Well folks, despite OPEC's decision to not manipulate oil supply to the downside, markets started the week in the red yesterday with the S&P regressing just under 2% by close - that said, this morning’s premarket is relatively unchanged with many awaiting next week’s inflation report and subsequent FOMC meeting to take a clear stance on the trend. Read further on that, the $65T that US banks are holding off-balance sheets, as well as a recap of the first installment of ‘The Twitter Files’ within this 166th Coachman’s Report!
Markets in Review
The market erased much of the advance it made last week with yesterday’s 1.79% fall - this brought the S&P below 4k once again and more importantly, below its 200-day moving average. Regardless, the 50 and 200-day moving averages have traded ever more closely together and are likely to cross on any one big daily move followed by at least one week of sustaining that same trend. Should next week’s inflation report on the 13th come in below expectations, or even beat last month's 0.4% increase and for whatever reason, the Federal Reserve decides not to raise rates by 75 bps, this could serve as the catalyst needed to realize that bull trend.
Long: Powell Industries, Inc. (POWL-NASDAQ) | Timeline: 2 days
Powell Industries, Inc. (POWL), which designs, develops, manufactures, sells, and services custom-engineered equipment and systems for the distribution, control, and monitoring of electrical energy, announced a stellar Q4 2022 earnings report to end off a troubling year. The company beat earnings and revenue estimates by 202.7% and 15.38%, respectively, attributable to recognizing three non-recurring events throughout the year. (Full Story) Referring to the chart, POWL has had quite the last 6 months, oscillating through a massive downward price channel between $20 and $30, while most key reversals were due to a jump from positive earnings. That said, as the stock has now approached the upper part of the channel, traders should expect a breakout to a channel above, signalled by positive news and a bullish facing RSI and Stochastic RSI.
No big deal… On Monday, the Bank for International Settlements (BIS) released their quarterly review, and within the 90-page report lies startling news that there’s over $65T USD of off-balance sheet debt being held by non-US institutions. To put that astronomical figure into perspective, the world’s GDP in 2021 was $96T. The debt is made up of currency derivatives and is mainly held by pension funds and insurance companies.
This level of leverage could prove disastrous for these institutions as the volatility of the pandemic, and related cost increases have already left them scrambling to make full payments. What’s more, it’s been proven time and time again that financial authorities, most recently in the UK, will intervene before the funds go bankrupt, meaning that the average taxpayer may be on the hook for a lot more than they’ve been led to believe.
The Significance of the Twitter Files
On Friday night the first installment of the ‘Twitter Files’ article series was released after Elon gave journalist Matt Taibbi “free reign” over Twitter archives and complete editorial freedom to publish “whatever he thought the public should know” (full thread). The evidence released thus far points to a cozy relationship between senior Democrat Party officials, whether they’re in power or not, and the platform’s senior management.
The email listed above is worth noting, as it shows the Biden campaign’s ability to have accounts removed seemingly at the push of a button. The article’s culmination exposed the thought process, or lack thereof, behind Twitter’s censorship of the Hunter Biden laptop story in the crucial days before the 2020 election. Senior executives aside from Jack Dorsey spearheaded the defence for the story’s censorship under shaky legal grounds, and although many knew they were in the wrong, no employee reversed the decision. While corporate oversight of what’s deemed as ‘acceptable’ information for the public in advance of an election may sound dystopian, it has and will continue to occur if left unchecked. With this being only Taibbi’s first installment in the series, more will be exposed in the weeks to come.
EU price cap on Russian oil is already disrupting the market
A European Union price cap on Russian oil kicked in on Monday and it's already causing shipping disruption — oil tankers are piling up off the coast of Turkey as Ankara is demanding paperwork that the vessels are fully insured. (Full Story)
Musk’s Neuralink faces federal probe, employee backlash over animal tests
Elon Musk’s Neuralink, a medical device company, is under federal investigation for potential animal-welfare violations amid internal staff complaints that its animal testing is being rushed, causing needless suffering and deaths. (Full Story)
Wirecard in the dock as Germany's biggest fraud trial starts
Former Wirecard executives go on trial on Thursday, two years after the collapse of the payments company that produced Germany's biggest post-war fraud scandal and sent shockwaves through the country's political and financial establishment. (Full Story)
Canada 'watching closely'
Prime Minister Justin Trudeau said Monday that Canada will be "watching closely" as the United States responds to complaints from Europe about the North American protectionism built into President Joe Biden's signature climate change initiative. (Full Story)
Chart of the Day: Lumber down 78% from the peak in May 2021.
“The gambling known as business looks with austere disfavour upon the business known as gambling” - Ambrose Bierce
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