Today's topics include Timiraos confirms another hike, the Fed's failure, index level returns, JPM scooping up First Republic, Powell could start to see pushback, the troubles of persistent inflation in the UK, Munger warns of credit risk, and evaporating gains for the dollar
Money market funds saw $66 billion in inflows in the week ending March 22. While this is a slowdown from the larger inflows seen in each of the prior two weeks, it is a sign that banks continue to bleed deposits.
Today's topics include more on the BoJ, eyes on money markey fund risks, Fed emergency loans, the First Republic saga continues, Treasury balances & debt ceiling, structural uncertainty, the American dollar, capital expenditures, consumption stays hot, and luxury goods proving resilient to inflation
While it might seem the S&P 500 is off to an outstanding start to 2023, considering the risk and uncertainty the economy currently faces, most stocks are struggling. Eight stocks have provided nearly all the returns for the index this year.
For the last few decades we have been in a low interest rate environment where deficit spending would not cause major issues. However, a 40-year high in inflation prompted the Fed to tighten monetary policy at a fast pace. Higher rates mean the cost of servicing U.S. debt will follow higher.
Pandemic-related stimulus measures created higher debt to GDP ratios around the world.
The fed funds market expects a 25 basis point hike at the May 3 FOMC meeting. After that, policy could get a bit more interesting.
The dollar is not invincible, but it will remain the dominant reserve currency until a better alternative presents itself.
A long-term look at wheat prices
Some interesting charts from our recent post.