Something Has To Give
Ian Reynolds
Investing and Trading | Capital Markets | Macroeconomics| Bitcoin & Decentralised Finance | Helping to Find the Money Flow | Commentator | Speaker
Breaking: FED'S Powell Expects Banks to Fail
[2 hours later] Breaking: New York Community Bank Rescue
New York Community Bank Daily
A big week for NYCB which started with Fitch downgrading it's debt to junk and then shocking admission of failure.
New York Community Bank stock, $NYCB, crashes 20%+ after reporting "material weakness in internal controls." The weakness is reportedly related to loan review resulting from ineffective oversight and risk assessment. NYCB is the same bank that acquired the collapse Signature Bank during the regional bank crisis. This comes just weeks after the bank posted an unexpected $260 million loss in Q4 2023..The stock is now at its lowest level since 1997.
“As part of management’s assessment of the Company’s internal controls, management identified material weaknesses in the Company’s internal controls related to internal loan review, resulting from ineffective oversight, risk assessment and monitoring activities,” the company said in a filing with the U.S. Securities and Exchange Commission.
But the week ended better with a rescue package, at a deep discount, of $1.05 Billion to be injected into $NYCB
Breaking: Xi Jinping today called on the country's armed forces to coordinate preparations for military conflicts at sea - The Business Standard
China possibly trying to divert attention from it's central bank, The People's Bank of China, buying gold yet again and the government encouraging citizens to do so.
The gold pressure cooker has started in China. Reports of massive lineups to buy physical gold as the price skyrockets.
Gold broke out to all time high prices as investors sense that currency debasement has led to an inflation doom-loop in the US initially and the rest of the world later. Record US debt and a series of failed treasury auctions combined with the rate cuts promised being pushed back meant that something had to break.
In Focus
Disruption
Something is happening in the background. Maybe a geopolitical event, maybe a forced move to central bank digital currencies after a debt jubilee of some sort, maybe something else.
Remember crashes happen because of multiple concurrent events, markets don't crash because of black swan events like COVID.
Here's some things to think about
This points to an inside job, rather than a confluence of externalities.
Banking / CRE
In The Background
China?
Apple's iPhone sales in China plunge 24% as Huawei's popularity surges [Yahoo Finance] Country Garden’s Sales Drop Most in Years Amid Wind-Up Fears [Bloomberg]
Key highlights from China's National People's Congress:
No press conference was the telling sign that things have become very serious in China.
领英推荐
Global Inflation / Economy
The dollar fell across the board on Thursday, as Federal Reserve Chair Jerome Powell said the U.S. central bank is "not far" from getting enough confidence that inflation is heading to its 2% goal to start cutting interest rates.
The euro initially stumbled after the ECB kept rates steady despite acknowledging cooling inflation, but recovered to log its biggest daily gain against the greenback in about a month. The common currency hit a six-week high against the broadly weak dollar.
"We are waiting to become more confident that inflation is moving sustainably to 2%. When we do get that confidence, and we're not far from it, it will be appropriate to begin to dial back the level of restriction so that we don't drive the economy into recession," Powell said in a hearing before the Senate Banking Committee.
Powell had told lawmakers on Wednesday that interest rate cuts were still likely in coming months but only if warranted by further evidence of falling inflation.
United States
The once much anticipated US Nonfarm Payroll report has become a yawn. Littered with revisions and changes to methodology, the market is frankly skeptical of it's accuracy. Government data being manipulated, who'd have thought?
Japan
BOJ board member Junko Nakagawa said on Thursday Japan's economy was moving steadily towards sustainably achieving the central bank's 2% inflation target.
Europe
ECB still on hold.?The European Central Bank cautiously laid the ground to lower rates later this year.
"We are making good progress towards our inflation target and we are more confident as a result - but we are not sufficiently confident," ECB President Christine Lagarde told a press conference.
While the policymakers did not discuss cuts for this meeting, they are just beginning to discuss the dialling back of their restrictive stance, Lagarde said.
Canada
The Financial Post is reporting mortgage delinquencies are surging in Ontario and BC. Ontario is up 135% and BC is up 62%. Meanwhile, bankruptcy fillings also soaring up 76% in ON and 46% in BC
Australia
CRE contagion comes to Oz
Australia's economy is grinding to a halt. Supported by iron ore prices alone, very high housing prices are keeping consumer spending depressed. The "new" central bank seems to be equally ineffective as the previous one that got thrown under the bus by Treasurer Chalmers.?
What's Next
No central bank meetings next week so it's all eyes on US CPI.
Watch for Gold, Silver and Bitcoin to keep driving higher and the US dollar to move lower.
This Week's Important Economic Indicators [London time]
Absolutely fascinating times we're living in! ?? Warren Buffet reminds us - Only when the tide goes out do you discover who's been swimming naked. Facing challenges really shows our resilience. ????