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UBS Acquires Credit Suisse in Response to Financial Crisis

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UBS Acquires Credit Suisse in Response to Financial Crisis
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UBS Acquires Credit Suisse in Response to Financial Crisis. The first full week of the banking crisis was dynamic. The Fed poured a record amount of loans ($303 billion) into the system, of which the FDIC added $143 billion, the US Treasury added $40 billion, the FDIC itself had ~$128 billion mainly in state funds, the total pool of FDIC capabilities was $300-310 billion with marginal payments of ~$260 billion for two banks. But there may be more on the way… Yellen’s capabilities are limited (the “ceiling” of the national debt is tight), the FDIC does not have much money, so they are trying to sell Signature Bank, and First Republic Bank was actually asked to save the largest banks, which will provide $30 billion.
 
Yellen, who has no extra money, has already stated that she will not save everyone (it was more correct to say “she will not be able”), had to gather the largest bankers (JPM, BofA, Citi, etc.) and push them to save the sinking $200-billion California bank. FRB has a lot of uninsured deposits of wealthy clients (who are fleeing), and the loan portfolio is mainly related to real estate (and in 2022 they increased it by 23.6%). In fact, the same story: “large” deposits without insurance, a loan portfolio with a large duration, but I can’t put a lot of securities in the Fed) t (little). There is another nuance – in addition, the bank has a large wealth management portfolio worth $ 270 billion... In California, the fall will be loud…with Hollywood passions, and then dozens of medium-sized banks. The story will continue, and Yellen‘s options are limited...
 
For Credit Suisse, the main option = this takeover by UBS is increasingly realistic. Although the banks themselves do not really want this, but there are not many options here – with the current blow to trust. The outflow of client money can be temporarily blocked by liquidity from the NBSH, but only temporarily, large banks are already actively cutting limits on the bank. The fall of CS, which is embedded in many instruments and mechanisms of the global financial system by thin threads, is the new Lehmann. In this sense, they will not let it fall at all (at least they will do everything to prevent it), but even without this, the withdrawal of capital from such structures can lead to the unwinding of complex derivative structures and possible sales/volatility in almost any market segment. UBS will get a pig in a poke that can bury it, because it will require exorbitant guarantees. It could be nationalized, but I’m afraid it can’t be solved in Switzerland without a referendum).
 
The markets are chaotic, in reality, the movements of any assets may be due simply to the fact that someone is forced to urgently close existing positions. Stocks in the United States, especially tech stocks, have grown, but I think this is not only because of expectations of easing by the Fed (although this is also), but also because of attempts to shove fleeing deposits at least somewhere ($300 billion from the Fed mostly goes to the outflow of deposits… they need to go somewhere other than deposits in large banks). Gold/ silver and bitcoin have gone to the ceiling – also on this story of flight from banks. Gold is clear and without comments. Considering that the deposits of IT/ creative sectors that are on the “you” with the crypt are largely affected, some of them go there, and there may also fall... but without the risk of instant zeroing. The crypt does not need much – $ 1-2 billion of inflow will give ~ $100 billion of market capitalization growth. It is clear that expectations of a reversal of the Fed and other Central banks are the engine of this movement.
 
There is also enough chaos in the public debt markets: liquidity is low (spreads have parted), volatility has increased sharply – flights by dozens of points in one direction or the other. There are also distortions in the money market. All this is directly related to the banking crisis – investors have moved powerfully from deposits to government debt, including. As a result, for example, the yield of the 4-week Treasury bill collapsed from 4.6% to 4%, while SOFR 4.6% and Fed rate futures also 4.6%. Of course, no one expects a rate cut to 4%… just a wild demand for bills of exchange. The crisis of liquidity and confidence in medium-sized banks is adjacent to the excess of liquidity in large ones (no one went to REPO with the Fed, and the reverse REPO began to grow, but $153 billion was crammed into the discount window)...
 
Deeds - thoughts
... I think it is necessary to make allowances for the fact that a significant part of the movements in the markets are due to throwing deposits into "something else", part - hopes that the Fed will reverse course. On Wednesday, there will be a very entertaining meeting of the Fed on rates, and forecasts will also have to be published... Powell will have to go through the blade, they have already essentially softened the approaches of pouring liquidity. It will turn around too sharply and lose face (but what about inflation!) and the market will scare (it means everything is very bad!) ... it will continue to put pressure on the gas (the rate forecast is important) – it will also scare, because there is an increase in losses and new victims ahead. Therefore, it may rather be an attempt to portray something in between... so we'll see, although everything can change in a day today.
 

Credit Suisse Total

 
UBS buys Credit Suisse for >$2 billion (at the closing of the CS market it cost > $7 billion) and traded $100 billion in liquidity to the Swiss National Bank. Switzerland is ready to rewrite the laws to circumvent the shareholder vote in the deal.
 
UBS managed to bargain for very good conditions in general, although no one fully knows how many CS skeletons there are in the closet.
 
At the very least, this may ease the tension a little, but it is not a fact that history will not eventually encounter resistance from shareholders... we‘ll see
 
@ESG_Stock_Market

Inflation Rate in US now Hits 6% YoY in February despite Used Car Drop

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Inflation Rate in US now
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❗️US inflation in February was 0.4% mom, 6.0% YoY, core inflation 0.5% mom, 5.5% YoY. And this despite the fact that used cars unexpectedly gave out a drop again – 2.8% m/m…

The banks’ opinions on the Fed’s further actions are divided, some believe that the Fed will cut rates in March… someone that leave unchanged… someone who will raise (1-3 times by 25 bps). The market has calmed down a little and is waiting for a 25 bps rate increase (69% probability) rather than remaining unchanged (31%), and another increase in May … but since July, he has been betting on a reduction in rates. The Fed needs to save face…

According to the current decisions on SVB and Signature, $264 billion of deposits need to be returned, of which about $30 billion and about $234 billion should be given by the Fed as collateral for assets (there are not enough securities on the balance sheets of both banks for collateral). The FDIC itself had $128 billion at the end of 2022, mainly in government bonds (for $126 billion of government bonds at face value). In 2021 and 2022, they managed to consolidate ~ $5 billion a year into the insurance fund. One way or another, the Fed will simply “print” about a quarter of a trillion dollars, which the FDIC will receive at 5% + per annum and distribute to depositors. The $25 billion that the US Treasury will provide is an amount close to the difference between the nominal and market value of collateral assets (a guarantee for the Fed).

At the weekend, J. Yellen refused to comment on the Fed’s further actions, saying on duty about the Fed’s independence and that they would evaluate it in the coming days and weeks. At the same time, she actually admitted that bankruptcies are a consequence of high rates: “The problems of this bank, from reporting about its situation, suggest that because we’re in a higher interest rate environment…”. There is no doubt that Yellen and Powell discussed this issue, but most likely no decisions have been made yet.
It is already obvious to everyone that what is happening is a consequence of the increase in rates, it is not obvious to everyone… but these are only the first signs of the consequences of the rate hike cycle, the losses of the financial system from the rate increase will continue to accumulate. For Powell, the situation is extremely unpleasant, a couple of days ago he went “hawk” (and not only he, but also other representatives of the Fed)… whether something has changed with inflation – not significantly. And just like that, to turn around right away is an epic failure and a blow to trust (which is so not very high). The market is already showing what it thinks – the growth of gold / bitcoin, the fall of the dollar, etc.

If inflation had slowed down on Tuesday, it would have been easier for the Fed to justify a reverse move. But no …


​​#USA #inflation #economy #Fed #debt #rates #dollar

Looking more closely at American inflation…

Externally, the report has no large deviations from expectations, total inflation is 0.4% mom and 6.0% YoY, without energy and food 0.5% mom and 5.5% yoy. But in reality, only one–time stories saved from a sharper price increase: used cars (-2.8% mom disinflation after a rapid takeoff), gas (-8% mom – heat), eggs (-6.7% mom disinflation) and medical insurance (-4.1% mom to the current inflationary reality has a very distant relationship). Together, these factors reduced monthly inflation by ~0.2 percentage points – too much.

Grocery inflation slowed down slightly by 0.4% mom and 9.5% YoY, but remains aggressive. Goods without energy, food and used cars added 0.4% mom and 4.2% YoY, growth decently slowed down from highs amid the migration of consumption from goods to services, but in the last three months the price increase has stabilized around 4-5% YoY. The main drive remains in services (0.5% mom and 7.6% yoy), active growth in housing continues (0.8% mom and 8.1% yoy), although this is an inertial growth, transport has accelerated (1.1% mom and 14.6% yoy), but mainly due to air travel (6.4% m/m).

If we discard various one–time emissions, inflation accelerated in February rather, various inflation indices cleared of volatile components remained at the ceiling of 6-7% YoY and even accelerated at the moment. I would still estimate the steady inflationary momentum as 4.5-5%, the New York Federal Reserve estimates at 4.9%. This means that even a neutral rate is 5-5.5%… and a restrictive policy means the rate is even higher. However, the same New York Fed published data on inflation expectations – annual expectations decreased from 5% to 4.2% than the Fed may try to justify caution. But the inflationary history as a whole speaks for an increase further.

PS: If anyone remembers, a couple of years ago, the Fed approved a new strategy and switched to targeting the average inflation rate (the average for 5 years is already 3.5%, for example), so if you approach it quite formally, then in order to fulfill your goals, Powell should lower inflation below 2% and keep it for a long time

@ESG_Stock_Market

 

Joe scares the stock market

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Joe scares the stock market
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Employment has grown quite well

USA: employment has grown well, unemployment – too

The number of people employed in the US non-agricultural sector increased by 311 thousand in February, of which 265 thousand in the private sector and most in the service sector (245 thousand). The negative dynamics were in the IT (-25 thousand) and transport/logistics (-21.5 thousand) sectors, but the leisure, medicine/education/trade industries more than compensated for the reductions. The unemployment rate increased from 3.4% to 3.6%, although the share of employed remained virtually unchanged at 60.2%, but labor force participation increased slightly (62.5%). So far, these are only local changes within the framework of ordinary fluctuations.

The markets were very happy about something else: the growth of hourly wages slowed down to 0.2% mom and 4.6% yoy. But it’s not so simple here, the dismissal of higher-paid workers and the hiring of less well-paid ones can quite objectively affect the average pay. If we look at the salaries of non-managerial production personnel, then in February, on the contrary, the growth accelerated to 0.5% mom and 5.6% YoY. However, at the same time, the average number of hours worked decreased, which somewhat adjusted the total wage fund (-0.1% mom) after its sharp rise in January (+1.2% mom). The annual growth of the wage fund has slowed down to 7.4% YoY, but it is still much higher than the pre-crisis ~4%, and the slowdown is rather due to the base effect. The increase in three months was 1.8%, which is slightly higher than the average observed in the last six months (1.7%), i.e. the short-term trend remains the same.

The report is generally ambiguous, on the one hand, it gives certain hints of a slowdown, but the number of employed is actively growing, and the slowdown in the growth of s/p is largely due to the cuts of higher-paid workers. The data can be interpreted quite broadly, the report is rather neutral for making a decision on the rate, but still allows the Fed not to rush back to the 50 bp step.

Yellen continues to spend

Yellen continues to spend “stash”, but there are still reserves

The Fed paused this week – the securities portfolio has practically not changed, in 4 weeks the reduction of the portfolio of government bonds is $61 billion, but the chronic shortage of MBS is only $15 billion reduction in 4 weeks. If Powell is on pause, then Yellen cannot do this and continued to spend “cash” from accounts, adding new dollars to the system: the deposits of the Ministry of Finance in the Fed decreased by $39 billion to $311 billion in a week, in 4 weeks the Ministry of Finance poured $184 billion into the financial system from its account in the Fed. It can add up to $50-100 billion more in March, but in April it will begin to actively withdraw through taxes (~$250..300 billion) – it will be interesting to see how the markets behave.

The banks returned dollars to the Fed through the reverse repo mechanism, the volume of which increased by almost $60 billion to $2.56 trillion in a week, because, despite the operations of the Ministry of Finance, there was a little less liquidity. Banks use reverse repos with the Fed to hedge – the inversion of the debt curve has intensified again. At the same time, corporate bond spreads were rather declining, although the “rout” of bank stocks on Thursday may indicate that there is a clear underestimation of risks.

Biden’s budget, which is $5.5 trillion in tax exemptions, is extremely negative for the stock market, because it will decently reduce capital inflows to the stock market, but it is unlikely to be missed by Republicans in Congress. Ahead of a stormy showdown with the debt ceiling and the budget… The annual CDS on the US national debt continues to grow (76 points).

The US Treasury will continue to add dollars to the system, but in April it will absorb a lot, which may add headaches to the markets along with a shake-up of banks if the Fed does not smooth the situation.

And what does Joe offer us?

US President Joe Biden has proposed a new budget plan for 2024

What is important for us there?

▫️Increase in corporate tax to 28%. Well, thank you, of course, that it is not up to 35% as it was before 2017, but it is still very unpleasant.

▫️Increase in the tax on baibek from 1% to 4%. They say there is nothing to return the value to shareholders here — invest in the development of business and jobs. It seems logical, but there are businesses that are in a cycle of peak development, and according to all norms of corporate finance, they need to give money to shareholders.

▫️The income tax abroad will be raised from 10.5% to 21%. Companies in the USA export services abroad and earn worldwide. Now they will pay “like at home”.

The tax on the rich will be raised from 8% to 25% with a fortune of $100 million. The richest stratum — 0.01% of all taxpayers — will suffer the most.

Cancellation of benefits for oil and gas companies and Big Pharma. For neftegaz, this means literally “pay taxes”, and for pharmaceutical companies, that many medicines can be made available to Medicare, which will lead to negotiations to reduce their cost.

So far, this is only a Biden Administration proposal, but the market reacted accordingly yesterday.

@ESG_Stock_Market

U.S. Labor Market Remains Hot Despite Drop in Job Openings

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U.S. Job Market Remains Overheated
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U.S.: labor market remains overheated

U.S. job openings fell by 410,000 in January, but the 2022 data was revised upward to 11.23 million, bringing the total to 10.82 million openings in January. That’s 1.9 times the number of unemployed, up 1.96 times in December after the revision. In the private sector, 9.77 million job openings remain. But still there are hints of the market cooling, for the first time in many months less than 4 million Americans have changed jobs in search of a better life (wage), and the employer-initiated layoffs are more common. True, more Americans are hiring than firing – not much has changed.

The ADP counted a job gain of 240,000 in February, with small businesses cutting and medium and large businesses hiring. Considering the past reports, the ADP data should be treated rather cautiously, they used to count crookedly, after the change of methodology something may improve, but it is too early to say. That said, they now have data on wage changes: growth slowed down a bit but from 7.3% y/y to 7.2% y/y, and with job changes you can expect a gain of 14.3% y/y (was 14.9% y/y). This is still very aggressive and so far the job market remains extremely overheated. Weekly jobless claims <200k and a total of <2 million on benefits is telling.

The head of FRS J. Powell on Wednesday did not bring much joy to the markets, though he tried to smooth the signal a little bit by saying that they have not made a decision yet (25 or 50) and will look at the data… but so far the data is more in favor of a harder reaction… although the labor market report and inflation reports are still to come – they will be decisive. That said, the Fed, based on the data, continues to show that it just doesn’t know where the ceiling will be and is even technically almost guaranteed to overreact.

In Congress, the head of the Fed was very nervous this time with questions like “You’re trying to put people out of work… That’s your job, isn’t it?”… “you want to put 2 million Americans out of work,” etc. Powell, of course, fought back that they were trying to restore price stability… telling them that this time things might be “different”… I recall how “different” it already was when inflation was “temporary”). Unemployment is not yet rising, elections are a year and a half away, and the Fed has already begun to actively “press” politicians… It’s going to get worse…

@ESG_Stock_Market

China Financial Regulatory Reforms electric vehicles subsidies

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China Financial Regulatory Reforms
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China revises financial regulation regime to control risks

China plans to strengthen oversight of its $60 trillion financial system by creating an expanded national regulatory body and removing some responsibilities from the central bank. According to the plan announced on February 7 at the National People‘s Congress, the new body will take over the supervision of banks and insurance and will oversee all financial sectors except the securities industry. He will take over functions, including overseeing financial holding companies such as Ant Group Co., from the central bank. “The purpose of the new regulatory body is to make sure that it covers some of the “blind spots“ in regulating illegal practices in finance, and under one roof to make sure that there is no place to discount responsibility,” said Yu Lanqiang, a representative of the fund. Manager of Pingtan Strategic Asset Management Co. The shake–up will give the Communist Party stronger control over the sector and centralize key policy decisions under President Xi Jinping during his unprecedented third term. This marks the latest development in a decade—long effort to consolidate — or at least cooperate more closely – between China‘s financial regulators, and followed an earlier merger of banking and insurance supervisors. According to the plan, the Chinese Banking and Insurance Regulatory Commission will cease to exist after major repairs, and the Chinese Securities Regulatory Commission will be transformed into a state institution reporting directly to the State Council. According to the plan, these steps are aimed at “resolving long–standing conflicts and issues in the financial sphere.” According to him, the new powers will focus on strengthening supervision of financial institutions and curbing violations. The fact that CSRC remains independent shows “that the authorities see an increase in the size of the stock market and its role in the economy in the coming years as a pool for absorbing household assets, taking the baton from property in the coming years,” Yu said.

China’s Provinces Offer Sweeteners for electric Vehicles after National Subsidies End

✅ National subsidies, which at one point returned up to 60,000 yuan (US$8,700) to electric vehicle buyers, have played a key role in stimulating the spread of electric vehicles in China. For the most part, they were a resounding success: China is the world’s largest market for electric vehicles, and the supply of passenger cars powered by new energy sources almost doubled last year to 6.5 million.

But at the end of the year, national subsidies stopped, and although electric cars are still being sold at a pace that shames other countries, growth has slowed. The heads of automobile companies began to call for the return of subsidies to the national level.

Beijing said it is working on a new policy to support the industry. Meanwhile, local authorities have taken it upon themselves to stimulate demand.

Here are some of the goodies offered in China for consumers switching to electricity:

➡️ Shanghai. Residents of the financial center of China, which has one of the highest penetration rates of electric vehicles in the country, can receive a one-time refund of 10,000 yuan when buying a new electric car to replace an existing gasoline car.

➡️ Beijing. The capital will continue to subsidize those who change their gasoline cars for electric cars. Owners who de-register cars with an internal combustion engine aged from one to six years can receive 8000 yuan, and those who replace cars with an internal combustion engine older than six years receive 10,000 yuan. According to the Beijing government, the incentives helped boost electric vehicle sales by 5 billion yuan in the second half of 2022.

➡️ Hubei. In the province of which Wuhan is the capital, the “largest car sales subsidy season” began this month with money-back offers starting at 5,000 yuan. In addition to the campaign, Dongfeng Motor Group Co., supported by the state, has started offering additional discounts on several of its Citroën, Nissan and Honda models. According to local media reports, Citroën C6 receives the largest refund amount of 90,000 yuan when taking into account the provincial subsidy and Dongfeng promotion.

➡️ Shandong. The Eastern province said it will distribute vouchers for the purchase of new electric vehicles worth 200 million yuan to buyers of new electric vehicles, and people selling their old cars will receive at least 7,000 yuan for expenses.

➡️ Zhengzhou. A manufacturing center in central China has also taken the path of buying vouchers, offering vouchers worth about 150 million yuan for residents who buy electric vehicles since the beginning of this year. People can get vouchers in the amount of 4,000 to 6,000 yuan for use in local shops and supermarkets, as well as in restaurants. There is an incentive to act quickly, because once the 150 million yuan pool runs out, there is no guarantee that there will be another batch.

➡️ Hunan. This southern province will reimburse people 5,000 yuan if they cancel the registration of their used car with an internal combustion engine and buy a new electric car. The plan is part of a goal to produce more than 1 million electric vehicles in Hunan Province, where companies including BYD Co., backed by Berkshire Hathaway, and Zhejiang Geely Holding Group Co. have manufacturing facilities.

@ESG_Stock_Market

Investing in Cryptocurrency Without Money: Strategies for Success

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Investing in Cryptocurrency Without Money: Strategies for Success
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This article provides strategies for investing in cryptocurrency without money. It covers methods such as airdrops, free mints, mining, and staking, and provides advice on how to choose the right option for you. It also provides information on how to stay safe from scammers and advice on calculating the costs of mining.

How to invest in the crypt when there is not enough money?

Have you been looking towards cryptocurrencies for a long time, would you like to buy some coins in order to eventually also become an investor and make a profit, but there is not enough money catastrophically? Today we will describe the most affordable methods of investing in the crypt without the need for hard–earned investments in its acquisition. So, where can I get a crypt without buying it?

  • Airdrops

    Most often, airdrops are used by people seeking to get the most information about a new project. For example, a Blur distribution was recently held, and the most active NFT traders who regularly visit this platform shared more than 360 million BLUR tokens among themselves. Sometimes the upcoming aidrop is announced in advance, this is necessary so that potential users have time to complete a number of tasks necessary to obtain the much–desired tokens. The price of the latter in the bull market can be more than one thousand. So, for example, on average at its peak, one Uniswap airdrop cost 12 thousand dollars. An impressive figure, isn‘t it? Therefore, airdrops are an excellent source of tokens, moreover, the source is completely free. However, you need to be vigilant, because a lot of scammers are willing to do a lot to steal your crypt, don‘t let them do it!

  • Free mints

    By distributing NFT and free mints, new projects are trying to make themselves advertising and hype to attract customers. They are a good source of free coins and can be the beginning of future capital. Alternatively, you can try to get a couple of NFTs, and then resell them and see what happens. Whatever it was, and free NFT is a great tool for investing in crypto without any investments.

  • Mining

    This method has become very widespread. The term “mining“ refers to the process of adding individual blocks to the blockchain and receiving a small reward in return. In other words, the computing power of the user‘s personal computer will be used, firstly, to process transactions, and secondly, to ensure their reliability and security. Despite the high cost of special installations for bitcoin mining, there are alternative coins that can be mined using a regular laptop. It should be taken into account the fact that mining entails an increase in electricity costs, so it is better to calculate everything carefully to understand whether it will be possible to come out on the plus side.

  • Steaking

    After collecting at least a small portfolio of cryptocurrencies using the methods described above, you can use another option, which is also completely free. Staking will make tokens work for you and provide additional profit. This is one of the types of passive income, which boils down to verifying transactions for blockchains and proving the so–called PoS. For example, you can make your own Ethereum, which will be used to ensure the operability of the corresponding blockchain. In return, the user will be charged a certain percentage of the commission for each transaction. Today, many exchanges provide staking services, which is convenient for beginners who do not even have to understand the nuances.

Instead of a conclusion. From the above, we can conclude that it is quite possible to create a cryptoportfel completely free of charge. However, you will still have to pay, even if not with money, but with time and effort that should be made at least for minimal study of this topic.

Investing in cryptocurrency without money, airdrop strategies, free mints, mining, staking strategies, how to choose the right cryptocurrency investment opportunity, cryptocurrency investing without money, risk-free cryptocurrency investing strategies, how to stay safe from cryptocurrency scammers, calculating mining costs for cryptocurrency investing

@ESG_Stock_Market

Impact of Inflation on Indian Consumer Spending After Adani Group’s Market Decline

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Impact of Inflation on Indian Consumer Spending After Adani Group's Market Decline
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For some Indians, the loss of more than $130 billion in Adani’s market value was a blow to national pride. But even those who refuse to identify Adani with India are forced to admit the big reason for the fiasco: the country’s desire for more beautiful airports, wider roads, faster rail links, etc. is not supported by the purchasing power of the masses. The stratospheric value of shares may attract debt obligations of asset-owning firms for some time. Ultimately, however, misallocated capital will not put an end to infrastructure shortages.

Look deeper into the collapse of Adani, and you will see the picture: most of the group’s shares that have failed this year have never been able to boast of excellent capital efficiency. Adani Enterprises Ltd., the flagship, has a return of less than 10% on invested capital, as does Adani Green Energy Ltd., one of the largest solar energy producers in India. Even the increased profitability of Adani Total Gas Ltd. It may be the result of the fact that its gas business has won tenders for the supply of an increasingly large geographical area — in accordance with the government’s desire to provide 90% of the population with a cleaner source of energy than diesel fuel, coal and cow manure cutlets.

No gloss of stock market valuation can hide the flaws underlying the economy. The group says that refinancing its net debt of $24 billion should not cause problems. However, if capital rises in price, Adani’s juggernaut may stumble.

Before Adani became synonymous with India at home and abroad, Hindenburg Research had a bombshell effect: a 106-page report claimed that the billionaire was trying to pull off the biggest scam in corporate history. Adani Group responded with a 413-page denial, but could not save the stock sale. Since then, the group’s shares have plummeted, although the struggle for corporate reputation has acquired political overtones. Ahead of Modi’s re-election in next year’s general election, the opposition is trying to accuse him of having a relationship with a businessman from his home state of Gujarat.

Whatever the outcome of the gladiatorial duel, one thing is clear: from airports and roads to green hydrogen, data centers and mining, five companies that the conglomerate planned to bring to public markets between 2026 and 2028 may have to be incubated. Bondholders and banks will be able to calm down if they see enough solid assets as collateral, but equity investors once failed. Now they will need proof of reliable underlying profitability.

P.S. Adani is a network of the largest companies in India.

PineBridge Investments Using Recent Sell-Off in Indian Market to Buy Stocks for Multi-Asset Portfolios

PineBridge Investments, an American asset management company, is using the recent sell-off in the Indian market to start buying stocks for its multi-asset portfolios, betting that explosive corporate governance charges against the Adani conglomerate will not stop the boom in growth and production.

*️⃣ While Hindenburg Research’s January 24 short seller report on tycoon Gautam Adani’s business empire was one of the reasons investors pulled billions of dollars out of Indian markets, Michael Kelly, who oversees Pinebridge’s $17.8 billion global multi-asset portfolios, is one of those going to another side.

According to Kelly, who is also a member of the PineBridge management committee, the stock collapse has become an entry point into a historically expensive market. His funds were not in Indian stocks before the Adani securities debacle, but they have since been bought, Kelly says, adding that “we are not necessarily done.”

🟡 Corporate governance risks similar to those Hindenburg mentioned exist not only in emerging markets, Kelly is sure, noting the massive corporate bankruptcies in the United States in 2001-2002, which were caused by fraudulent accounting methods at Worldcom and Enron. He also does not discount the risk of new turmoil in Indian markets as corporate governance controls increase.

“If you shine a spotlight, you’ll find something,” says Kelly. “You can never say that there is only one cockroach. There was Worldcom in the USA, and then another cockroach named Enron,” he added. “Having said that, if you shine a light on India, you will also see a lot of good companies.”

According to Kelly, as the MSCI India index is about 10% below the all-time high reached in December, some of these names have become more accessible, although the index is still trading at about 20 times forward earnings, which is twice the ratio of the main emerging market benchmark.

The Rally of Consumer Stocks in India Is Over

According to the top manager, the rally of consumer stocks in India is over According to one of the country‘s largest money managers, the rally in shares of India‘s largest consumer companies has probably exhausted itself, as margins are close to historic highs, and firms do not seem to want to increase investments. “We think revenue growth will disappoint,” said Anish Tavakli, who oversees about $4.8 billion as deputy director of investment at ICICI Prudential Asset Management in Mumbai. “We don‘t think volumes will recover if these companies don‘t increase investments in brand creation, marketing, product innovation, consumer spending.” The global resurgence of the pandemic has led to an increase in the share of consumers worldwide, especially in India, where the history of domestic demand has long been touted by global funds, which led to billions of inflows in the second half of 2022. However, as inflation accelerates and hits rural populations especially hard, cracks appear in the country‘s consumption dynamics. The negative impact of inflation will lead to a decrease in middle–income consumption in categories such as fast food restaurants, food delivery, paints and durable goods, according to a report by Goldman Sachs Group Inc. last week. Core inflation in India has exceeded 6% over the past 16 months, which threatens to slow economic growth and consumer spending. The central bank expects the consumer price index to average 6.5% in the current fiscal year by March. Tavakli said that for one of his other funds, he has reduced his investments in metallurgy and non–bank financial companies and is instead leaning towards housing and construction–related sectors in anticipation of positive earnings surprises.

Which Indian companies are listed in the USA?

There are not so many of them. 11 pieces:

1. HDFC Bank (HDB), bank, capitalization, capitalization 114.01B$
2. Infosys (INFY), information technology, capitalization 81.95B$
3. ICICI Bank (IBN), bank, capitalization 74.09B$
4. Wipro (WIT), information technology, capitalization 27.27B$
5. Dr. Reddy’s Laboratories, drug manufacturers, capitalization 9.06B$
6. WNS Holdings (WNS), data and voice communication services, capitalization 4.17B$
7. MakeMyTrip (MMYT), tourism, capitalization 2.89B$
8. Sify Technologies (SIFY), telecommunications services, capitalization 314.19M$
9. Azure Power Global (AZRE), RES, capitalization 252.26M$
10. Yatra Online (YTRA), tourism, capitalization 141.98M$
11. Lytus Technologies (LYT), software, capitalization 30.82M$

And listing on the stock exchanges of India (Mumbai Stock Exchange and National Stock Exchange of India) is still a modest 4,418 companies 😎

@ESG_Stock_Market

How is the US economy affected by wage inflation?

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US economy affected by wage inflation
Post Views: 28

How is the US economy affected by wage inflation? USA: s/p are growing – inflation too

Income & Expenses. In January, American statisticians again revised income data, as a result, it turned out that disposable incomes are growing by 2.0% mom and 8.5% yoy. The revision for previous periods concerned the growth of nominal s/p in the private sector, which turned out to be more intense than previously thought and amounted to 1% mom and 8.4% yoy, and since December 2019 the growth was 25%. Additionally, in January, the budget threw money (taxes were reduced). Inflation, of course, ate up part of the income, real disposable incomes showed an increase of 1.4% mom and 2.3% YoY.

Consumer spending increased by 1.8% mom and 7.9% YoY in nominal terms, but monthly increases are a consequence of the seasonal calculation curve of retail sales in December/January, the annual dynamics here is more indicative, and it indicates an acceleration in the growth of real spending per capita to 1.9% yoy and this 7.1% higher than the levels of December 2019. The revision of the growth of the s/p also led to a revision of the savings rate, which in January was 4.7%, so there is where to go down if anything.

Inflation. The deflator of consumer spending accelerated sharply to 0.6% mom and 5.4% YoY, core inflation (Core PCE) accelerated to 0.6% mom and 4.7% YoY. Moreover, the price increase was quite widespread across the basket. It is clear that prices in the housing sector are growing quite actively (0.7% mom and 8% yoy), the growth of goods without energy and food is more modest (0.5% mom and 2.8% yoy), food and energy have risen in price (0.4% mom and 11.1% yoy/d). But the most important thing is that the beloved now J.Powell’s price index for services without energy and housing accelerated its growth to 0.6% mom (a record since November 2021) and 4.8% yoy (the maximum since February 2022). Cyclical components of core inflation accelerated growth to 8% YoY, their contribution to overall inflation is about 3 percentage points.

What we have in the end: wages grew faster than expected, the consumer is active, inflation accelerated (especially where it is sensitive for the Fed) stronger than forecasts. The markets, of course, are depressed… expectations of a Fed rate hike rose to 5.25-5.5%. Shares of “hawks” in the Fed sharply up.

​​#USA #income #economy #Crisis #spending #budget #inflation

Loretta Mester:
(24.02.2023)

“The rate should be raised above 5% and kept there for some time. I hope the Fed will be able to return inflation to 2% without destroying the labor market.”

James Bullard:
(22.02.2023)

“A more aggressive rate hike will give the Fed a better chance of reducing inflation.”

Source: cnbc.com

Evercore:

The probability of achieving a soft landing is reduced. We still believe that the Fed is unlikely to return to raising rates by 0.50%, however, such a risk appeared after the release of the latest data on the PCE Price Index.


Minutes of the Fed meeting January 31-February 1, 2023 (FOMC Minutes).
(pub. 22.02.23)
(page 11)

“Almost all officials were in favor of raising the rate by 0.25%. FOMC members who were in favor of raising the rate by 0.50% noted that a more significant increase would bring the rate closer to the levels that, in their opinion, would allow achieving a fairly restrictive position.”

source: federalreserve.gov

For 100 years, the US stock market has entered the overbought zone for the third time

#stocks #usa #sp500 #overbought #stock market #finance

For 100 years, the US stock market has entered the overbought zone for the third time

Over the past 100 years, the American stock market has entered an overbought zone for the third time in relation to the global stock market. This means that the cycle of dominance of American stocks in the global financial market is over. Pay attention to the exhibitor from 2008, it looks epic.
In the West, this schedule is not yet discussed enough, however, with the onset of depression, it will definitely become relevant.
Of course, this does not mean that the American market will not grow, but investors will give priority to other developed and emerging markets.

investors have had a paradigm shift

investors have had a paradigm shift


#rates #bonds #cash #stocks #finance #allocation

This month, investors experienced a paradigm shift in expectations of the peak discount rate in the United States: at the beginning of the month, expectations were 4.5% in March-April, now – 5.4% in August, with a further decline to 3.8% by the end of the year.
The change of mood led to the breakdown of trends in the financial market: the growth of the dollar brought down the prices of precious metals and base currencies, and led to the sale of the US debt market, the stock market is still holding, but the positive there is also over.
At the next stage, the market will increase expectations for the duration of the high-rate cycle, which will also lead to a decrease in risk appetite.

The red line on the chart is the difference between the yield of junk bonds and treasuries; the indicator is steadily decreasing, i.e., according to the market, garbage carries less risk than risk-free government bonds;
The blue line is the world’s lending standards, which are already worse than they were in 2020; that is, it is more difficult to get a loan, and this primarily concerns less reliable borrowers who issue junk bonds.
Actually, the situation was similar in the pre-crisis 2007, but now all the processes are going faster, so this year the global financial system may plunge into depression.

the yield of treasuries is 2.5 times higher than the internal yield of the S&P500

the yield of treasuries is 2.5 times higher than the internal yield of the S&P500

#finance #dividend #coupon #stocks #bonds

📍Probably the most underestimated chart to date: the yield of treasuries is 2.5 times higher than the internal yield of the S&P500 (you can not count on the income from the exchange rate difference in the rate hike cycle).
Taking into account the current risks, from the point of view of the risk/profit ratio, it is more profitable to sell shares and buy treasuries, and this flow will increase as the prices of American stocks decline – this will put additional pressure on the US stock market.

The company’s reporting for the upcoming week

The company's reporting for the upcoming week

🇺🇸 #USA #reporting season #reporting
in the USA the reporting season continues : corporate reporting for the upcoming week

FactSet: 68% have already exceeded earnings per share expectations this reporting season, which is below the 5-year average of 77% and below the 10-year average of 73%

66% of companies exceeded revenue expectations, which is below the 5-year average of 69%, but above the 10-year average of 63%

@ESG_Stock_Market

The Fed raged, but the US Treasury corrected everything

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Fed's rate hike
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The Fed raged, but the US Treasury corrected everything

After a week-long pause, the Fed reduced its portfolio of government bonds by $32.4 billion and mortgage securities by 1.2 billion at once, the “other” assets of the Fed decreased by another $15 billion (where accumulated interest/coupons are usually taken into account), in total, the assets of the Fed decreased by $50.6 billion at once. But the US Treasury came to the rescue, which in a week reduced its reserves of “cache” at the Fed by $56.1 billion, and it did all this on February 15 in the amount of $87.9 billion. Despite the fact that one of the most significant weekly reductions of the Fed’s balance sheet took place this week, the banks did not have less dollars. And, given that banks have reduced reverse repos by $56 billion, there is even more free dollar liquidity – the balances on the accounts at the Fed have increased by $73.9 billion to $3.1 trillion.

There were more dollars, which helped the stock market in the face of the Fed’s aggressive rhetoric, but it certainly did not help the government debt market. Although the Ministry of Finance practically did not increase market debt during the week, the US government debt curve went up by 40-70 points in a week, the inversion of the curve remains around 1%.

The US Treasury still has a large margin of safety: $440 billion of cash in the Fed, which it will gradually spend in anticipation of the ceiling, adding dollars to the system and leveling the effect of the Fed’s QT and up to $400 billion of “emergency measures”. In April, the budget balance is usually positive (annual taxes), even with the growing costs of servicing the national debt, Yellen should have enough money until September.
After two consecutive months of buying US stocks by non-residents, “hot” loan money was attracted to the US market, in January, for the first time in six months, the volume of margin debt increased (positions with leverage) and immediately by $ 35 billion, to $ 641 billion. But they reached there through an increase in leverage, because the balance of funds on margin accounts did not grow, but even decreased from $164 billion to $161 billion. On the one hand, this is good for stocks at the moment, “hot” credit money has pulled up to record cashbacks and the influx of non-residents’ money, but this is in the moment.

If you look a little further, then against the background of the degradation of profits, the cashbacks may be lower (this is even if the Democrats cannot push through a tax increase). High rates will actively eat up free capital on margin accounts – margin is expensive, and for every dollar of cash now $4 borrowed is decent. The Fed is still aggressive:

✔️ hawks Mester and Bullard, although they have already increased by 50 bps again
, ✔️ the rest intend to keep the rate high, at least until the end of the year.

A reversal of the Fed, of course, is possible, but it is more likely to happen together with a financial shock (economic processes are much more inert than financial ones), which is unlikely to be positive for the market at the first stage of the action. In this regard, the arrival of “hot” credit money, although it supports stocks at the moment, but at the same time forms a mass for future descent when the market conditions worsen…. ​​#USA #inflation #economy #Fed #debt #rates #dollar

⚖️ Markets are putting the Fed’s rate hike in March on:

Fed's rate hike

0.25% with 82% probability
0.50% with 18% probability

a day ago:
0.25% with 85% probability
0.50% with 15% probability

a week ago:
0.25% with 91% probability
0.50% with 9% probability
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

For the first time in the current US rate hike cycle, the market expects a rate higher than the Fed lays down

US rate hike cycle

📍 For the first time in the current US rate hike cycle, the market expects a rate higher than the Fed lays down (blue line).
Back in early February, market expectations for the end of the year were at 4.4%, on 16.02. – 5.08%, and on 17.02. – 5.13%.
📍 At the same time , the hawks )supporters of a tough policy) want to raise the rate by 0.5% in March, which is not yet being laid by the market. So, despite the sharp shift in market expectations on the subject of monetary policy, surprises are not over yet, and in general, they are now frequent guests.
#rate #usa #fed #finance #prep

The historical chart of the discount rate in the United States tells us that in the cycle of rate increases

chart of the discount rate in the United States

The historical chart of the discount rate in the United States tells us that in the cycle of rate increases, there is always some kind of “accident” in the financial system, which may be local (1987, 1998, etc.), or lead to a financial crisis (2008, 1929, etc.), but it always happens.
In addition, the current rate of rate hikes are second only to the 70-80 years of the last century – this definitely poses a danger that cannot be quantified.
#history #crisis #recession
Seasonal factors are a short-term risk factor. Thoughts for the next month.
Seasonal factors are a short-term risk factor, but the arguments in favor of stocks remain unchanged

Although there have been some “hot” inflationary economic data recently, it is too easy and tempting for supporters of inflation to pounce on them and think that inflation is skyrocketing.

But the Fed depends on the data, and does not “react to them,” and until the main factors of inflation grow rapidly – energy, housing and wages – the Fed will raise rates, but in a predictable way. This is what determines the lower volatility and this is what allows the multipliers to grow this year.

We assume that the shares will grow strongly in 2023, and the expansion of the spectrum contributes to this. For this, there were three factors that are observed only at major turning points in the markets, and this confirms our opinion that October 12, 2022 was the main minimum.

But we also have to respect seasonal factors, and we believe that 16.02-07.03 remains a period when markets may stall. As shown in the picture, the aggregate of 7 previous years, when the markets gained > 1.4% according to the “rule of the first 5 days”.

Performance of sectors, goods, currencies, companies as of 02/18/2023
Performance of US Equity Sectors (YTD):

1. Consumer Cyclical: +16.5%
2. Technology: +13.9%
3. Communications: +11.6%
4. Real Estate: +8.2%
5. Financial: +7.2%
6. Industrials: +6.7%
7. Materials: +6.2%
8. Consumer Defensive: +0.1%
9. Healthcare: -0.9%
10. Energy: -1.0%
11. Utilities: -2.2%

Performance of Metals in the USA (YTD):

1. Iron ore +12.2%
2. Copper +8.3%
3. Gold +1.4%
4. Zinc +1.3%
5. Aluminum +0.6%
6. Steel -3.4%
7. Nickel -9.1%
8. Silver -9.7%
9. Platinum -15.0%
10. Palladium -17.0%

Performance commodities in the USA (YTD):

1. Cocoa +6.9%
2. Lumber +0.2%
3. Soybeans +0.2%
4. Corn -0.1%
5. Sugar -1.1%
6. Wheat -2.1%
7. Oil -3.2%
8. Gas -49.4%

Top 5 Growth/Fall Leaders in the S&P 500 (YTD):

1. Tesla: +69.1%
2. Warner Bros. Discovery: +62.8%
3. Catalent: +58.6%
4. Align: +50.2%
5. Royal Caribbean Cruises: +47.7%

1. Lumen: -24.7%
2. Enphase: -22.6%
3. Baxter: -19.6%
4. APA: -18.4%
5. Pfizer: -15.7%

Top 5 leaders of growth/decline on NASDAQ* (YTD):

1. Coinbase: +84.2%
2. Tesla: +69.1%
3. Warner Bros. Discovery: +62.8%
4. Lucid Group: +60.0%
5. Airbnb: +53.9%

1. Enphase Energy: -22.6%
2. Sirius XM: -21.2%
3. APA: -18.4%
4. Chesapeake: -15.1%
5. ZoomInfo: -14.6%

* cap. > $10 billion

Top 10 largest US companies by capitalization (YTD):

1. Apple +17.4%
2. Microsoft +7.6%
3. Google +6.8%
4. Amazon +15.7%
5. Tesla +69.1%
6. Berkshire Hathaway -0.2%
7. NVIDIA +46.4%
8. Visa +7.6%
9. UnitedHealth -5.9%
10. Meta* +43.7%

Top 5 leaders of growth/decline of Chinese stocks* (YTD):

1. Baidu: +29.3%
2. Aluminum Corp of China: +23.4%
3. Li Auto: +22.7%
4. Netease: +22.0%
5. HSBC: +21.8%

1. JD Health: -17.2%
2. Meituan: -16.7%
3. Smoore: -15.9%
4. Kuaishou: -15.3%
5. Henhan: -8.3%

Top 10 largest companies in China by capitalization (YTD):

1. Tencent +17.8%
2. Kweichow Moutai +5.2%
3. Alibaba +16.0%
4. ICBC +2.0%
5. CCB +2.7%
6. China Mobile +11.6%
7. HSBC +21.8%
8. Contemporary Amper +7.2%
9. Agricultural Bank of China +3.8%
10. CM Bank +3.1%

Top 5 Growth/Fall Leaders on MOEX* (YTD):

1. Polymetal +27.5%
2. Globaltrans +25.7%
3. Sberbank +13.2%
4. Ozone +12.9%
5. Pole +12.7%

1. Tatneft -9.2%
2. Tatneft AP -6.6%
3. X5 Group -5.7%
4. Lukoil -5.6%
5. Rosneft -5.6%

People’s portfolio of shares of the Russian Federation on the Moscow Exchange (shares)*:

1. Sberbank JSC: 26.6%
2. Gazprom: 22.5%
3. Lukoil: 10.4%
4. Norilsk Nickel: 9.6%
5. Sberbank AP: 7.1%
6. Yandex: 5.4%
7. Rosneft: 5.3%
8. Surgutneftegaz AP: 5.1%
9. Novatek: 4.2%
10. MTS: 3.8%

Company Results (YTD):

1. Sberbank JSC +12.8%
2. Gazprom -5.8%
3. Lukoil -5.9%
4. Norilsk Nickel -5.7%
5. Sberbank AP +11.3%
6. Yandex +8.5%
7. Rosneft -6.2%
8. Surgutneftegaz AP +2.6%
9. Novatek -4.4%
10. MTS +5.5%

Portfolio result since the beginning of the year: +2.0%.

Currencies and Cryptocurrencies* (YTD):

1. USD** +0.2%
2. EUR -0.1%
3. GBP -0.4%
4. JPY -2.3%
5. CNH +0.8%
6. RUB -4.9%
7. KZT +3.3%

1. Bitcoin +49.2%
2. Ethereum +42.1%
3. Ripple +17.0%
4. Cardano +64.3%
5. Solana +134.8%
6. DogeCoin +25.5%

* against the US dollar
** DXY – dollar index

Performance of World Indices (YTD):

US:
S&P-500: +5.9%
NASDAQ: +12.0%

Asia:
Shanghai Comp.: +4.4%
Nikkei: +6.1%
Nifty 50*: -1.0%
KASE**: +4.0%
XU100***: -9.7%

Europe:
DAX: +10.6%
FTSE-100: +7.1%
CAC-40: +12.7%
MOEX: +0.5%

* indian index
** kazakhstan index
*** Turkish index

Source: https://finviz.com

@ESG_Stock_Market

Moderate greed in crypto, greed in stocks is in the risk zone. Be cautious ♨️. Fear greed index

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Fear and greed nasdaq
Post Views: 42

Fear and greed nasdaq, moderate greed in cryptocurrencies, greed in stocks is at risk. What are we trying to say?

fear greed index

Why was the stock market depressed on Friday? US: The overheated labor market doesn’t want to cool down. Fear and greed nasdaq

Statisticians traditionally revised the U.S. labor market numbers in February, with historical data revised up by 813,000, and the gain in employment in January was an incredulous 517,000, of which 443,000 was in the private sector. So quite unexpectedly there was another million employed, i.e., the labor market was even hotter than thought. Of course, the main thing here is the data revision, but compared to the December report, there were 1.3 million more people employed in January.
The unemployment rate in January was at its lowest level since 1969, dropping to 3.4%. Labor force participation rose slightly (62.4%), but it’s still decently below pre-decline levels. The labor force participation rate has also risen slightly to 60.2%, although it too remains below pre-set levels, and that’s with the current near-zero unemployment rate. The fact that the labor market has even improved in recent weeks was indicated by the benefits data, which fell below 200K per week, the current report has confirmed it.

With wages also turned out to be somewhat better, the slowdown in 2022 was lower than previously thought, and growth even accelerated somewhat in January. This was not due to an increase in hourly wages (+0.3% mom), but more to the estimate of hours worked. Production and non-management payrolls added 0.8% mom and 9.2% yoy, more than twice the average pre-crisis level.

It’s worth discounting the fact that this is a February report and revisions, but still, after seeing job openings rise sharply in December and amid record-low unemployment benefits, the market still looks like it’s very hot. And that will give the hawks at the Fed new arguments to kick the growing pigeonhole army. The market, on this, of course, is depressed …

A little clarity. ​​The Fed took it away, the Ministry of Finance added

The Fed continued to reduce the portfolio this week, removing $38 billion of government bonds from the balance sheet at once, over the past 4 weeks the portfolio has decreased by $60 billion – everything is according to plan. The Fed is not getting steadily on mortgages, but this is already a familiar story. The US Treasury, on the contrary, added $ 72 billion to the system, raising bank liquidity by $ 30 billion. Local fluctuations will occur here, but the main process will not change: the US Treasury will borrow little, the Fed will continue to QT, but the overall supply of public debt will be low. At the same time, the budget will spend the cache, adding liquidity, and the Fed will withdraw it through QT. And there will be such a swamp until Yellen runs out of cash on her accounts and “emergency measures” and the debt ceiling is raised – then the situation can shake up.

The US Treasury has published plans for the first half of the year, it needs to borrow $1.3 trillion in the market to end the half-year with $0.55 trillion in cash on the balance sheet. But they estimate the actual financing needs at $0.6 trillion for the first half of the year – this is due to the fact that annual taxes are paid in the second quarter and there is virtually no budget deficit. In this regard, Yellen, of course, rather catches up with fears, saying that the money will last until June, in reality they are quite capable of holding out until September without raising the ceiling, if there are no emergency expenses.
Interest expenses on debt in the 4th quarter have already officially amounted to $0.85 trillion (in annual terms, or 3.3% of GDP) – increased by 42% YoY. Net interest expenses adjusted for Fed payments and interest income in annual terms increased to $0.82 trillion (3.1% of GDP), which is 77% higher than in the 4th quarter of last year. By the end of the year, we expect more than $1 trillion in interest on the debt, which is comparable to the records of the 80s and a big fight over the budget.

Looking back at the decisions of the Fed and the ECB (the Bank of England does not count – they initially rather pretend that they are struggling with something, even though the head of the Central Bank said that this is not the end of the increase), although the Central Bank itself did not show much softness – they showed complete uncertainty, and if they themselves are not in why are you not sure – why should the market believe them and their forecasts? Well, the market generally does not believe them, but I think the market overestimates the softness of the Central Bank and underestimates the risks of recession and inflation …
#USA # inflation #economy #Fed #debt # rates #dollar

What did Powell tell us? Powell: postpone until March

What did Powell tell us? Powell: postpone until March

The press conference of the head of the Fed turned out to be even more insipid than her press release. Perhaps its main motive is only one thing: to raise it by the expected 25 bp and sit out until the March meeting, and then we’ll see. This is exactly what the entire speech of J. was dedicated to.Powell. He repeated dozens of times everything that the market has already heard many times and which he does not really believe.

In fact, trying (which is typical for the Fed under Powell) to sit behind the locomotive, because they are not sure of anything and (apparently) are very afraid to make a mistake again. The peak of the bid – we do not know, maybe higher, maybe lower… how long – some time, where it will turn – we will go there.

Powell said a lot of “I think”, “I think”, as a rule, everything he says after these phrases means a little more than nothing – it showed up well in the first term, the crown “I think inflation is temporary”, because he doesn’t have much of his own expertise.

“Powell is talking hawkishly at every opportunity he can, using all the standard phrases, but the dollar scoffs at this admonishment.” – in this comment, the whole attitude of the market to the signals of the Fed. When the market sees fear (to make a mistake) and uncertainty, it always bends its line. By the way, this does not mean at all that the market is right in its expectations, but while it bends, it bends.

It is possible to understand the Fed, the second mistake in a row can cost not only the chair to Powell himself, but also bear the quite material risk of losing the formal independence of the Fed, which forces them to take an extremely cautious position, leaving the doors open in all directions. But the markets are taking a very specific position, which threatens volatility on the one hand, while reducing the effectiveness of the Fed’s policy on the other.

Anyway, the Fed has suspended the situation until the March meeting, when they will have to publish forecasts. The markets interpret this as weakness, driving the dollar rates down, and risk assets and gold up. It is not a fact that this fuse will last for a long time, the first good reports on the labor market, or bad ones on inflation will be nervously perceived.
#Fed #rate #inflation #USA

 

It is not a recommendation for action.

“Praemonitus, praemunitus”

@ESG_Stock_Market

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