First Republic’s earnings report yesterday was a disaster, which is why the stock is crashing to a new low. The Street was thinking they were going to show a $40 billion deposit outflow. Instead they report a $70 billion NET outflow. Net means after the $30 billion that the 11 banks (led by Dimon at… Continue reading Quick comment about Credit Suisse and First Republic
The T-bill yield curve continues to be an important metric to watch. The distortion in the shortest maturities is a result of buying, not selling of bills around the debt ceiling's X-date. This is more about deposits leaving banks for money market funds than concerns over a potential default.
Today's topics include Are U.S. CDS markets useful?, ChatGPT dominates the stock market, critiquing the new 1-day vix measure, the changing consumption basket, retail wants a piece of higher rates, the Fed dials back its swaps auctions, European exchanges vs. U.S. exchanges, the cost of fear, the state of globalization, potential solutions to bank runs in a fractional reserve system, a history of shale oil, and housing's supply/demand imbalance
The current state of the economy, the level of inflation, and what the Federal Reserve is communicating to markets are irrelevant. Instead, the million dollar question is, "what will be the impact of the bank walk on lending and the economy?" We believe a continued flight of deposits will create a significant economic drag later this year.
Q1 2023 earnings reports are underway. S&P 500 operating earnings are expected to decline in early 2023, with a rebound later in the year. Tracking expectations can give insight into the broader macro picture.
Today's topics include mounting losses for retail crowd in 0DTE options, Credit Suisse details their rough quarter, insider purchases, low tax receipts push debt ceiling x-date closer, gold & the dollar, central banks' balance sheets propping up stocks, hedge funds betting on higher rates, commercial real estate weighing down on banks, and Bitcoin's next halving roughly one year away
Today's topics include the hottest investment right now!, market returns after Fed stops hiking,banks can no longer rely on 0% deposit rates, regulating midsized banks the same as large banks, social media can create a bank run, be careful reading too much into CDS prices, breaking down unemployment claims, ETFs & bond market liquidity, stock vs. flow, and the lawsuit on AT1 bond wipeout begins
The Fed's interest expenses exploded higher in 2022. They have been operating at a loss since September and might not return to profitability until 2026.
Based on different consumption baskets, middle-income households have experienced sharper rises in inflation relative to high-income households for decades.