🦢Black Swan Street Weekly Stock Market Summary (Feb. 5th - Feb. 9th 2024)

Welcome to Black Swan Street!

Welcome back!! It’s @JohnWetter here with another edition of Black Swan Street!

Global economies are on the brink of collapse? Perhaps. Let’s just get straight into it…

• China’s Economy Slowing📉

• The Swan’s Selections🦢

• In Other News🗞

• Next Week In The Stock Market🔮

Read time: 7 minutes

China’s Economy Slowing📉

What’s the background? The CSI 300 Index is a stock market index that consists of 300 of the largest listed stocks on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE). Think of it as similar to the S&P 500 but for Chinese stocks. It’s important because Investors and Economists use it as a benchmark for the performance of Chinese equities.

What’s happening?

The CSI 300 Index has declined ~20% over the past year and is trading near 2019 lows. Representing ~$7 trillion in value lost over the last three years. This has led to Chinese officials being forced to step in and ‘stabilize its markets’.

China has attempted multiple forms of stimulus, as well as, implementing trading restrictions, such as:

• Limiting investors’ ability to short Hong Kong stocks, as well as some investors being told they’re not allowed to sell their positions

• Certain quant funds are being banned from placing sell orders and cutting leveraged positions

Also to note: Evergrande and Deflation.

Evergrande. Evergrande was the second-largest Chinese real-estate developer until they amassed $300 billion in debt (1.5% of China’s GDP) they couldn’t pay back. On Jan. 28th, 2024, Evergrande, the world’s most indebted real estate developer, was ordered to undergo liquidation.

Deflation. While much of the world battles inflation, China is battling deflation. China just reported its fourth consecutive monthly decline in its Consumer Price Index (CPI) report. Weak consumer demand has been weighing on prices.

China’s economy is slowing.

How does this affect you? As you can see below, Chinese and U.S. markets have historically had a strong correlation with each other. That is until 2023.

The disconnect between U.S. equities and Chinese equities is mind-boggling. China’s equity markets are currently fighting for their life, while U.S. equity markets are at all-time highs.

The Swan’s Selections🦢

💊Novo Nordisk Doubles Down. Last week on Black Swan Street, we covered Novo Nordisk and their exponential growth due primarily from the drugs ‘Wegovy’ and ‘Ozempic’. Well, they’re doubling down on fat-loss drugs. Novo Nordisk just acquired ‘Catalent’ for $16.5 billion to expand Wegovy supply. Novo Nordisk said the deal would help boost supply of the highly popular drugs.

❌2024: The Year Of The Layoff? 2024 starts hot with another wave of job cuts. So far in 2024, we’ve seen 32,000 tech workers who have lost their jobs. See the full list here.

🛢️Oil Prices Set To Rise By 2025? Occidental CEO, Vicki Hollub, says the oil market will face a supply shortage by the end of 2025 because the world isn’t replacing crude reserves fast enough. The world has replaced less than 50% of the crude produced over the last decade, she said.

📝Guess Who’s Back… Back Again. That’s right the SAT is back. The college admissions test was dropped by many colleges as a requirement for admission starting in the pandemic-era. Well, Dartmouth College announced they are reinstating it and is the first Ivy League to do so.

💰The $118.2 Billion Bipartisan Air Proposal Is Here. This week, Senators released the details of the long-awaited bill. The bill requests $60.1 billion for Ukraine aid, $14.1 billion for Israel, and $20.2 billion to improve security at the U.S. southern border. It also includes smaller pockets of funding for humanitarian assistance in war-torn regions, and defense operations in the Red Sea and Taiwan.

📽️Tucker Carlson To Interview Vladamir Putin. Yes, you read that right. Former Fox News host, Tucker Carlson, interviewed the President of Russia, Vladamir Putin. This is the first member of the Western media to interview the Russian leader since the country’s invasion of Ukraine. In the first 24 hours, it had over 100 million impressions. You can watch it here.

🎮Fortnite Metaverse Coming Soon. Disney invested $1.5 billion in ‘Fortnite’ maker ‘Epic Games’ and are teaming up to build what’s being described as an “expansive and open games and entertainment universe.” Disney CEO, Bob Iger, said in a statement “this marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion.” As of now, it’s unclear when this metaverse will debut.

In Other News🗞

• Snapchat to lay off 10% of total workforce - TV

• Estee Lauder to lay off up to 5% of workforce - FB

• Facebook parent ‘Meta’ announces first-ever dividend - WSJ

• King Charles diagnosed with cancer - CNBC

• Liquidity tops trader concerns for volatile 2024, JPMorgan finds - BBG

• ESPN, Fox, and Warner Bros. Discovery to launch joint sports streaming platform this year - CNBC

• SEC increases oversight for hedge funds, high-speed traders - WSJ

• Treasury Secretary, Janet Yellen, says commercial property is a worry, but regulators are on it - BBG

• Amazon is laying off hundreds in its health care division - BBG

• U.S. Treasury’s biggest-ever 10-year auction garners solid demand - BBG

• DoorDash aims to boost presence abroad while delivery rivals struggle - YF

• Adam Neumann explores buying WeWork out of bankruptcy - BBG

• Ackman exits Lowe’s after bet earned $1.3 billion for Pershing Square funds - USN

• Las Vegas is trying to become the sports capital of the world - BBG

• Warner Music to cut 600 jobs, or 10% of staff - CNBC

• Spirits sales beat out beer and wine for second straight year - CNBC

• Goldman is facing CFTC probe over fees charged for futures trading - BBG

• Google rebrands Bard AI to Gemini and launches a new app and subscription - CNBC

Next Week in the Stock Market🔮

Earnings To Watch Next Week:

What the Swan is watching:

Monday: Waste Management, Goodyear Tire & Rubber

Tuesday: Coca-Cola, Shopify, Hasbro, Datadog, Airbnb, Lyft, AIG, Robinhood, MGM Resorts

Wednesday: Sony, Xpeng, Kraft Heinz, Occidental Petroleum, Cisco, HubSpot

Thursday: Deere & Co, CBRE Group, Wendy’s, DraftKings, Roku, DoorDash, Coinbase, Applied Materials

Economic Calendar Next Week:

The Wrap-Up🔄

🎊🎉 That’s it for this week 🎉🎊

Follow my Twitter @theJohnWetter, if you want real-time market and economic analysis.

Let us know what you thought about this week’s edition of Black Swan Street⬇