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The Austrian business cycle theory teaches us that low interest rates manipulated by the central bank lead to malinvestments, which are cleared when the central bank lets rates rise, reflecting a truer cost of capital.
Regional bank stocks saw their losses for the week deepen as investors digest the failure of First Republic.
The news is full of emergency meetings, central banks offering credit lifelines and tumbling bank shares. Another troubled US bank has been taken over, but your money is safe, say regulators.
Shares in US Banks PacWest Bancorp and Western Alliance Suspended as Fresh Crisis Fears Grip MarketMay 2, 2023 - 12:21:09 PDT
Shares in two regional US banks have been paused amid fresh concerns about the health of the financial sector in the wake of the rescue of First Republic.
Goldman Trading Desk Warns Bank Selling Is Spreading And Could Get Far WorseMay 2, 2023 - 12:18:08 PDT
Remember yesterday morning, before the open, when Jamie Dimon told the world not to worry because "the system is very, very sound" adding that the FRC deal "will help stabilize the system" and various talking heads proclaimed that FRC was just another outlier bank, nothing systemic and "this is getting near the end of it" on bank failures...
Gold extended gains on Tuesday and was on track for its biggest daily rise in a month, after grim data on U.S. job openings further clouded the economic picture ahead of the Federal Reserve's widely anticipated decision to hike interest rate.
Us May Default on June 1 Without Debt Ceiling Hike; Biden, McCarthy to MeetMay 2, 2023 - 08:41:42 PDT
U.S. President Joe Biden on Monday summoned the four top congressional leaders to the White House next week after the Treasury warned the government could run short of cash to pay its bills by June.
Weak JOLTS?, Poor factory orders, hot EU inflation, surprise RBA rate-hike, a sudden realization of the urgency and seriousness of the debt ceiling debacle, Europe back from vacation, or just pre-FOMC jitters?
Labor Market In Freefall As Job Openings Slide, Quits Tumble To 2 Year LowMay 2, 2023 - 08:37:26 PDT
For months we have been warning that at a time when the US economy is careening into a hard landing recession, the manipulated, seasonally-adjusted, and politically goalseeked job openings data released as part of the DOL's JOLTS report is sheer rubbish...
And Fed Chair Jay Powell won’t interfere.
What if the world’s states were to come together and create a single world currency? From a purely economic point of view, there would be significant advantages if every nation didn’t operate with its own money but with the same currency.
It is becoming increasingly clear that the world is losing faith in the United States dollar… and rapidly turning to alternatives. And that’s a huge deal for the United States.
Continuing with the current policy of higher interest rates might lead to further financial and economic problems similar to what happened in 2008 (Great Recession) and 1929 (Great Depression).
A hike on May 2 is a given. The market perceives a 30.1 percent chance of a one more hike in June.
The light green bars show the panic around the bank failures in May. The market has since put more rate hikes back on the table as noted by the bars for April 11 and May 2.
May 2, 2023 - 07:34:22 PDT
The Fed Funds Futures data is pointing to one more hike at the upcoming May FOMC meeting. Then reversal of poli…
Headline factory orders for March disappointed e3xpectations, rising 0.9% MoM versus +1.3% MoM expected (and Feb's 0.7% decline was revised down to 1.1% MoM decline). That pushed the YoY growth in factory orders to just +1.4% YoY - the weakest since Feb 2021...
Mentions Of "Job Cuts" Overtake "Labor Shortage": Cost Control And Job Cuts Are In, Growth Is Out May 2, 2023 - 07:10:53 PDT
Wall Street’s worries about Corporate America’s dwindling profit margins appear to have made their way to the C-suite based on earnings reports so far this quarter.
Gold prices traded slightly higher early Tuesday but remained within their recent tight trading range around $2,000 an ounce as the yellow metal entered what one analyst called “a period of consolidation” ahead of Wednesday’s Federal Reserve policy decision.
Global Bank Lending Standards Tighten to The Great Financial Crash LevelsMay 2, 2023 - 06:14:55 PDT
A composite measure of DM banks’ lending standards shows they are the tightest since 2009. Tighter credit conditions will be an impediment to central banks’ preference to keep rates “higher for longer.”
May 2, 2023 - 06:11:24 PDT
SVB’s implosion highlights the destabilising impact of quantitative easing. At the end of 2022, the US banking system had $18tn in domestic deposits, including an estimated $10tn of deposits insured by the Federal Deposit Insurance Corporation. That meant there were $8tn of deposits that exceeded the FDIC insurance limit.