Welcome back,

The US 2-Year Treasury yield is at its highest level since July 2007. But it’s not to be outdone by a hot week of Eurozone economic releases.

Let’s keep it concise.

Market Headlines 👀

• U.S. durable goods orders plunged to -4.5% in January (exp.) — their biggest monthly drop since Covid lockdowns in 2020.

• Pending home sales rose by 8.1% in January, crushing previous expectations of 1% (prior -1.1%). It marks the best month since June 2020.

• Twitter (TWTR) is said to have laid off 200, or roughly 10%, of its employees on Saturday.

• SpaceX and NASA postponed their planned launch to the International Space Station because of an issue related to an ignition fluid.

• Snapchat (SNAP) announced “My AI” for Snapchat+ subscribers in the US

• A US congressional panel was created to focus on the role of private equity, venture capital and Wall Street in China.

• Germany's 10-year yield hit its highest since 2011.

• TD Bank (TD) will pay $1.2B to settle a lawsuit over the multi-year Stanford Ponzi scheme.

• UK and EU strike Brexit deal on Northern Ireland protocol.

• Pfizer (PFE) is in early talks to buy cancer drugmaker Seagen (SGEN) for >$30B.  

• Apple’s (AAPL) secret “XDG” team, which dominated headlines last week for its work on a potentially life-changing glucose monitor, is reported to be on more than just a health feature.

• Canada bans TikTok from federal government devices citing security reasons.

• U.S. Treasury Secretary Janet Yellen made a surprise visit to Ukraine to reinforce U.S. support.

• Coinbase (COIN) announces it will suspend trading of Binance USD (BUSD), effective 3/13.

• Meta (META) released its own AI competitor last Friday with a “research tool” for building AI products.

• Fed Governor and voting member Jefferson revealed in a speech at Harvard today he believes “inflation is still too high” and rejects arguments for raising their 2% inflation target.

Earnings 💸

• Berkshire Hathaway (BRK.A):

  • EPS (adj.): $4.57k misses (exp. $5.64k)

  • Revenue: $78.17B beats (exp. $77.5B)

• Fisker (FSR):

  • EPS: -$0.54 misses (exp. -$0.42)

  • Revenue: $0.31M misses (exp. $3.18M)

• Workday (WDAY):

  • EPS: $0.99 beats (exp. $0.90)

  • Revenue: $1.65B beats (exp. $1.63B)

• Zoom (ZM):

  • EPS: $1.22 beats (exp. $0.80)

  • Revenue: $1.12B beats (exp. $1.10B)

Recap Around the Street 🧠

US Consumer debt is now above levels hit during the 2008 financial crisis. Total household debt rose by $394B (or 2.4%), to $16.9T in the fourth quarter of 2022.

Not to be outdone, credit card interest rates just reached their highest in history. Real wages are down after rising for the better half of a decade, meanwhile the savings rate is plummeting.

If it’s any consolation: debt service payments as a percentage of personal income have been rising, but remain near the lowest levels in the last 43 years (FRED). In other words, the ability to service debt remains very favorable by historical standards.

The price of used cars has been falling steadily, and steeply, for much of the last year. Some experts, however, say that could be set to change shortly.

Wholesale prices for used cars being sold at auction have risen sharply in the last few weeks, according to industry data. As a result, economists expect higher retail prices on used car dealer lots to be close behind.

If you may be a buyer, the good news is the jury is still out. For example, in its earnings call last Thursday, Carvana said it expects continued sales declines into the first quarter and perhaps beyond.

The ECB gets its latest inflation data this week, with experts anticipating another strong core reading despite predictions of a softer headline number. The inflation print is expected to cement the ECB's plan to raise rates by another half-point next month.

For background, underlying inflation in the Euro-Area hit a record in January, with core price gains reaching 5.3% (revised). Headline inflation also ticked up to 8.6% after Germany’s figure turned out to be higher than its preliminary estimate.

VIX volatility is picking up this week. The Cboe Volatility Index (or “VIX” if you’re cool) represents the market's expectations for volatility over the coming 30 days. It measures those expectations based on S&P 500 index options.

More call options betting that the VIX will rise have changed hands on an average day in February than at any time since March 2020, the WSJ reported yesterday. That means fear is re-entering the stock market.

In case you’re just tuning in, here’s a recap of last week from @rhemrajani9:

Market Preview 🎞️

• Tuesday: Target (TGT), Axon (AXON) and Rivian (RIVN) report earnings tomorrow; Goldman Sachs has its investor day

• Tuesday: US wholesale inventories, Conf. Board consumer confidence

• Wednesday: China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Eurozone S&P Global Manufacturing PMI, US construction spending, ISM Manufacturing, light vehicle sales

• Thursday: Eurozone CPI, unemployment

• Friday: Eurozone S&P Global Services PMI, PPI

Plus, check out Michael Kao’s latest paper he presented at West Point earlier this month on “USD Primacy in an Era of Economic Warfare."

Thats all for today, folks! We’ll be back around the same time tomorrow with a curated list of important news, economic data and market highlights. 

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