Market and Economy
Diligence is the mother of good luck ~ Benjamin Franklin
Video: Banking Crises Creates Bank Bailout, Impact on QT (Quantitative Tightening), FFR Increases, and CPI
Banking Crises Creates Bank Bailout
1. All deposits even over $250,000 are covered by FDIC at Silicon Valley Bank and Signature Bank. Implied guarantee for all uninsured deposits in the banking industry. About $7 Trillion in total.
2. Banks can borrow against their portfolio at par even if the market price is 70, 80 or 90.
Economic and Market Review February
Economic and Market Review February 28, 2023 Monthly Summary Inflation worries persisted in February as government data revealed stubbornly elevated prices for food and energy. As a result, the Federal Reserve’s policy on additional rate increases continues to bombard the equity and bond markets. The Fed’s concern is that it might relent too soon in…
Video: Fed Funds Rate Heading to 5.25% and Staying High Longer
Fed Funds Rate Heading to 5.25% and Staying There Longer. Inflation, QT (Quantitative Tightening), Debt Ceiling are all intertwined in a tangled web and discussed. In our opinion, the problem is compounding upon itself and will eventually lead to a Fed pivot and monetization of the debt.
Economic and Market Review January
Economic and Market Review January 31, 2023 Monthly Summary Inflation became less of a concern in January as the most recent data revealed six consecutive months of falling prices. The most recent inflationary data, as measured by the Consumer Price Index (CPI), fell to 6.5% after reaching 9.1% in June. Surveys of banks conducted by…
Video: Bear Market Rally Probably Ending with QT and a Recession Ahead
Bear Market Rally Probably Ending with QT (Quantitative Tightening) and a Recession Ahead S&P started year with a strong 6% return with the January seasonality. Fed way below pace YTD at only $37 Billion in QT. The Fed’s Balance Sheet of less than 15 day treasuries indicate this could be a big QT week.
Economic and Market Review December
Economic and Market Review December 31, 2022 Monthly Summary Global equity and fixed-income markets navigated through a volatile environment as 2022 unfolded to be a challenging year. The Russian invasion of Ukraine, rising interest rates, inflationary pressures, and a slowing economy all weighed on financial markets. The three major equity indices saw their largest declines…
Video: QT accelerates. Stay Cautious. Fed Funds likely to be at 5% or higher into 2024.
QT Quantitative Tightening accelerates. Stay Cautious. Fed Governors are indicating that the Fed Funds are likely to be at 5% or higher into 2024. No near term pivot or pause. QT accelerated into $43.7 Billion for the week ending Wednesday. Fed Holdings of Treasuries maturing in less than 15 days makes QT implementation on or above schedule likely for the next couple of weeks. QT has really just started to scratch the Fed’s bloated Balance Sheet which got to $8.9 Trillion in April of 2022.
Video: CPI & Fed Meeting = Big Week.
CPI for November and Federal Reserve Meeting and Announcement highlight a Big Week.
Inflation Slowed to 7.1% year over year and 0.1% month over month.
Energy helped last month but will reverse as SPR (Strategic Petroleum Reserve) is no longer drained at a million barrels a day. China COVID lockdowns ease and demand returns.
Video: Inflation is High and The Fed is Unlikely to Tame It
Inflation is now being driven by massive federal deficits. The deficit for the FY23 ending in September of next year is estimated to be $1.2 Trillion, adding to our $31.4 Trillion debt. That’s just the tip of the iceberg — we also have unfunded Social Security liability of $22.3 Trillion and Unfunded Medicare liability of $34.7 Trillion.
Economic and Market Review November
Economic and Market Review November 30, 2022 Monthly Summary Markets reacted to indications that the Fed might slow its pace of rate increases heading into the new year. Such a change in monetary policy would be positively received by financial markets with the anticipation of eventual lower rates. The supply chain constraints that existed this…