Bloomberg - Evening Briefing - ‘Everyone got burned’

All across Wall Street, on equities desks and bond desks, at giant firms and niche outfits, the mood was glum. It was the end of 2022 and everyone seemed to be planning for the recession they were convinced was coming. The biggest names at the biggest firms were predicting the S&P 50O Index was about to tumble and telling clients to prepare for a plunge in Treasury bond yields. Some strategists were talking up Chinese assets after Beijing’s sudden end to Covid-19 precautions. Together, these three calls—sell US stocks, buy Treasuries, buy Chinese stocks—formed the consensus view on Wall Street. Then came 2023. “I’ve never seen the consensus as wrong,” said Andrew Pease, the chief investment strategist at Russell Investments, which oversees around $290 billion in assets. “When I look at the sell side, everyone got burned.” —David E. Rovella 

In the good call department, one retail stock that’s been a clear winner this year is Abercrombie & Fitch. The chain has gained 285%, its top annual showing since going public in 1996, which also made it the best in the S&P 1500 Index. It even managed to beat out artificial intelligence darling Nvidia. Here’s how they did it.

BlackRock and Valkyrie Investments named the broker-dealers that will be responsible for steering cash into and out of their proposed spot Bitcoin exchange-traded funds, should they be approved by US regulators. Bitcoin has rallied more than 150% in 2023 amid optimism that the Securities and Exchange Commission will finally approve an ETF that invests directly in the digital asset.

The euro region probably ended 2023 with an upward bump in inflation, as consumer prices rose 3% in December from a year earlier, the first acceleration in eight months. Still, central bank policymakers are likely to remain on course to slowly move toward interest-rate cuts.

Indian equities are poised to rise further in the new year after closing out a record eight-year winning streak in 2023. Expectations of continued inflows from retail and foreign investors as well as strong growth in corporate earnings are seen driving the market in 2024. That’s the key takeaway from an informal Bloomberg News survey of fund managers and strategists. The unprecedented run has pushed India’s market value above $4 trillion for the first time. “Multiple tailwinds” should benefit Indian stocks, including the nation’s infrastructure push and diversification of supply lines beyond China, said Arun Chulani, emerging market strategist at First Water. “All this should mean that there will be significant opportunities for wealth creation.”

But in China, overseas investors are set to record their smallest-ever annual purchases of Chinese stocks, discouraged by a raft of concerns including a fragile economic recovery and geopolitical tension. Foreign funds bought just 44 billion yuan ($6.1 billion) of onshore stocks via trading links with Hong Kong on a net basis this year. The year started on a strong note amid hopes of a market revival following Beijing’s sudden reopening last December, only to see the rally fizzle as a prolonged housing slump, a lack of strong stimulus and regulatory uncertainties led to a heavy selloff. Nevertheless, in the new year, China’s regional officials are pledging to take the lead in driving the world’s second-largest economy.

The commercial real estate crisis isn’t taking a break for the holidays. JER Investors Trust filed for bankruptcy in the latest sign of distress for the pandemic-punished industry. The real estate investment trust, which counts private equity firm C-III Capital Partners among its top shareholders, manages a portfolio of mortgage-backed securities and other types of debt tied to the commercial real estate market. As interest rates climbed this year, commercial properties came under pressure, especially firms that lost tenants as office-tower workers stayed home.

Months before Scott Shleifer stepped down as head of Tiger Global Management’s private investments, the firm’s founder—Chase Coleman—had already begun to reclaim control of its $34 billion venture-capital arm. Coleman had sought more communication from Shleifer and his team after they plowed billions of dollars of client cash into hundreds of startups just ahead of an industrywide slump. Now, he’s taking over the unit that accounts for about two-thirds of his firm’s assets and has made Tiger a dominant force in startup investing. The move comes after some investors asked Coleman and other partners to get more involved in the wake of steep markdowns.

Chase Coleman Photographer: Amanda L. Gordon/Bloomberg

• US stocks close the year on a down note: Here’s your markets wrap.
• China taps new defense minister, removing an obstacle to US talks.
• Elon Musk leads world’s richest to a $1.5 trillion wealth gain in 2023.
• Top secret US space plane lofted into orbit by SpaceX Falcon rocket.
• Turkey’s stealth drone makes its debut flight after years of secrecy.
• Pacific storm sends 30-foot waves to pound the US West Coast.
• Bloomberg Opinion: The new economic normal is unrecognizable.

The climate crisis often feels like an insurmountable challenge. Humanity must move away from fossil fuels and rethink how it lives, eats and gets around. And it needs to do it soon—or else. While the arguably half-hearted efforts this year of some nations and companies to turn the tide can be dispiriting, there is—yes, we’re going to say it—something everyone can do to help. The how depends on the level of time, energy and money you’re willing to spend. Whether you’re looking to get up to speed on the crisis or jump straight into trying to help solve it, Bloomberg Green has 12 suggestions on where to start. 

Photographer: Space Frontiers/Getty Images/Archive Photos

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