Like EF Hutton Ads, Yellen Speaks And Markets Crash (SVB Increased Loan To Regulators Before Its Collapse … Where Were The Regulators?)

Like the old EF Hutton ads, when Treasury Secretary Janet “Too Low For Too Long” Yellen speaks, people listens. Particularly when she reverses course after bailing out he Silicon Valley/Big Tech buddies by guaranteeing deposits. Then in a US Senate hearing AFTER Fed Chair Powell tried to calm markets, Treasury Secretary Janet Yellen told Senators yesterday that ‘Blanket insurance’ of bank deposits is not being discussed. Look out below!

So why did the Biden Administration and Janet Yellen bail out Silicon Valley Bank (SVB), regulated by San Francisco Federal Reserve (run by Mary Daly)? And then tell the US Senate “That’s it!”??

Where was Mary Daly when SVB increased loans to INSIDERS before its collapse? And will Daly/Yellen actually punish the CEO of SVB who jetted off to Maui after the collapse rather

Perhaps SF Fed’s Mary Daly should be prosecuted for negligence. Or thinking that SVB is unreserved.

Fed Reverse Repo Useage Rises To $2.28T As Fed Hikes Target Rate To 5%,+25 BPS (Fed Dots Look Like Ski Slope)

As expected, The Federal Reserve raised their target rate (upper bound) to 5%, up 25 basis points. At the same time, Fed Reverse Repo useage soared to $2.28 trillion as banks hide from inflation.

Here is today’s Fed FOMC decision.

The Fed’s DOTs project looks like a ski slope with rates lower over the next few years (return of QE??)

Treasury Secretary Janet “The BIG Statist” Yellen loves Modern Monetary Theory (MMT).

Aftermath! The Fed is out of time!

After The Fed’s announcement, the 10-year Treasury yield fell -12.8 basis points.

And the 2-year Treasury yield dropped -20.9 basis points.

Mortgage Demand Rises 3% WoW Thanks To Banking “Crisis”, But Mortgage Purchase Demand Still Down 36% From Same Week Last Year (Refi Demand Down 68% YoY)

The deposit runs and Federal bailout at Silicon Valley Bank and Signature Bank has a positive silver lining: mortgage rates dropped -3.43% from the previous week. As such, we got an increase in mortgage demand.

Mortgage applications increased 3.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 17, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 36 percent lower than the same week one year ago.

The rest of the story.

How I will feel if The Fed raises rates today more than 25 basis points. Or if Treasury Secretary Janet Yellen gets on TV lecturing us again.

The Fed’s “Doomsday Machine”! Catching Up From Bernanke/Yellen’s “Too Low For Too Long” Policies (US Treasury 2-Year Yields UP 16.1 Basis Points)

I feel like I am watching the Star Trek original series episode “The Doomsday Machine” as former Fed Chair and current US Treasury Secretary effectively just guaranteed ALL US bank deposits. Aka, a massive bank bailout. The episode was about a robot space vehicle that destroy planets … and anything in its path. And if it changed course to destroy something, it gradually returned to its original destructive path. Like The Federal Reseve.

But after a few days of declining Treasury yields because of the mess created by Bernanke/Yellen’s too low for too long policies, and the Biden/Congress insane spending, the US Treasury 2-year yield is up 16.1 basis points.

Whether it was politcally motivated to protect Obama/Biden or Obama/Biden’s economic recovery was terrible, The Fed only raised their target rate once before Trump’s election. And then Yellen raised rates like crazy. Only to hand her mess off to Powell who had to drop rates like a rock and massively expand the balance sheet … again … to fight Covid.

The Federal Reserve from a car on Constitution Avenue in Washington DC.

Philly Fed Non-manufacturing Sentiment Index Signals Recession (Down -12.8) As Fed Retreats … For The Moment

It’s not always sunny in Philadelphia.

The Philly Fed non-manufacturing sentiment index just tanked to -12.8 as The Federal Reserve removes its Covid-related stimulus.

The banking fiasco (SVB, Signature, etc.) has caused The Fed’s balance sheet to expand … again.

And Fed Funds Futures are pricing in a meager 20 basis points increase at tomorrow’s FOMC meeting (some betting on no change, some betting on 25 basis points). Then another rate hike at the May FOMC meeting, then all downhill from there.

Call this the Powell retreat.

US Leading Economic Indictors Plunge -6.5% YoY In February, Consumer Sentiment Falls (S&P 500 Down -1%)

Apparently, the only thing that is strong in the US economy is low-paying jobs. The economy as a whole is sucking wind as we can see with the Conference Board’s Leading Indictors plunging -6.5% Year-over-year (YoY) in February.

US consumer sentiment fell again … and has not been near 100 (baseline) since Covid struck.

And on the fears that the banking system is not well, the S&P 500 index is down -1.1% this morning.

Argentina Raises Benchmark Leliq Rate By 300 Basis Points To 78% To Fight Inflation Of 102.5% (While Fed INCREASES Balance Sheet To Fight Banking Crisis)

Cry for Argentina! Their central bank boosted its benchmark Leliq rate by 300 basis points to 78%. The monetary authority’s board considered the increase in response to accelerating inflation and after leaving the key rate unchanged for several months.

Of course, the US Federal Reserve is going in the opposite direction to combat the US banking crisis created by inflation and Yellen’s “Too low for too long” Fed policies.

I am beginning to wonder in Treasury Secretary Janet Yellen and Chicago Mayor Lori Lightfoot are the same person. Both complete Statist screw-ups.

The NEW Banking Crisis In One Chart (Hint: Inflation = Fed Rate Hikes = Treasury/MBS Duration Increases = Bond Losses = Bank Runs) Bond Volatility Highest Since 2008

So, the Biden Administration made a horrible error by guaranteeing deposits at Silicon Valley Bank for deposits over $250,000. Essentially, Biden bailed out big tech that kept their deposits at SVB.

But what triggered the run on SVB and other banks? Simple. Biden and Congress spent like drunken sailors with Covid and The Federal Reserve went nuts printing money. Viola! We got inflation. But with inflation came The Fed’s attempt to get inflation back to its 2% target (difficult since Biden/Congress refuse to return spending to pre-Covid levels). But as interest rates rise, duration (weighted average life of MBS) rose dramatically meaning that risk increased. But banks like SVP ignored the risk, or didn’t hedge, or were spending time worrying about non-bank related issues.

So, what happened? Banks are holding Treasuries and MBS (orange line) that are getting clobbered with rate hikes (yellow line).

Talk about volatility. Today, the 2-year Treasury yield is up over 20 basis points as bond volatility hits levels last seen in 2008, just prior to the subprime credit crisis.

So, Biden’s bailout of SVP depositors stopped the deposit run for the moment. But if The Fed keeps hiking rates, banks are going to be hurting worse and worse. They could rebalance their portfolios and/or hedge. But with Uncle Spam (Biden) at the helm, bailouts are always on the table.

Don’t Cry For Argentina! Inflation Hits 102.5% As M2 Printing Hits 80% YoY (Suicide By Printing Press)

Don’t cry for Argentina! Their leaders did this to them.

Argetina’s inflation rate just hit 102.5% as their M2 Money printing hit 80%

Argentina’s central bank is considering raising its benchmark rate on Thursday for the first time since September after inflation data showed prices increased by more than 100% annually last month, according to two people with direct knowledge.

The monetary authority’s board will consider an increase after leaving the key Leliq rate unchanged at 75% for several months, the people said, asking not to be named discussing internal decisions. The board has not yet decided on the size of the hike in case they opt for such move, they said.

A cautionary tale for Washington DC spendacrats and Fed officials.

Brought to the same country that gave us Statist Juan Peron and his wife Eva.

Reversal Of Fortune! Fed Expected To Hike Once By 25 BPS, Then Cut Rates By 125 BPS By End Of 2023

Market now expects FED to hike max. one more time by 25bps followed by 125bps cuts in total by end of 2023.

And bond volatility is up the most since … the last financial crisis.

No, not the Klaus von Bulow “Reversal of Fortune.” Just a Fed/Biden murder of the US economy.