January 24, 2022
Happy Monday! That was a roller coaster.
Today's newsletter, edited by Pete Gannon, is 699 words, a 2½-minute read.
🔔 The dashboard: The S&P 500 closed up 0.3%, after briefly falling into correction territory in a broad-based sell-off this morning. More on the markets below.
- Biggest gainer? Gap (+7.9%).
- Biggest decliner? Signature Bank (-3.7%).
1 big thing: Investors reset
The endpoints of a stimulus-fueled market are being defined, Hope writes.
Why it matters: Conditions that drove excess pricing in riskier assets are steadily being removed, and big swings in the market like those seen today are inevitable as investors try to adjust to the new landscape.
Catch up quick: After a broad and deep sell-off earlier in the day, all three major averages rallied to close higher.
- The S&P briefly entered correction territory (defined as being more than 10% from its record close earlier in the month).
The big picture: Investors continue to shuffle bets as they evaluate new market conditions with less government intervention.
Today's trades were triggered by crashes in unprofitable and speculative tech companies, meme stocks, SPACs and crypto, Jay Hatfield, chief investment officer at Infrastructure Capital Management, tells Axios.
- That then dragged down lower-risk, more profitable tech companies like Apple and Amazon, which drove down the S&P, which then induced investors to sell additional stocks, he adds.
- The market bounced back hard in part as hedge funds like his started to cover their short positions, says Hatfield.
By the numbers: Recent SPAC companies like satellite launcher Virgin Orbit (-17.9%) and electric vehicle maker Arrival (-9.4%) were among the day’s biggest losers, as well as WeWork (-9.8%) and GameStop (-5.9%).
What to watch: Whether the Fed signals it will take a slower approach to quantitative easing when it meets Tuesday and Wednesday.
- "You definitely don't want to be in the market when the Fed [is taking liquidity out] aggressively," says Hatfield.
The bottom line: Bets that made sense when the Fed began to intervene may no longer make sense now.
2. Charted: Downside protection
One additional measure of the markets today: the volatility index.
Why it matters: Think of it as an indicator of market insurance for portfolios in case of major dips, Hatfield tells Hope.
3. What's happening
4. Cruise ship on the lam 🛳
A cruise ship diverted course to elude authorities after a federal judge ordered U.S. marshals to seize the vessel following accusations that its owner failed to pay for fuel, Nathan writes.
Driving the news: The warrant prompted the Crystal Symphony to avoid its initial destination of Miami, sending passengers and crew instead to the Bahamas.
- The threat of arrest came after fuel provider Peninsula Petroleum Far East filed a lawsuit accusing Crystal Cruises' parent company Genting Hong Kong of not paying $4.6 million, including $1.2 million by the Symphony.
Context: Genting Hong Kong recently began liquidation proceedings in a Bermuda court.
- Crystal Cruises spokesperson Vance Gulliksen declined to comment on legal issues but said the Symphony had provided overnight accommodations to its guests and arranged for their transportation home.
The bottom line: The Crystal Symphony’s days of porting in the U.S. are likely over.
5. About that secret checking account
Who among us, Nathan writes, hasn’t spent a few dollars without telling their significant other? (Not me, I swear.)
The big picture: Nearly a third of people in serious relationships admit to some form of financial infidelity, according to a survey conducted by YouGov for CreditCards.com.
- That includes 15% who spent "more than their partners would be OK with,” 9% with secret debts, 9% with a secret credit card, and 8% with a clandestine checking account.
As an older millennial, I’m sorry to report that my generation is among the worst offenders: 48% of millennials and 61% of Gen Zers in serious relationships are financial cheaters, compared with 28% of Gen Xers and 19% of baby boomers.
Yes, but: Young couples may be more likely to hide things because their relationships are less settled, CreditCards.com analyst Ted Rossman says.
My thought bubble: Lying about your finances is a one-way ticket to a breakup.
6. What they're saying
"The decisions you make in the coming weeks will be critical toward the future of the restaurants that are so proud to serve your communities.”— Sean Kennedy, executive vice president for public affairs at the National Restaurant Association, exhorting Congress to provide more stimulus funds to restaurants hurt by the Omicron variant of COVID.