Burry In Q1: "Sell", Also Burry In Q1:

Institutional investors have been dumping stocks for the last 12 months. You have to ask yourself some serious questions when you see this.

Market

Prices as of 4 pm EST, 5/15/23

Macro

According to CME Group’s FedWatch Tool, markets give virtually zero (0.4%) chance that interest will remain at their current level of 5-5.25bps by the end of the year.

• Yesterday, however, Fed officials pushed back on those odds.

• Atlanta President Raphael Bostic said he doesn’t predict any rate cuts until “well into 2024”.

• Minneapolis Fed President Neel Kashkari (who is a voting member this year), meanwhile, said the Fed still has “more work to do…to bring down inflation”.

Total consumer debt has hit a new record at over $17 trillion.

• The fresh highs come despite the lowest level of mortgage originations since 2014.

• For the first time in 20 years, consumers failed to pay down their credit card balances in Q1.

• This suggests households are struggling under the pressure of higher prices.

Manufacturing activity in New York collapsed to its lowest level in 4 months, falling to -31.8 in May.

• Excluding the pandemic, the 42.6 drop was the largest ever.

• Relative to expectations, it was the 3rd largest drop on record.

• The biggest drops were seen in new orders (-53.1), shipments (-40.3), and inventories (-20.5).

• Was April’s 10.8 reading a headfake?

Zero Hedge

Stocks

Mark Kolanovic has reiterated his underweight call for US and EU equities.

• As the X-date approaches, the top JPMorgan strategist points to the debt ceiling impasse as a catalyst for stock market volatility ahead.

• He cites 2011’s debt event as a roadmap for investors if the “issue goes down to the wire”, as it appears likely to do so.

Activist investor Nelson Peltz has upped his stake in Walt Disney.

• After cutting its position by 34% by the end of March, his firm (Trian Partners) has purchased another 500k shares, bringing its total share count to 6.4 million.

• Peltz had backed off his push for a board seat in February after the company announced a $5.5 billion cost-cutting plan.

Here’s what a couple of Wall Street’s biggest names were buying/selling in Q1:

• Warren Buffett:

  • New: COF, DEO, VTS

  • Closed: BK, USB, RH, TSM

  • Add: AAPL, OXY, HPQ, PARA, MKL

  • Trim: CVX, ATVI, GM, CE, ALLY, MCK, AON, AMZN

• Michael Burry:

  • New: SIG, NYCB, ZM, COF, LILA, CI, WFC, WAL, NOV, DVN, PACW, HBAN, FRCB

  • Closed: BKI, WWW, MGM, QRTEP, SKYW

  • Add: JD, BABA

  • Trim: COHR, GEO

Energy

The US is planning to buy up to 3 million barrels of sour crude oil in August to restock its Strategic Petroleum Reserve (SPR).

• The government drained the SPR by 2.9 million barrels last week.

• At ~372 million barrels, reserves are currently at the lowest level since 1983.

Earnings

Yesterday’s highlights:

Nu Holdings NU: $0.04 EPS (vs. $0.03 expected), $1.62 billion in sales (vs. $1.39B expected).

• Net income reached $142 million on revenue which nearly doubled YoY.

• The company added 4.5 million customers in Q1, bringing its global total to 79.1 million.

Monday.com MNDY: $0.14 EPS (vs. -$0.28 expected), $162.3 million in sales (vs. $155.3M expected).

• The company revealed plans to open its platform to third-party developers to build AI apps.

• It also posted stronger-than-expected billings and raised its full-year revenue outlook.

What we’re watching today:

• Home Depot HD

• Sea Limited SE

• Baidu BIDU

• Vodafone VOD

• Keysight Technologies KEYS

• Tencent Music TME

• On Holding ONON

• Doximity DOCS

Top Headlines

• Icahn probe: Federal prosecutors in New York are investigating allegations made by Hindenburg Research against Icahn Enterprises.

• El Niño: The periodic weather phenomenon has the potential to disrupt global commodity markets.

• Russian oil: Exports of Russian oil hit their highest level since the invasion of Ukraine in April.

• Survey says: BofA’s latest global fund managers’ survey revealed investors are the most pessimistic they’ve been all year.

• Fed is done: Billionaire Paul Tudor Jones thinks the Fed is done raising rates and predicts stocks end the year higher from here.

• Settlement: Wells Fargo will pay $1 billion to settle a lawsuit accusing it of making misleading compliance statements.

• Super-app moves: Elon Musk’s Twitter made its first acquisition in job-matching tech startup Laskie.

• Musk subpoena: Elon Musk has been subpoenaed in a lawsuit against JPMorgan over its relationship with Jeffrey Epstein.

Crypto

Prices as of 4 pm EST, 5/15/23

• Secret deal: The SEC says Jump Trading engaged in a secret deal to prop up stablecoin TerraUSD.

• Feet dragging: The SEC has rejected Coinbase’s request for regulatory clarity saying it has no requirement to do so.

• Asset flows: Digital investment products saw their 4th straight week of outflows totaling $54 million.

• Correlation: The correlation between Bitcoin BTC/USD and Ether ETH/USD has dropped to its weakest since 2021.

• Active users: Despite rising transactions, the number of active addresses on the Bitcoin network is falling.

Deals

• Approved: Despite UK and US opposition, the EU has approved Microsoft’s $69 billion takeover of Activision Blizzard.

• Blocked: The FTC plans to block Amgen’s $27.8 billion acquisition of Horizon Therapeutics.

• Burger battle: Activist investor Engaged Capital is preparing to launch a proxy fight for 3 board seats at Shake Shack.

• Credit investing: Private equity group TPG will buy debt and real estate manager Angelo Gordon for $2.7 billion.

• VW sale: Russia’s government has approved the sale of Volkswagen’s Russian assets to auto dealer Avilon for ~$140 million.

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