The Economy

Barney Frank Pushed to Ease Financial Regulations After Joining Signature Bank Board

Has nothing to do with why Signature Bank failed. ... but I'll take demagogue hypocrites for $100, Alex.

 

Depends on how you define bailout.

They didn't bail out the banks. Shareholders and bondholders are going to lose their equity and the money they lent.

But they put an implicit guarantee in that everyone's deposits are safe. So that is a bailout.

For me? Debating the word "bailout" misses the forrest for the trees.

There are two issues that people AREN'T focused on. The Fed has been ostensibly raising their overnight rate and letting bonds start to roll off their balance sheet to address the consumer price inflation they stoked. ... But what they did yesterday is at odds with that, because the "loans" they are giving those banks are money printing in a different wrapper (what stoked the inflation in the first place). They are accepting collateral for the "loans" and valuing that collateral way higher than it currently is actually worth. They can do this, because at the press of a button they can create money out of thin air. Trillions dollars worth of that (in the name of crises) is what CREATED the mess we are now facing.

Secondly, during the financial crisis in 2008, the FDIC raised the covered deposits limit from $100K to $250K. Yesterday, they implictly told people that bank deposits are covered to infinity. Even if that was possible. ... it adds about $7 to $10 trillion in additional unfunded liabilities to the U.S. government. It's a complete fucking joke. Take a look at the FDIC's balance sheet if you want to have a laugh. ... It has $125 billion that is somehow supposed to be securing $7 to $10 trillion.

 

FYI. ... There is a CPI print at 8:30, which was SUPPOSED to be the big event of the week. ... What does it mean for Fed hiking?

Forecasts have inflation at 6 percent (core inflation at 5.5 percent) year over year.

Putting aside that I always believe what they put out as much as I believe Donald Trump's golf scorecard. ... things are now a complete mess, because due to the banking crisis, odds went way down based on the Fed Funds futures for a 50 basis point hike at the Fed meeting next week, and took the odds of NO HIKE from 0 to more than 50 percent (funny how "data dependent" has shifting meanings).

If that number runs hot at 8:30, or the perception by Mr. Market is that it is hot, all hell is going to break loose in the bond market (and by extension, equity markets) today.

We'll never know, but I totally wouldn't be surprised if the BLS had a number ready to go late last week that looks radically different from the number they are going to spit out at everyone at 8:30.

 

Meanwhile:

Credit Suisse flags 'material weaknesses' in financial reporting

I'm sure it's OK.