Good morning / afternoon / evening - please choose whichever one which best describes when ever it may be that YOU are stumbling across this weekends note…
First UP, a WSJ headline just after 7p, so well after markets closed and weekend celebrations underway …
WSJ: Regulators Seize Troubled Philadelphia Bank, Republic First Regional bank Fulton Financial buys substantially all of the failed bank.
… Republic First faced some of the same problems as the three regional banks that failed last year: paper losses on bonds that lost value as interest rates rose, and high proportions of uninsured deposits that can quickly flee …
… see what they did there … First Republic LAST year and now THIS year … it’s Republic FIRST … very tricky!! Well done, folks!! From the ‘horses mouth’ …
… and for somewhat more …
ZH: Bank Failures Begin Again: Philly's Republic First Seized By FDIC
… I’ll leave you to the keyboard warriors and bank experts littered throughout #FinTWIT and only say that am 100% certain this one should be chalked up in favor of Team Rate CUT … in fact, a side note offered and which is a complete coincidence (?) …
ZH: US Bank Deposits Suffer Biggest Weekly Decline Since 9/11 As Tax Man Cometh
It's that time of year again and US bank deposits sure showed it...
While money-market funds' total assets fell over $100BN,on a non-seasonally-adjusted (NSA) basis, total bank deposits crashed by a stunning $258BN as Tax-Day cometh. That is considerably more than the $152BN decline last year but less than the $336BN plunge in 2022...
… However, on a seasonally-adjusted (SA) basis (i.e. adjusted by the PhDs for the fact that we get large deposit outflows at this time of year to pay taxes), total deposits dropped $133BN - the biggest weekly plunge (SA) since 9/11!
… I’m sure it’s nothing … nothing at all?
AND NOW Team Rate CUT looking more at ease but there’s still an eventful week ahead. Before we get there, a couple / few things items from yesterday …
ZH: Fed's Favorite Inflation Indicator Prints Hotter-Than-Expected As Savings Rate Plunges (BUT … the silver lining had stocks AND bonds both BID immediately after print…)
… The silver lining is that this hot PCE priont is 'dovish' relative to the GDP-based data we saw yesterday, with whisper numbers of +0.4 to +0.5% MoM (vs the +0.3% print).
… but wait, there was somewhat moar …
ZH: UMich Inflation Expectations Accelerated In April To 2024 Highs
… AND by days / WEEKS end, here’s how it all shook out (at least from ZH perspective) …
ZH: Micro Trumps Macro As Stocks Shrug Off Week Of Higher Inflation, Higher Rates, & Lower Growth
… ZH spin aside, checking in with Mr. Markets … looks like complete and utter indecision from 2yy at least on a WEEKLY basis …
2yy WEEKLY candles … all you need to know / watch ahead of this weeks FOMC
… Momentum stretching into overSOLD territory and as you’ll see just below and on this weeks edition of whatever it is Global Wall St is sellin, many / most are updating calls, pushing OUT rate cuts, raising yield f’casts and we all know what THAT means … soon as the last of Team Rate CUT folds and bond bull (HIMCO aside) bails, well, that is precisely when we’re supposed to be backin’ up the truck, right?
… AND so, on THAT note, TO the reason many / most are here …some UPDATED WEEKLY NARRATIVES … some of THE VIEWS you might be able to use, here are a couple / few things which stood out to ME this weekend …
BARCAP Global Economics Weekly: Higher for longer...for sure(but I thought only things which were certain were death and taxes … )
… We now think July looks too soon for the rate-cutting cycle to start, while remaining of the view that the presidential election likely precludes a cut in September. Consequently, we now see the Fed implementing its first cut in December.
…Updated UST rates forecast Following a string of above-expectations inflation prints, DB’s US Economics team recently updated their Fed forecast, calling for one cut this year, in December, and 150bp of cuts overall. Subsequent to that, we published a provisional rate forecast showing what this revised Fed call would imply for yields at the end of this year given our assumptions around term premia. Here we officially adopt that forecast – with two modest adjustments – and flesh out the quarterly profile through midnext year. The forecast has 2y and 10y UST yields at 4.7% and 4.6% at year-end, and while the gaps between it and forward pricing are modest, points to money market flatteners, overweights in the belly, and long-end steepeners. For now, we leave our SOFR swap spread forecast unchanged.
MS - Friday Finish: Road Signs to a July Cut (some are updating calls as others are diggin’ heels in and in light of FDIC news Friday night … maybe just maybe …)
The lack of progress on inflation in the first quarter led us recently to push out the timing of the first rate cut to July. Data on inflation this week was both disappointing and encouraging. The road to July has narrowed to a footpath, but we think April will bring a shift to downside surprises.
Moving along and away FROM highly sought after and often paywalled and Global Wall Street narratives TO a few other things widely available and maybe as useful from the WWW
… Before you go thinking that this is just a spurious correlation during the period shown in the chart above, let me assure you that this has been going on for decades. Here is a longer term version of that same comparison, again employing an inverted temperature plot and a 3-year time lag.
The important point to observe is not so much the overall trend in both data plots, but rather the manner in which the fluctuations in temperatures get echoed 3 years later as corresponding fluctuations in inflation data. The big inflation that we saw in the 1970s was the echo of a cooling period in the 1960s and 1970s, something that had climate scientists worried about the coming of a new ice age…
… AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.
First, this from the best in the strategy biz is a LINKthru TO this calendar,
Sure my inflation goes down IFs I don't eat or goes anywhere, but then hows I supposed to live? WWIII ,'novel' viruses and their 'safe & effective' Big Pharma (untested) mandated MEDS, Vue Vile Eats Zee BUGZ, Useless Eaters oops that may well be the point.
July, September, December, 2025.....going, going, gone......
Fed ON HOLD Indefinitely......
Sure my inflation goes down IFs I don't eat or goes anywhere, but then hows I supposed to live? WWIII ,'novel' viruses and their 'safe & effective' Big Pharma (untested) mandated MEDS, Vue Vile Eats Zee BUGZ, Useless Eaters oops that may well be the point.