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- Market Munch 🍎 | 18 January 2023
Market Munch 🍎 | 18 January 2023
Goldman sees it's profits plunge, FTX's bankers get drained, and China shrinks heavy. 🔥
Aryaansh Rathore
January 17, 2023
Happy morning, Munchers! 🙏
As always, here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 4 minutes and 59 seconds.
Yesterday, Goldman got caught by a bitter slowdown, Silvergate's mystery got blown open by the crypto crisis, and Chinese people stopped having kids. 🔥
Let’s dive in.
What’s hot, what’s not?
Market Commentary
The smart money is rolling out of American bank accounts, and trickling into the East. Consensus trade on Wall Street is to go long emerging markets. Can't say I disagree!
Stocks wobbled yesterday as investors weighed a tricky earnings season. Big banks had big booms in their bottom lines.
Surveys going around say that most Indian CEOs don't plan to reduce their workforce sizes and comps in 2023. Looks like India is the only major economy that isn't knee deep in hot water. 😬
Story Roundup
It's been a grim start to the new year for Goldman Sachs.
Their profit plunged about 70% last quarter - forcing them to embark on yet another historic cost-cutting drive.
Biggest culprit was a sharp slowdown in investment banking activity since higher rates and a crippled economy ended a multi-year dealmaking boom.
Their consumer business also racked up a few hefty losses (along with some sneaky frauds thrown in on the way...).
Only silver lining on this dark, dark cloud was their trading division - which does well when markets are choppy.
The air must be heavy on Wall Street. 🤔
Crypto-focused bank Silvergate just swung to a $1 billion loss.
It's another hefty nail in the coffin for them since their stock dropped 50% in a single day.
Silvergate pivoted from a small community lender to a big, bustling crypto bank in recent years.
They enjoyed the run up, and the downturn is now hitting them hard.
Customers' deposits also plunged 52% in Q4, which shows just how bad the "confidence crisis" was with FTX.
Collateral damage. 😬
China's population just shrunk for the first time in a very, very long time.
It's a small shrinkage - loss of 850k people.
Doesn't move the needle at all, but it signals something mysterious.
China is the world's manufacturing powerhouse. Their rapid population growth has been a crazy source of labour and demand for the world.
So what happens when that labour force stops growing?
Growth ticks lower.
The great Chinese economic engine is gonna be spitting and roaring with less power.
Changing world order. 😮💨
Every single 50-year old uncle's favorite quote -
There are two staples in life. Death and taxes.
No one can relate to this better than oil majors - who've been the subject of a massive windfall tax attack by global governments.
France's TotalEnergies is the first casualty, reporting a $2.1 billion hit from windfall taxes with over half the bill coming from Britain.
The UK government takes 75% headline taxes on oil and gas production and a further 35% windfall tax on profits.
That's pretty hefty.
One thing is certain however. Habibi, come to Dubai. 🥳
The tech bros in Silicon Valley have had a hard time beating their Chinese counterparts when it comes to cutting edge chip tech.
But not recently.
Apple's own-brand M series chipsets are mind-blowing, and they've just doubled down.
They just launched their M2 PC chips. These ones blow their M1s out of the water.
Tons more memory, tons more processing power, and most importantly - a much larger price tag.
Happy spending. 🙏🏼
Hope you enjoyed this issue of the Market Munch. If you've got any feedback - good or bad (😏) you can hit reply to this email. Thanks a ton for reading!
Cheers, and have a lovely day. 🙏
Aryaansh