weekly market update

After three consecutive months of declines, the S&P 500 surged off oversold levels and finished higher every day this week, rising almost 6% and registering its strongest five-day rally since November 2022.  Underlying the rally was a decline in interest rates, led by the yield on the 10-year US Treasury going from over 5% last week to 4.5%, coupled with fourth quarter S&P 500 earnings coming in better than expected and on pace to snap a three-quarter streak of negative earnings growth.

Larry David was Right

On February 13, 2022, the now defunct cryptocurrency exchange FTX spent a reported $20 million to produce and air a Super Bowl commercial titled “Don’t miss out with Larry David”.  In the ad Larry David dismisses some of the most important inventions in history, such as the wheel and the lightbulb, before dismissing FTX with an “Eh, I don’t think so”.

Over a year later and Mr. David has been vindicated, as on Thursday FTX founder Sam Bankman-Fried, or SBF, was convicted of stealing billions of dollars from his crypto exchange’s customers.  SBF faces additional charges that could go to trial in March, but this week’s verdict caps a remarkable rise and fall that saw FTX valued at $32 billion in January of 2022, before a digital bank run exposed massive fraud and triggered the cryptocurrency exchange to declare bankruptcy less than 10 months later.  SBF now goes from jet-setting around the world and mingling with celebrities and politicians to joining the ranks of Bernie Madoff and Charles Ponzi as perpetrating one of the largest financial frauds in US history and faces a 110-year maximum sentence set for March 2024.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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