October 11th, 2022
- Nov 21, 2022
- 3 min read
The financial information you need at your fingertips.
Welcome According to the official rules of UNO, you cannot stack reverse cards. Apparently those rules do not apply for Elon Musk's.
We hope you had a great thanksgiving and were able to spend some time with friends and family. It has been a very disappointing couple of weeks, months, and so on in the world of capital markets. Have a quick read if you want to appreciate being a business student watching from the sidelines.
Capital Markets: Public markets, IPO's, and private markets are flying lower than your thanksgiving turkey.
The U.S. stock market is heading towards its worst performance since the financial crisis in 09. NASDAQ and S&P500 2022 YTD performance has not been this bad since 2002.
The markets saw a short lived rally starting October, even though the S&P 500 dropped nearly 10% in the month of September marking its worst performance month since the start of the pandemic.
Venture Capital has come to a holt as funding has dropped by 33% in Q3 (and 53% year over year). To add on, the US IPO market has dropped to a low $7.2 billion raised in stock offerings in 2022; along with 87% of companies that went public 2021 have dropped under their listing price. Basically, the private sector is struggling to raise capital, going to the public market is hopeless right now, and the companies that have in the past couple of years are swimming naked. Perhaps the M&A sharks will start to come out.
Uber plans to have all vehicles fully electric by 2030. A new ETF is launching to bet against Jim Cramer investments, CNBC's Mad Money host. Porsche is going public with a valuation of €75 Billion. China dominating age of the battery despite US and EU effort to increase production of batteries. The EV battery market is expected to grow to $95 billion by 2028 due to the increase demand to decarbonize transport.
Fixed income:
Interest rate hikes has risen faster than ever before. Read further about it here.
In Canada, the 3-year mortgage rate is 5.39% (2.6% last year), and home prices continue to stay at record high prices. I guess it's a good time to be a student paying rent in a small town in Quebec. In the U.S., mortgage rates exceeded 7%, yet home prices dropped for the first time in 10 years.
Credit Suisse has investors talking after a sharp fall in its bonds and shares. The bank is under continued scrutiny for risk management failures and top leadership changes, but is insisting its performance will bounce back after strategic "re-vamp".
Commodities and World Currencies: OPEC+, an intergovernmental organization involving oil production outside of North America with members including Saudi Arabia and Russia, are reducing oil output by 2 million barrels a day (~2% of global supply).
For the past few weeks, Canada has suffered from a low flying loonie. This means imports from the United States will become increasingly expensive, which is problematic since they are Canada’s biggest trading partner. On top of record high inflation, the Bank of Canada now needs to deal with a decreasing currency sitting at a record 2-year low of 0.73 US cents for 1 Canadian dollar. This could be very problematic for many of the Canadian snowbirds this winter. In the 2000s, the Canadian dollar was trading for 0.63 US cents, compared to today’s price. While Britain tries to clean the bond mess they have created and American stocks keep falling, the American dollar keeps climbing. The US dollar is pulling a Mayweather against all currencies put against it. Oil is sinking, Gold is melting, Russia keeps bombing and rates keep jumping. American investors are anxious about the economic weaknesses and nervous about what Powell might say next. New rules caused Chinese chip stocks to fall. Companies must now apply for licenses, a move designed by the US to attempt to control Chinese dominance in this industry.
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