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Tuesday, November 29, 2022

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Almost Daily Grant’s: Clean Plate

Almost Daily Grant’s

CLEAN PLATE
Are you going to finish that? Here’s Dirk Van de Put, CEO of Mondelez International, delivering some less-than tasty news in an interview this morning with CNBC:
Our input costs for next year are going to be up as much as they are up this year which means we need to keep [moving] on pricing. . . there will be more price increases coming in food in my opinion.
CALLING ALL CARS
The good ship crypto springs a few leaks. Binance disclosed today that hackers have helped themselves to as much as $570 million worth of assets, forcing the digital bourse to temporarily suspend its eponymous Smart Chain. “The issue is contained now, your funds are safe,” Binance founder and CEO Changpeng Zhao assured his social media followers this morning. “We apologize for the inconvenience and will provide further updates accordingly.” 
 
Considering that Binance stands as easily the world’s largest crypto exchange by trading volume, the news is emblematic. Citing data from analytics firm Chainalysis, the Financial Times relays that crooks absconded with nearly $2 billion of digital assets over the first seven months of 2022, almost double the comparable period last year. Coloring that sharp increase in thefts: crypto’s aggregate valuation has sat near $1 trillion since the end of July, down from a $2.3 trillion peak in November. 
 
Indeed, the newfangled asset class offers no shortage of fodder for global law enforcement. Yesterday, South Korean prosecutors announced they have frozen the $67 million bitcoin holdings of Do Kwon, the fugitive co-founder of failed Terraform Labs.
 
Kwon, who purportedly moved to Singapore in April, shortly before his digital lending outfit collapsed to the tune of $60 billion in vaporized notional asset value, remains at large nearly two weeks after Interpol issued a so-called red notice for his arrest. Yet the crypto executive keeps an open line to his fans, hopping onto Twitter to deny that those seized bitcoins were his. “I don’t get the motivation behind spreading this falsehood – muscle flexing?” he mused, adding that: “I don’t know whose funds they’ve frozen, but good for them, hope they use it for good.” 
REAR WINDOW
It’s not quite the “pause” bulls are hoping for: The upcoming deluge of third quarter earnings reports could present a near-term complication for the stock market, as corporations’ step back from their share repurchase programs in quiet periods typically commencing two weeks prior to dissemination of their results. Analysts from Deutsche Bank find that nearly 90% of S&P constituents 500 will find themselves in that blackout period next week, compared to about 50% as of Sept. 30.  
 
“The price of any asset is always determined by the marginal buyer and seller, and corporations have played that role for a considerable period of time,” Mark Freeman, chief investment officer at Socorro Asset Management, told Bloomberg yesterday. “If they pull back in the near term, that would be a clear headwind for the market.” Total net corporate buyback volume will reach $700 billion this year, strategists from Goldman Sachs estimate, compared to $623 billion in 2021 and a mere $32 billion during the plague year. 
 
Indeed, c-suites nationwide find the practice hard to do without. Reuters reported on Tuesday that a trade group representing the domestic airline industry rejected a request from 70 members of Congress to voluntarily abstain from share repurchases. Washington enacted a temporary ban on stock buybacks, which expired at the end of September, as a condition of the $54 billion in taxpayer cash furnished to the industry during the pandemic. “Airlines willingly agreed to the intentionally temporary restrictions of the (payroll support program) to protect jobs and preserve their workforces amid the unprecedented global health crisis,” the Airlines for America diplomatically put it in a letter last Friday. 
RECAP OCT. 7
A stronger-than expected September payrolls featuring 3.5% measured unemployment rate (matching the pre-virus lows of February 2020), was enough to ignite a ferocious selloff as the S&P 500 and Nasdaq 100 lost 2.8% and 3.8%, respectively, leaving both of those indices near their closing lows in the year-to-date.  
 
Treasury yields continued their inexorable climb, as the two note settled at 4.3% and the long bond rose to 3.86%, each a fresh high for the current bond bear market. WTI crude reached the doorstep of $93 a barrel, gold pulled back to $1,703 an ounce and the VIX ticked above 31, finishing higher by less than a point. 
 
– Philip Grant
 
Photo by Thought Catalog on Unsplash
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