Hooray, rate hikes are over! With yet another bank (PacWest) disintegrating before our eyes, a debt ceiling debacle that looks suspiciously grave, and a 3-month 10-year yield curve that is profoundly inverted, the Fed finally hauled out language suspiciously similar…
As recently as 20Q1, interest on the public debt was $549 billion at a seasonally adjusted annualized rate. During Covid, rates collapsed and despite a rapid rise in the debt, carrying costs declined to just $516.1 billion in 20Q3. They…
The reason there were no buyers for First Republic before it was seized by regulators is because buying the bank for $1 would have been insanely expensive. Generously assuming the portfolio losses equal the bank’s remaining equity, the acquirer would…
The Friday File: Until the late-1970s there were never more than two 300 lb. players in the NFL. By 1990, there were 72, in 2000 there were 286, by 2010 there were 379, and in 2020 there were 468. Accounting…
Banks are currently experiencing rising deposit costs. If those costs can’t be fully passed to borrowers, profits will fall, reducing lending. It’s estimated that a 10% reduction in profits reduces lending by regional and smaller banks by 2%, and based…
While the first estimate of 23Q1 GDP is a pleasant 2%, do not be deceived. First, growth is clearly decelerating from 3.2% in 22Q3 to 2.6% in 22Q4. Moreover, the monthly data suggests that economic growth was very strong in…
As the date the U.S. Treasury will hit the debt ceiling approaches, investors are increasingly taking note. The cost of a one-year U.S. sovereign credit-default swap that pays out should a default occur has risen from its typical 10bps to…
The national median existing-home price fell 0.9% Y-o-Y in 3/23 to $375,700 from $379,300. Prices have now fallen Y-o-Y for two straight months, the first time in 11 years. Median home prices peaked during 6/22 at $413,800 and are now…
The Friday File: Earlier this week was 4/20 or “fourtwenty”, the unofficial high holiday of weed/stoner culture. Since California legalized medical marijuana (THC) in 1996, recreational cannabis is now legal in 21 states and D.C., and medical use is legal…
At just over $2,000/oz, gold is within striking distance of its high of $2,069.40 set in 8/20. With the Fed raising rates, gold seems unattractive. However, because it’s priced in dollars, the decline in the dollar has made gold cheaper…