Inside Arbitrage Friday Wrap – The 75 Basis Point Hangover

FRIDAY WRAP

Our list of curated tweets for the current week

The sell off that started last week accelerated this week when the Fed decided to increase its benchmark rate by 75 basis points and did not rule out another 75 basis point hike in their next meeting. We wrote the following in our last Friday Wrap,

“Earlier this week we explored bear market rallies in a post titled The Emotional Toll Of Bear Market Rallies and given market action during the last two days, it feels like the bear market rally we were experiencing since late May appears to have come to an end. It is hard to see an end to this challenging environment when fundamental conditions like inflation, high energy prices and supply chain issues have not been addressed. Experienced investors who have seen multiple market cycles like Stanley Drunkenmiller and Jamie Dimon think there is more pain ahead. There are some spots of optimism including commodities and the strategy of merger arbitrage, while impacted, has held up better than the overall market.”

The excesses we discussed in our November 2021 mid-month update A Time For Caution, continue to concern me and while this latest pullback has left some companies down more than 90% peak to trough, I don’t think we have bottomed just yet. It is not possible to time either market tops or bottoms and that is why I decided to update a bear market playbook I used in March 2020 and discussed it in more detail in our June 2022 mid-month update.

If you like this weekly wrap or have any suggestions for improvement, I would love to hear from you. Some of your suggestions over the last several weeks have already helped us improve the format of these articles.

Investing

If you're a long-term investor the odds of experiencing a crushing bear market and a recession are 100% yet so many act surprised and shocked when it happens

I had lunch today with a great investor who told me about a stock he's owned for 27 years

Today was a 98% downside day. Oct 19, 1987 still holds the record: 99.8%

More than 90% of stocks in the S&P 500 declined today

FOMC MEETING takeaways

In Jan 2021, the 30-yr mortgage rate was 2.65% and average new home price in the US was $401,700

crypto

crude oil

Oil futures prices

Exxon comes out swinging!

This is bold move by Hertz

Six Flags' new CFO purchased a small number of shares last week and this week

Netflix - Squid Games

Buy-now-pay-later is not the same as traditional lending.

GPU prices down by more than -50% YTD

Revlon filed for bankruptcy

Blue Nile SPAC $MUDS

Inflation

increases in prices

inflation

Great Financial Crisis

Entrepeneurship

Here's what I've learned about scaling a startup

If you find the same ideas across evolution, business, investing, philosophy, myth, or physics, there’s likely something useful in them

Life/Health

Harrowing and detailed story about the state of San Francisco

When routine medical tests trigger a cascade of unnecessary care

The effectiveness with which we can interpret our internal state seems to be strongly correlated with mental and physical health

Voluntary Disclosure: I hold a long position in Netflix (NFLX).

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