Tech sentiment declines
Investor sentiment has been getting flogged, as almost everyone must be aware by now from the news headlines, with the NASDAQ dropping by a quarter from the highs.
Plenty of the pandemic favourites - such as Netflix and Zoom - have lost up to three-quarters of their valuation.
Coinbase reported its results and fell dramatically again on underwhelming revenue after hours to a share price of $60, down from above $340 in November.
ARK's famous "Innovation" ETF has followed Coinbase in falling to under $40/share after hours today, having peaked at over $155/share early last year.
There's also been some volatility in crypto world after Terra's stablecoin, the world's 4th largest, broke its peg and crashed, while Bitcoin briefly touched below $30k yesterday.
Upstart Lending fell 40 per cent after hours, and many buy-now-pay-later stocks fell 30 per cent over the past 24 hours.
This suggests consumers binged on their stimulus cheques, and overspent on credit, but now the bills are falling due.
Goldman and Citi have announced that they are exiting the wild west SPAC business, as speculative sentiment has unravelled.
For those of us with more of a value bent there's been some belated gratification, with the energy sector now a clear outperformer since the 2020 meltdown, and Warren Buffett finally unloading the elephant gun in recent months to buy billions of dollars of Occidental Petroleum and other energy stocks.
Peakflation?
The interesting thing is that the Federal Funds rate has only reached 1 per cent (although US fixed mortgage rates have spiked dramatically over the past few months).
Consumer credit use has shot up at the fastest pace on record in the US, and there's been some significant demand destruction already.
In fact it's possible, if perhaps unlikely, that the US may already be in a technical recession.
Many commodity prices have also been getting walloped back down.
All of the talk of late has been about global inflation getting out of control, but Goldmans are now out revising their year-end personal consumption expenditures (PCE) inflation figures down for the first time since prices took off last year.
They are now growing more confident that both headline and core PCE inflation have already peaked in year-on-year terms.
Source: Goldman, Hatzius
That doesn't mean there's no inflation around - these revised figures might still imply quite a lift in core prices over the next two years of up to, say, 8 per cent - but we might start to see some of the more alarming inflation predictions tapering off from here.
Tech investors are probably hoping so - one to watch with interest this week.
