DHUnplugged #653: Ceiling Dilemma

Announcing a new Closest to the Pin this week.

Yellen starting to freak out.

Market not ready for an inflation data surprise.

Sentiment slipping....

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Warm Up

- ANNOUNCING - NEW CTP for PacWest

- Some prices from F1 food stops - is this right?

- Gamma squeeze Friday?

- Small biz sentiment - taking a leg down

- Derby Day - bourbon and ham sandwiches

Market Update

- Oil gets a reprieve - dropped as low at $63

- Credit/loans tightening and we are just starting

- Lending conditions tighten overall

- Earnings - 79% companies beating estimates (good color with Silverblatt this week)

 DONATIONS?

Debt Ceiling Fight

- Odds?

- Bug dilemma

- Republicans pushing for spending cuts

Inflation

- NY Fed- estimates 3-year rise to 2.9% from 2.8%

- NY Fed 1-yr inflation expectations measure drops to 4.4% from 4.7% last month

Employment Report

- Higher than expected gains in employment

- BUT - Last month revised much lower - so not much difference

- Unemployment Rate drops to 3.4%

- April Nonfarm Private Payrolls 230K vs. 160K Briefing.com consensus; prior revised to 123K from 189K

- April Average Workweek 34.4 vs. 34.5 Briefing.com consensus; prior 34.4

- April Average Workweek 34.4 vs. 34.5 Briefing.com consensus; prior 34.4

- BIG ONE FOR INFLATION OUTLOOK - April Avg. Hourly Earnings 0.5% vs. 0.3% Briefing.com consensus; prior 0.3%

Employment Situation Trend

- Slowing economy - employment holding up well - How does that square?

  Employment Chart

Harbinger

- Bank Credit is tightening (not much yet, but noticeable 1.5% drop)

- 1.9% decline in bank credit in 1975.

-  2.2% drop in bank credit in 2002.

- 6.9% dip in bank credit between 2008 and 2010.

  Credit Conditions

Monday - Senior Loan Officer Report

- Banks reported that lending standards tightened across all categories of residential real estate (RRE) loans other than government-sponsored enterprise (GSE)-eligible and government residential mortgages, which remained basically unchanged. Meanwhile, demand weakened for all RRE loan categories. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Standards tightened for all consumer loan categories; demand weakened for auto and other consumer loans, while it remained basically unchanged for credit cards.

- Market may see this (perversely) as good news as Fed could think this is bad and not raise... (The Upside Down)

Oil Prices - Headlines

- Thursday: Oil Prices Fall Due to Recession Fears

- Friday: Oil Steadies - Traders Look To Future

- Monday: Oil Higher: Recession Fears Abate

- -3 days and story changes?

--- Oil prices rose on Monday as fears of a recession in the U.S., which drove prices down for three straight weeks for the first time since November, started receding. Brent crude futures were up 43 cents, or 0.6%, at $75.73 a barrel at 0624 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 45 cents, also 0.6%, at $71.79 a barrel.

COVID EMERGENCY - OVER

- COVID-19 is no longer a global health emergency, World Health Organization director-general Tedros Adhanom Ghebreyesus declared Friday.

- COUNTS according to WHO - 765 million cases and 7 million deaths

- Meanwhile - Rochelle Walensky will step down as director of the US Centers for Disease Control and Prevention at the end of June, an unexpected departure after more than two years leading the agency through an oft-criticized response to the biggest public health crisis in a century.

Icahn - Short Seller Report

- Hindenburg cost Carl > $10 Billion

- IEP Stock on the ropes due to questionable marks and leverage