It’s been another of those macro weeks that makes you 10 years older in a matter of days. We look at the timeliest indicators of the deposit flight crisis and assess how to deal with it.
CEO at Steno Research. Macro afficionado, investment analyst and Madridista. Host/Editor @ Real Vision. Hosting "The Macro Trading Floor" podcast @ Blockworks.
Something for your Espresso: 3 take-aways from Powell
The Fed is semi-cornered in the discussion on deposit flights and decided to neglect it in practice. Issues are likely going to accelerate on the back of the 25-bps hike. The hiking cycle is over.
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Something for your Espresso: No one’s willing to address the root cause yet
It is Fed day and the last few days of increasing market stability will allow them to hike interest rates. The question is if Powell will decide to address the root cause of the deposit flight… Fed Funds is too high relative to bank deposit rates.
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Energy Cable #12 – Banking crisis seeping into energy
Energy prices- and stocks have suffered due to the banking crisis as it flows through to the real economy. Was this the actual recession trigger? If so, it may be too early to tilt positive on Energy and underlyingly our models have rather turned more bearish than they already were over the past weeks.
Find out what to expect from Gas, electricity and oil markets below!
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Something for your Espresso: While we are waiting for the next shoe to drop
Calm is temporarily restored while First Republic Bank continues to suffer. Tech and Consumer Discretionary are underperformers when the calm is restored. The world is truly upside down right now.
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Fed Watch: 25bps that they will woefully regret
The FOMC will likely decide to raise the Fed Funds target range by 25bps and regret it soon thereafter on Wednesday. Everything but the banking sector stress screams higher interest rates, why the Fed will attempt to regain control of the narrative.
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Banking Crisis Liveblog Week 2 – Credit Suisse
The banking crisis continues and we’re covering it live here on StenoResearch.com! Bookmark this page and we’ll keep you posted throughout the week.
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Something for your Espresso: Bye bye to AT1 investors
Another hectic week is in the making and we don’t find risks to be contained yet. The Fed is likely to hike on Wednesday even if markets are screaming that they should rather cut. The first stages of the crisis playbook are playing out. The next will be true pivots from central banks.
Steno Signals #40 – The banking crisis is likely to accelerate in coming weeks
The banking crisis will continue to rage until the Fed and the ECB accept the underlying reason for the deposit flight. Banks cannot cope with an über-inverted yield curve, why cuts are needed asap to contain the situation. It will likely get worse before it gets better.
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Flow Watch: Any buyers left?
What a week. Let’s have a look at flow and positioning indicators. Some of them will surprise you
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Something for your Espresso: The rates roller-coaster
Up, down, up, down. Front-end rates are schizophrenic these days and the hiking cycle is close to being over consequently. The banking crisis “complicates communication”.
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Good morning, America: The hiking cycle is over #2
Goldilocks data keeps coming from the US economy, while the ECB rhetoric hints of the hiking cycle potentially already being over. Here are our take-aways. The steepening will CONTINUE as the cycle is (almost) over.
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5 Things We Watch: Five Aspects Surrounding the Banking Turmoil
This week really has been one for the books. On Friday, markets sounded the alarm as we experienced the second largest bank-failure in US history. Naturally, this behemoth event swept magazine covers and blew up our phones and inboxes leaving not much room for other things to watch – hence this peculiar edition of the recurring ‘5 Things We Watch’, where all five things relate to the banking frenzy.
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Something for your Espresso: Is the ECB even aware of the banking crisis in the US?
The US inflation print yesterday would have been a CLEAR 50bp data print, but markets and we remain convinced that the credit event will force the Fed to rethink. The ECB is, on ther other hand, not awake yet.
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Inflation Watch: 7 charts on inflation even though no one cares
We focus on three categories in today’s inflation print from the US. Shelter, Medical Services and Transportation Services. Overall, we find risks to be on the downside for inflation but mostly in March/April.
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Something for your Espresso: Will anyone care about inflation?
The market is convincing itself that the hiking cycle is over in the US, but will anyone care about inflation today? Long gone are the calls for higher(er) for longer(er) and the curve is steepening fast.
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Banking Crisis LIVEBLOG
Live coverage of the SVB crisis! We give you our live updates over the coming days!
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Something for your Espresso: The hiking cycle is over
The hiking cycle seems over, even if inflation is running too hot. Lower rates are likely needed to resteepen the curve and tempt money back into deposits from bills and money market funds. The Fed is caught between a rock and hard place.
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Steno Signals #39 – Time to figure out who’s naked
Silicon Valley Bank is nothing but a symptom of years of excess money growth and it is now time to figure out who else is swimming naked. Money growth is negative, and idiots only survive in times of excess liquidity.
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Positioning Watch: How big were the SVB flows?
Let’s have a look at our flow -and positioning indicators after a week of market turbulence. How big were the SVB-fueled flows on Thursday and Friday? We look across assets in this analysis.
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Money Watch: Have people forgotten that everything is about money? Also the SVB case..
Most people tend to agree that the amount of money in an economy affects economic conditions. More money makes consumers buy more goods and services, and the excess demand leads to increasing prices.. but what happens when we destroy USDs as we currently do? More SVB cases show up!
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Something for your Espresso: Bear Stearns 2.0?
Silicon Valley Bank is under water on the exchange and a bank-run is currently unfolding it seems. Should we be worried? A few notes from a night of full of telcos.
Something for your Espresso: Eberly, Kuroda-san and their ilk
Will Kuroda-san rock the boat on his last meeting in charge of the BoJ? And will Janice Eberly prove to be a dovish VP of the Fed? 3% inflation targets soon to be discussed.
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Steno Editorial: Is China your only feasible savior in 2023?
China is rebounding from a Lehman like credit event in 2022, which makes Chinese assets the cheapest on earth. Buying Chinese assets or assets outside of China with a link to China may prove to be your portfolio liberator in an otherwise tricky road ahead in 2023.
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Something for your Espresso: Powell the flip-flopper
Powell is back as the hawk we knew from 2022, but the extreme data-dependency is volatility creating by design. One soft inflation and/or job report and we will back at where we were just a few weeks ago. Buckle up.
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China Week: The reopening play vol 2
The abiding tale of a Chinese reopening has been about as labile as pundits’ conviction of a soft landing. In fact the two may very well be tightly correlated. Now, it seems data has finally arrived to firmly lay to rest the debate whether a reopening would show. What better time then to unwrap and examine the implications?
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Something for your Espresso: RBA “inflation has peaked” .. over to you JPow
RBA echoed other major central banks by clearly stating that inflation has peaked. This is a potential interesting harbinger ahead of Powell’s appearance in the US congress
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Wage Watch: The recession without job losses – 7 charts on US employment
Some have labeled 2022 a “white collar recession” as the job market has remained stable throughout. Are there early signs of weakening in US labor markets? And what would be the consequences? We look at 7 charts here.
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Something for your Espresso: A yuuge week ahead
The Chinese politburo aims for 5% annual growth in 2023. This leaves room for an upside surprise from China for once. We have a big week ahead of us. Find our expectations here.
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Steno Signals #38: Is this good or bad inflation?
There are undoubtedly signs of inflation pressures resurfacing in leading indicators, but remember that activity leads inflation. If inflation returns (from a momentum perspective), it is because activity has picked up markedly ahead of it. That is not bad news.
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