dating style, one on one. If you are attending, feel free to DM me and we’ll connect for a coffee or drink.
I hope that you enjoy the letter as much as I enjoyed writing it and please feel free to share the links with friends and associates. If you are interested in startups and are an accredited investor you can join over 750 other backers that follow my AngelList syndicate here.
Stay safe and stay well. Sean Bill / MacroCrunch / Twitter