Bulls Charging Back? | Short $IBTX

Well folks, despite many forecasting a down day, the market surprised yesterday with a 1.2% gain by close, that said today is looking quite different already in the premarket. Moreover, today we’d like to shine a spotlight on a special equity report piece by our partner Ben the Globetrotting Investor, check out his analysis of 3M here and read on for your daily dose of market inspiration within this 202nd Coachman’s Report!

Markets in Review

After yesterday’s green day, premarket futures are down across the board with the Dow, S&P and Nasdaq currently -26, -22 and -38 bps respectively. With the S&P pictured below, yesterday’s session saw the index breakout slightly from its price channel, without any real catalyst, that said, it’s starting to look as though the index will squeeze sooner than next week’s February 1st FOMC meeting.
 
Additionally, the share of bearish investors has regressed to only 33% of market participants, despite the market’s now even more frothy 21x P/E multiple – it’s usually at times like these where the majority start to feel that the bear market is over that its last leg rears its ugly head; we’ll be looking into the earnings forecast for Q1 to bring you our take on the market’s outlook.
Short: Independent Bank Group, Inc. (IBTX-NASDAQ) | Timeline: 2 days
Independent Bank Group, Inc. (IBTX), which operates as the bank holding company for Independent Bank that provides various commercial banking products and services to businesses, professionals, and individuals in the United States, reported earnings yesterday after the market closed. The company missed earnings and revenue estimates by 6.22% and 5.68%, respectively, amid macroeconomic uncertainty and a dynamic interest rate environment. (Full Story)
 
Turning to the chart, IBTX has struggled over the last 12 months, falling from highs of $79 with no real sign of recovery. That said, as the stock reaches the upper end of this downward price channel, a rejection is likely – especially with the Stochastic RSI in overbought territory.
Zooming Out…
 
Zambia in Question
 
To many, Zambia was seen as an up-and-coming African nation following a slew of investments from multinational firms in the pre-pandemic years. From 2010 to 2019, Zambia’s GDP and GDP per capita (in constant $USD) rose by 46% and 9.4% respectively. Unfortunately, the majority of this growth was fueled by debt, and as such the dream was shattered in early November 2020 when Zambia became the first country to falter on a bond payment in the pandemic era.
 
Over $6B worth of Zambia’s estimated $30B debt is held by China and was largely issued through the infrastructure projects built by the Belt and Road Initiative. Due to China’s vast global infrastructure expansion program, many smaller and oftentimes poorer countries are in the same boat as Zambia. As the country still wishes to finance further projects including a nationwide railroad, how China negotiates, and how the US intervenes here will be a telling sign to the rest of the world.
Showdown With the Senate Head
 
Since the US breached the debt ceiling last week the eternal political tug-of-war in Washington has been at a near standstill. While House GOP members have begun to introduce various headline-grabbing bills, everyone’s mind is still occupied with how the government will resolve the debt issue before June. The White House remained adamant that they are not willing to negotiate on cuts before a bill is passed to avoid default, while the House Leader has said “If you gave your child a credit card and they kept hitting the limit, you wouldn’t just keep increasing it”.
 
Many are fearful that Medicaid, Medicare and Social Security cuts could be requested by the GOP as these programs cost Trillions, and are likely to be insolvent within the next 15 years. The Democrat Senate Leader believes that the GOP are being coy about the matter because no matter what gets cut, their political favour will likely decline in advance of the 2024 elections.
Making Headlines…
 
Senior UK Conservatives under fire over tax, finances
  • U.K. Prime Minister Rishi Sunak opened an investigation Monday into allegations that the chairman of the governing Conservative Party settled a multimillion-dollar unpaid tax bill while he was in charge of the country’s Treasury. (Full Story)
Cathie Wood’s ARKK Is Well on Way to One of Its Best Months Ever
  • Cathie Wood’s flagship strategy is on course for one of its best months on record, joining assets across Wall Street that are so far defying gloomy expectations for the year ahead in emphatic style. (Full Story)
Russia’s Biggest Firms Bypass Wall Street to Service Debt Sold Before Sanctions
  • Russia’s biggest companies, even those that haven’t been directly targeted by recent sanctions, are bypassing Wall Street to repay their outstanding debt after the crackdown broadly disrupted the financial plumbing needed to service bonds. (Full Story)
Europe’s Energy Swap Is Why Big Banks Are Now Bullish on Krone
  • The immense wealth coming from Norway’s gas and oil fields is underpinning a new refrain among market experts: it’s time for a big rebound in the krone. (Full Story)
Chart of the Day: How much longer will the Fed raise rates?

“The bad news is time flies. The good news is you’re the pilot.”
— Michael Altshuler