Welcome back,

The Eurozone just set a record-high core inflation, and US markets reacted as the 2-year/10-year Treasury saw its biggest inversion since 1983.

Let’s keep it concise.

Market Headlines 👀

• Eurozone headline inflation in February exceeded estimates (8.3%; prev. 8.6%). Core inflation quickened to an all-time high of 5.6% from 5.3%.

• Silvergate Capital (SI) said it needs more time to assess the financial damage from last year’s crypto rout, feeding US authorities’ worst fears.

  • Silvergate (SI) stock tumbled after Coinbase (COIN) flagged risk of a capital shortfall.

• Citigroup (C) cut hundreds of jobs, including in its investment banking and mortgage units.

• Mortgage demand from US homebuyers dropped to a 28-year low.

• YouTube (GOOGL) is entering the AI wars with a plan to add AI-powered tools for video creators.

• The Inverse Cramer (SJIM) and Long Cramer (LJIM) ETFs opened trading today, which offer short and long exposure to CNBC host Jim Cramer’s stock recommendations.

• U.S. jobless claims (190,000) came in lower than expected (195,000; prev. 192,000).

• SpaceX launched its final of the six missions it was awarded by NASA, sending four more astronauts to the space station.

• Amazon's (AMZN) cloud unit plans to invest $6B in Malaysia by 2037.

• U.S. 10-Year Treasury hit 4.08%, its highest since November 10.

  • The 90 bps inversion is its biggest since 1983.

• U.S. 2-Year Treasury rises to 4.92%.

• Antony Blinken (US Secretary of State) met Sergei Lavrov (Foreign Affairs Minister of Russia) for the first time since the Ukraine war.

• Michael Burry tweets that he sees 'terrible consequences' from the ongoing student loan forgiveness battle.

• Japan firms are boosting their spending despite the global economic slowdown.

Earnings 💸

• Costco (COST)

  • EPS: $3.30 beats (exp. $3.20)

  • Revenue: $55.27B misses (exp. $55.58B)

• Zscaler (ZS)

  • EPS: $0.37 beats (exp. $0.29)

  • Revenue: $387.6M beats (exp. $364.91M)

• Broadcom (AVGO)

  • EPS: $10.45 beats (exp. $10.25)

  • Revenue: $8.93B beats (exp. $8.9B)

• C3 AI (AI)

  • Revenue: $66.7M beats (exp. $64.25M)

• Macy’s (M)

  • EPS: $1.88 beats (exp. $1.59)

  • Revenue: $8.26B misses (exp. $8.27B)

• Marvel (MVRL)

  • EPS: $0.46 meets (exp. $0.46)

  • Revenue: $1.42B beats (exp. $1.4B)

• Dell (DELL)

  • EPS: $1.80 beats (exp. $1.64)

  • Revenue: $25.04B beats (exp. $23.43)

Recap Around the Street 🧠

The quality of corporate America’s earnings is its worst in three decades. US industries are expanding quickly, but far too rapidly for than cash is coming in the door. As a result, income at S&P 500 companies topped cash flows from operations by 14% in the year through September (i.e. before record lows discussed below).

Despite the negative news from February, hedge funds have been busy quietly loading up on big, high quality tech stocks this year.

The S&P 500 wrapped up a turbulent month as it recorded its third-worst performance in the past 25 years this February. Stocks dropped during the final stretch of Tuesday’s session, the last day of the month, and bonds pared earlier losses.

All in all, the S&P 500 fell 2.6% in February. The Nasdaq 100 didn’t manage to avert a monthly decline either. The benchmark 10-year Treasury yield, meanwhile, climbed more than 40 basis points in February

More broadly in the month of February, each of the three major indexes ended with monthly declines. As a result, investors continue to assess whether interest rates will remain high for an extended period of time.

February saw the highest calendar month of new investment grade (“IG”) bond issuances ever. As a refresher for you Big Short viewers, or anyone alive during the 2008 crash, “investment grade” refers to the quality of a company's credit. Today, to be considered an investment grade issue, the company must be rated at “BBB.”

In January, the expected new issue markets were close to breaking records. By February, $154B of IG issuances broke the all-time record previously held by February 2015.

Since September and October lows, investors have drained cash balances to get long equities. In February, investors’ net purchases, despite growing fervor into ETFs, investor’s net purchases swung heavily back in single stocks’ favors.

As for ETF flows, investors are still getting back into government bond ETFs, with inflows reaching >$5.6B over the past week. On a one-month basis, they've made up over a third of all inflows. Aggregate bond funds also remain popular.

TikTok is imposing time limits on teens to prevent social media addictiveness. Yesterday, the company announced that users below 18 years old will be set to a one-hour daily screen time limit. (Because age restricting worked so well when you were getting a Facebook in middle school).

The news is unlikely to shift federal governments’ perceptions of TikTok, which has been banned from government-owned phones in the U.S., Canada and elsewhere over spying concerns.

Tesla (TSLA) lost $60B in the span of its 3-hour investor day yesterday (market cap). Musk outlined his vision for Tesla around its scale and cost efficiencies for the next decade. Investors were disappointed with no sub-$30k vehicle officially unveiled, and broad consensus Twitter expected more.

Notable highlights from Musk include:

• Announced Giga Mexico (factory to build EV)

• Presented Master Plan lll

• Showcased update of Optimus (robot or “Tesla Bot”)

• Provided info on a Gen lll vehicle/platform

• Teased two new energy products

• Further detail on efficiency, engineering and future investments

  • New motors without rare earth and much less silicon carbide

  • 48 volt, ethernet-based wiring harness and complete vertical integration of electronics design

• Introduced to Tom Zhu (China Chief and Global Head of Production)

• Van under a sheet based on the cybertruck platform

TL;DR - The cybertruck is expected this year.

Market Preview 🎞️

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

If you’re in an investigation, research or just light reading mood this weekend, check out our friends over at Concoda! They deep dive into many of the topics we give you a preview of.

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

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