DHUnplugged Podcast

Another weekend, another bank failure.

79% beat rate for earnings season - what does that mean?

Sinkhole alert! Comparing and contrasting past occurrences.

PLUS we are now on Spotify and Amazon Music/Podcasts!

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Warm Up

- Weekend bank failure and rescue

- EGG BOOK?

- NEAR MISS - Tornado Update

- Sinkhole alert!

- Fed releases the blame report for SVB

- BIG story on education and AI

Market Update

- Earnings Season - Statistically looking good

- Apple on tap this week

- Wednesday - Fed rate decision

- Friday - Employment Report

-Debt limit on investor's minds

JCD's take on Tucker Carlson's Firing...

Sinkhole Alert - What Does it Look Like?

  Sinkhole

Recession Fears - Looks like this:

- Oil taking a leg down

- Gold on fire

- Stocks Down

-Bonds up

First Republic

- 2nd largest bank failure ever - seized by California regulators

- JP Morgan acquires

- "Our government invited us and others to step up, and we did," JPMorgan CEO Dimon said in a press release.

- "This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise."

- In addition to most of First Republic's deposits, JPMorgan will pick up about $173 billion in loans and about $30 million of securities. It said it won't assume First Republic's corporate debt or preferred stock.

- JPM up 2.5%

- We Should BECOME A BANK!

KRE Bank Index

- Down 33% YTD

-Down 6% today - as WAL and PACW crash

- No Alice- The Banking Crisis is NOT over

- Why all these WESTERN banks?

Debt Limit

- Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations

- Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. Congressional leaders in both parties have recognized that this is necessary.

- Yellen pulled forward date that

Bye Bye Nurses

- Almost a third of the nurses in the United States are considering leaving their profession after the COVID-19 pandemic left them overwhelmed and fatigued, according to a survey.

- The survey of over 18,000 nurses, conducted by AMN Healthcare Services Inc in January, showed on Monday that 30% of the participants are looking to quit their career, up 7 percentage points over 2021, when the pandemic-triggered wave of resignations began.

- The survey also showed that 36% of the nurses plan to continue working in the sector but may change workplaces.

Pay Half

- Pfizer Inc and BioNTech's new proposal to the European Union, amid a glut of COVID-19 shots, includes a provision for member states to pay half price, or about 10 euros ($11), for each of about 70 million cancelled doses, the Financial Times reported.

- In January, Reuters reported talks between the EU and the two drugmakers aimed at reducing up to 500 million COVID-19 vaccine doses Brussels has committed to buy this year in return for a higher price.

China Rebound?

- China's manufacturing activity unexpectedly shrank in April, official data showed on Sunday, raising pressure on policymakers seeking to boost an economy struggling for a post-COVID lift-off amid subdued global demand and persistent property weakness.

- The official manufacturing purchasing managers' index (PMI) declined to 49.2 from 51.9 in March, according to data from the National Bureau of Statistics, below the 50-point mark that separates expansion and contraction in activity...

Markets are moving back and forth just waiting for some big news.

Talk of a US default is making the rounds.

Tech has a big day - helping to push markets up from their recent despair.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

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Warm Up

- All of a sudden - recession fears

- US Default whispers

- Republicans put forth budget with increase and expense slashing

- India - taking over the population race

- Resiliency everywhere ...

Market Update

- Banks - Still on shaky ground

- Central Banks blamed for market rally

- "This year’s rally in risk assets is more to do with a $1 trillion central bank liquidity injection than any improvement in the economic outlook, according to Citigroup Inc.. "

- "That massive tailwind — enough to lop 50 basis points off the investment-grade risk premium — may soon become a huge drag as policymakers get back to quashing inflation, having extinguished the banking-sector fire. "

- Do we believe that the Fed is done?

Earnings

Coca-Cola - Average price of 192 ounces of Coca-Cola's soda (12 pack of 16oz bottle) in the U.S. rose to $9.30 in 2022 from $8.03 in 2021, according to NielsenIQ's data. It stood at $10.55 so far in 2023. (31% increase in 2 years)

- Adjusted earnings came in at 68 cents per share, compared with estimates of 64 cents.

- The company's first-quarter revenue rose about 5% to $10.98 billion, beating estimates of $10.80 billion

IBM Earnings

- Bellweather anymore?

- IBM Corp missed Wall Street expectations for first-quarter revenue

- WHY? Hurt by shrinking corporate spending on IT services and a strong dollar.

- IBM cut its full-year consulting revenue growth forecast to 6%-8% from earlier expectations of high single-digit percentage growth.

- "We are seeing softness in certain components of our discretionary based offerings in consulting," Chief Financial Officer James Kavanaugh told Reuters about the U.S. market.

Whirlpool

- Didn't everyone think that margins would compress and higher rates will kill real estate?

- Whirlpool prelim Q1 $2.66 vs $2.17 S&P Capital IQ Consensus Estimate; revs $4.65 bln vs $4.50 bln S&P Capital IQ Consensus Estimate

- Whirlpool sees FY23 $16.00-18.00 vs $15.97 S&P Capital IQ Consensus Estimate; sees revs $19.4 bln vs $19.02 bln S&P Capital IQ Consensus Estimate

Tech

- Microsoft beats by $0.22, beats on revs; Azure +31% constant currency growth  (Shares up 6% A/H)

---- Revenue rose 7% to $52.9 billion in the quarter ended March

- Windows division  reporting revenue of $13.3 billion versus analyst estimates of $12.19 billion

- Alphabet beats by $0.10, beats on revs, Google Advertising revenue essentially flat yr/yr; On April 19, Board of Directors authorized repurchase up to additional $70 bln of Class A and Class C shares PLUS big 70b buyback announcement (Shares slight move A/H)

------- Ad sales saw a drop again - although not as much as last quarter

Banks

- The bank crisis is not totally over yet

-  Earnings and news from First Republic Bank - massive loss of deposits and company looking to some drastic ways to save itself (stock don 49% today)

- Pacific West bank - better than expected results, shares up 13% A/H

Debt Ceiling - Limits

- Republican led plan

- McCarthy floated a plan last week that would pair $4.5 trillion in spending cuts with a $1.5 trillion increase in the $31.4 trillion U.S. debt limit.

- All talking about this being political divided and will not pass

- The HOPE is that it will get sides talking

Change of US Default - debt ceiling etc

- Current pricing of credit default swaps soar

- BUT, only 2% implied odds of a default

- Seen this movie before.......

- This time different?

A flood of earnings and a flood in SOFLA

Lunch with the Feds this week.  Last week's Fed minutes tell an interesting story.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

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Warm Up

- Earnings Are Out

- Flooding in SOFLA - we have pictures

- Lunch with the Feds

- Fed minutes tell an interesting story

- Re-Announcing CTP for Goldman Sachs (glitch last week)

Market Update

- Going Sideways

- Banks post decent results - but doesn't include post-crisis (bank run)

- Tesla, Netflix earnings and and next week gets busy

- Yellen making some noise - nosing in wrong business

- Rates - Moving wrong direction (remains massively inverted)

Yields

- Yields on 3-month T-Bills have reached new post-2007 highs of 5.06%+

3M Yield Chart

Fed Minutes

- Fed expects banking crisis to cause a recession this year, minutes show

- Fallout from the U.S. banking crisis is likely to tilt the economy into recession later this year, according to Federal Reserve documents released Wednesday.

- Though Vice Chair for Supervision Michael Barr said the banking sector "is sound and resilient," staff economists said the economy will take a hit.

- "Given their assessment of the potential economic effects of the recent banking-sector developments, the staff's projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years," the meeting summary stated.

Apple Follow Up

- We discussed potential store closures???

- Apple opens first retail store in India

- Cook was there in Mubai this week to take selfies and smile

China

- GOLD AND JEWELS

- Jewellery and precious metals consumption in China soared 37.4% in March from a year earlier underpinning a 13.6% jump for the quarter and topping the list of items that stoked a surge in first-quarter retail sales, official data showed on Tuesday.

- "Economic fundamentals, risk aversion and the recovery of domestic consumption all drive the investment demand for jewellery and precious metals," said Pang Xichun, research director at Nanjing RiskHunt Investment Management Co.- China's economy grew at a faster-than-expected pace in the first quarter, with retail sales rising 10.6%, beating forecasts for a 7.4% increase by a large margin.

 Bank Earnings

- Generally okay - withing tolerance range

- None seems to include post Bank run (Tighter standards)

- Not much in guidance that is useful

Bank Of America

- Earnings: 94 cents per share versus 82 cents per share expected

- Revenue: $26.39 billion versus $25.13 billion expected

- Bank of America said its net interest income jumped 25% to $14.4 billion during the quarter, driven by benefits from rising rates and loan growth.

- Stock up marginally

Goldman Sachs

- Reports Q1 (Mar) earnings of $8.79 per share, excluding non-recurring items, $0.73 better than the S&P Capital IQ Consensus of $8.06; revenues fell 5.5% year/year to $12.22 bln vs the $12.66 bln S&P Capital IQ Consensus.

- Provision for credit losses was a net benefit of $171 million for the first quarter of 2023, compared with net provisions of $561 million for the first quarter of 2022 and $972 million for the fourth quarter of 2022.

- Global Banking & Markets generated quarterly net revenues of $8.44 billion, driven by strong performances in Fixed Income, Currency and Commodities (FICC) and Equities, including record quarterly net revenues in Equities financing.

- Net revenues were $12.22 billion for the first quarter of 2023, 5% lower than the first quarter of 2022 and 15% higher than the fourth quarter of 2022. The decrease compared with the first quarter of 2022 reflected lower net revenues in Global Banking & Mar...

Banks need some inflows - giving away prizes for deposits.

Earnings season is about to begin - looking for a significant downside for growth.

Yields ticking lower as recession fears bump inflation worries.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

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Warm Up

- Easter and holiday season coming to an end...

- A NEW Closest to The Pin Announcement

- Bond yields way down - what does that mean?

- Free Toasters Making a comeback

- Gold, metals, alts, COINS!

Market Update

- Falling Yields - may be a bit much

- Employment report - mixed bag

- Earnings season starts this week - Big Banks

- Apple news - PC Demand

DONATIONS - April Donations - Bring May Flowers

Earnings Season Prep

- Going to be some bad guidance... If actions by companies any guide

- Example - Google letter about 2008 and getting in advance so they can say - we are ahead of this...

- Banks - what good can they say? Or maybe at worst levels?

-  S&P 500 Estimates - looking for -7% YoY growth for earnings

How Bad? Tech bad...

- Apple Mac shipments fell 40.5% in the first quarter of 2023, compared with the same time the prior year, market intelligence provider IDC said.

--- Apple’s worldwide PC market share dropped between the first quarter of 2022 and the first quarter of 2023, from 8.6% to 7.2%, according to IDC data.

- All five of the largest computer makers — Apple, ASUS, Dell, HP and Lenovo — saw double-digit drops in first-quarter shipments, reflecting weaker demand and persistent inventory woes. But Apple’s decline was the biggest of the bunch.

- Taiwan Semi - slowing production as demand is not there

Employment Report

- March nonfarm payrolls 236K vs consensus 239K; prior revised to 326K from 311K

- March unemployment rate 3.5% vs consensus 3.6%; prior 3.6%

- March avg. hourly earnings 0.3% vs.consensus 0.3%; prior 0.2%

- March avg. workweek 34.4 hours vs consensus 34.5; prior 34.5

- 25% of the employment gains were in services (restaurants, bars and hotels)

Home Price Outlook

- Moody's expects 98% of major markets to post a home price decline over the coming year.

- According to Zillow, tight supply will make it hard for home prices to fall much heading forward.

- Through the first two months of 2023, the biggest home price drops were found in markets like Austin (down 2.5% since December), Boise (down another 2.4%), Las Vegas (down another 2.4%), Phoenix (down another 2.2%), and San Jose (down another 2.1%).

- Western US home values seem the most detached from fundamentals according to reports.

Bond Yields

- Dropped due to banking crisis

- Even with FED pressing on - still lower (3.4% on 10-year)|

- Heavy Inversion

- Recession now the play versus inflation worries

Sky Is Falling

- Starlink seems to have a problem

- Satellites are falling out of orbit and coming back dosn to earth (something Elon will never do)

- Astrophysicist Jonathan McDowell tracks SpaceX's satellite activity, and said that at present "at least 14" of the company's devices were "on their way down".

- Reports show that the satellite in question likely burned up as it attempted to reenter the Earth's atmosphere, meaning traces of it will be incredibly hard to find.

AS the Sky is Falling ...

- Investors snapping up alternatives

- Gold >$2,000

- Silver in rally mode

- Bitcoin > $30,000 (but 1 bitcoin is still 1 bitcoin

- Ether > $1,900

Meanwhile - Fed is full CYA mode

- Federal Reserve Bank of New York President John Williams said on Monday that financial system troubles that drove the central bank to provide large amounts of credit to banks is not collateral damage from the Fed’s aggressive effort to lower inflation.

The end is near - AI taking over they say...

OPEC+ Suprise cuts - not the best tine for that move.

Some bankers may be in hot water after their recent poor judgement.

PLUS we are now on Spotify and Amazon Music/Podcasts!

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DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

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Warm Up

- 1st Quarter scores gains

- Gold and Silver breaking out

- Never let a good crisis go to waste?

- More layoffs... Big names making news

- OPEC Surprise !

Market Update

- Tech BIG winner 1Q 2023

- Yields down -- even though inflation still high

- Reflex trades - all tied to rates

- More layoffs coming

- AI names making a run - with all chatter about AI doomsday

----- FRIDAY MARKETS CLOSED

Twitter Logo Update  = Dodgecoin Ramp

Happy Passover and Happy Easter (The Usual Holiday Price Drops for Political Purposes)

- Bought 5 dozen eggs from Walmart yesterday for $12.75

- Matzah prices coming down as well

AI Doomsday !

- They are coming for your job

-- The letter, issued by the non-profit Future of Life Institute and signed by more than 1,000 people including Musk, Apple co-founder Steve Wozniak and Stability AI CEO Emad Mostaque, called for a pause on advanced AI development until shared safety protocols for such designs were developed, implemented and audited by independent experts.

- Elon Musk and a group of artificial intelligence experts and industry executives are calling for a six-month pause in training of systems more powerful than GPT-4, they said in an open letter, citing potential risks to society and humanity.

- The letter also detailed potential risks to society and civilization by human-competitive AI systems in the form of economic and political disruptions, and called on developers to work with policymakers on governance and regulatory authorities.

---AI and Your JOB -

-- Goldman Sachs: The boost to global labor productivity could also be economically significant, and

nee estimate that AI could eventually increase annual global GDP by 7%. (Savings from less workers... less workers = less $ to spend)

- Goldman Sachs Estimates That 300 Million Jobs Will Be Affected By AI In The Future

QUESTION: Isn't this the same concerns we had in 2000?

AI Banned

- Italy has become the first country in the West to ban ChatGPT, the popular artificial intelligence chatbot from U.S. startup OpenAI.

- Last week, the Italian Data Protection Watchdog ordered OpenAI to temporarily cease processing Italian users' data amid a probe into a suspected breach of Europe's strict privacy regulations.

- How can they do this? Must be workarounds

More Tech

- Google to cut down on employee laptops, services and staplers for 'multi-year' savings

- Google said it's cutting back on fitness classes, staplers, tape, and the frequency of laptop replacements for employees.

- “We've been here before," Porat's email stated. "Back in 2008, our expenses were growing faster than our revenue. We improved machine utilization, narrowed our real estate investments, tightened our belt on T&E budgets, cafes, micro kitchens and mobile phone usage, and removed the hybrid vehicle subsidiary.”

- “Just as we did in 2008, we’ll be looking at data to identify other areas of spending that is as effective as they should be, or that don’t scale to our size.”  (2008 references???)

McDonalds ?

- MCDONALD'S has shut down its offices temporarily as the company reportedly prepares for mass staff layoffs.

- Corporate employees were instructed to cancel meetings at its headquarters.

- The company said in the memo that the layoffs are intended to make McDonald’s more efficient.

- “We have a clear opportunity ahead of us to get faster and more effective at solving problems for our customers and people and to globally scale o...

Microsoft Activision deal - back in the spotlight.

Bank runs have cooled - but there are still questions.

Resilient - yes, that's the word Fed officials will use. Over and over to describe banks.

PLUS we are now on Spotify and Amazon Music/Podcasts!

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DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

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Warm Up

- More Banks - But not to worry

- Odds are for RATE CUTS this year starting July

- Chili Cook Off - The Results (ask Andrew about the Cocoa)

- Crawfish Boil and BBQ this weekend - What is JCD Doing?

- Dueling message on Seaweed Blob

- Moores law - Coiner - Dies

Market Update

- Big Bucks pulled from banks - (they have been screwing depositors for years with low rates)

- Big banks getting those Big Bucks

- Recession odds increased with all of these problems

A Moment

- Gordon Moore, the Intel Corp. co-founder whose theory on computer-chip development became the yardstick for progress in the electronics industry, has died. He was 94.

Bank Notes

- Nearly $100 billion in deposits pulled from banks; officials call system 'sound and resilient'

- Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials convened a special closed meeting of the Financial Stability Oversight Council on Friday.

--- "The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient," the statement said.

- Data released Thursday showed that institutions took a daily average of $116.1 billion of loans from the central bank's discount window, the highest since the financial crisis, and have taken out $53.7 billion from the Bank Term Funding Program.

Sunday - Kashkari: “The banking system is resilient, and it’s sound,” Kashkari told Margaret Brennan on CBS’s “Face the Nation.” “The banking system has a strong capital position and a lot of liquidity and has the full support of the Federal Reserve and other regulators standing behind it. Now, I’m not saying that all of the stresses are behind us, I expect this process will take some time.”

Controversial

- Big banks, advising smaller banks...

- The dynamic has put big banks like JPMorgan and Goldman Sachs in the awkward position of playing multiple roles simultaneously in this crisis. Big banks are advising smaller ones while participating in steps to renew confidence in the system and prop up ailing lenders like First Republic, all while gaining billions of dollars in deposits and being in the position of potentially bidding on assets as they come up for sale.

New Programs - Because Banks are Sound

- US authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank more time to shore up its balance sheet, according to people with knowledge of the situation.

- AND YET - "I think this is more of a Bear Stearns moment. I think a lot of people, including me, said when they bailed out Bear Stearns, they increased moral hazard. They created an expectation of further bailouts," former FDIC Chair Sheila Bair said Friday

- "[The government is] trying to imply that all uninsured are protected, which they don't have legal authority to do, frankly, and this is putting pressure on community banks," she said. "It's really troubling."

First Citizens Buys Silicon Valley bank - SWEETHEART DEAL

- First Citizens BancShares is acquiring $72 billion in SVB assets at a discount of $16.5 billion

- But even after the deal closes, the FDIC remains on the hook to dispose of the majority of remaining SVB assets, about $90 billion, which are being kept in receivership.

- And the FDIC agreed to an eight-year loss-sharing deal on commercial loans F...

No rest for bankers - weekend overload to quiet markets.

COCO bond rug pull - billions lost

The Fed in a no-win position this week. Rate decision meeting Wednesday.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

Follow John C. Dvorak on Twitter

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Warm Up

- Full blown banking crisis - S&P P/E  still above 17+

- Fed has big decision tomorrow

- Fed/Treasury dusting off financial crisis playbook

- Bond yields move - largest since '87

--- Banks joining in the charade - $30 billion

- Whatever you do - don't say bailout!

Market Update

- Banks failing - forced merger over weekend

- Fire sale for deposits - big win for some banks

- COCO / ATI Bond massacre - RUG PULL

- Tech favored over most other sectors

- Goldman says rates hikes over

FED GAME - What will the do tomorrow?

- ECB Playbook (raise like nothing happening)

- Powell Playbook - raise 0.25% and keep pushing that the data is what they look at - try to save face...

- Volker Playbook - ram it

- Bernanke Playbook - zero or cut

GAME ON

- We are playing the real life Monopoly

- Treasury Secretary Yellen says the govy could backstop more deposits if necessary to stop contagion

- - Trillions in deposits  - how would that work?

- - - Monopoly Rules: The Bank: The Bank newer "goes broke." If the Bank runs out of money, the Banker

may issue as much more as needed by writing on any ordinary paper.

----- Why would Yellen need to say that ???

Asked on Twitter this week: Why do so many investors enjoy throwing hard earned money into dumpster fires?

(Follow John at @therealdvorak and Andrew at @andrewhorowitz)

Dust off the playbook

- Plenty of financial crisis moves being made

---- Have I mentioned that this group of Fed leaders could be the worst in my lifetime?

- $30 billion from consortium of banks into First Republic

---- NON insured accounts was the push

--- NO WAY is this not backstopped by Fed/Treasury as a attempt to boost confidence. TOTAL BS

----- Meanwhile - investors are not impressed. (Stock down from $29 to $17 since announcement)

---- WAIT - NEWS BREAKING MONDAY - JPMorgan Chase's (JPM) Dimon is leading talks with bank executives of others banks about new FRC plans; deal could involve converting previously announced $30 bln in deposits into a capital infusion, according to WSJ

----- NO Correction out - that may bot be the way they want to go .... Just spitting at the wall with ideas it seems

-- Meanwhile after 47% drop yesterday, FRC up 36% Tuesday (still down 90% from peak)

Remarkable

- Yields up from ZERO

- Earnings down and falling

- Global banking crisis

- S&P 500 forward P/E at 17.9

- PEG at 1.8!

Credit Suisse  COCO

- UBS buys for pennies on the dollar

- COCO bonds (Contingent Convertible bonds) - wiped out

- $17 billion lost as regulators write down bonds to ZERO

- COCOs - high-yield investments with a hand grenade attached (AKA ATI bonds)

--- They’re essentially a cross between a bond and a stock that helps banks bolster capital to meet regulations designed to prevent failure. They’re contingent in the sense that their status can change if a bank’s capital levels fall below a specified level; they’re convertible because in many cases they can be turned into equity

Forced Merger

- Credit Suisse bought by UBS

- In a package orchestrated by Swiss regulators on Sunday, UBS Group AG will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse Group AG  and assume up to $5.4 billion in losses. (80% discount)

- The Swiss central bank said Sunday's deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse.

Fed Decision

- Holding 2-day decision on rates today and tomorrow

Banks get smoked as depositors run scared.

Fortunately we get a Sunday Night STICK SAVE!

We have some bones to pick - bad math and even worse work ethics.

Where are the bargains? We have some thoughts.

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

Follow John C. Dvorak on Twitter

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Warm Up

- Back from Central America!

- Largest bank failure since 2008!

- Fed will keep raising until something breaks - HELLO!!!!!!!!!!!!!

- Worst Fed Ever!

- General lack of any business sense - math clearly not a priority in last generations

- - No attention to detail - oversight sucks- management is limp

- Sunday Night STICK SAVE! (A joint statement from the various regulators involved said there would be no bailouts and no taxpayer costs associated with any of the new plans. )

Market Update

- Capitalism is Dead - Moral Hazard Lives On!

- 2-day panic attack with region banks - SVB Blowup

- DJIA down for the year

- California Banking system is imploding - RUN-ON-Bank

- CPI - not slowing down too much - 6% YoY

- Everyone now banking on less Fed hikes due to banking crisis - or none... Or cuts! (85% chance for 0.25% increase next week)

Coming up this week on Andrew's TDI Podcast - Guest, Anthony Scarramucci

BONE TO PICK

- All these tik-tok nubes  - want to be a millionaire but have no idea what that means - LET me explain something from someone who works with lots of money all the time... It takes work and then more work

- - You can't just make it, you need to keep it. That is just as hard.

---- Making it is not just seeing it on social media - it is a grind and something special - hard work - which it seems is not what people want.

----- Sit at home, no oversight, playing on phone, personal time and personal boundaries that are above work AND not watching the details.

--- This is what creates the mess we see today - Then we want government to bail us out! Childish!

Assuming everyone knows what happened. Right?

- Banks started to get squeezed as assets/loan valuations got crushed under higher rates

- Fed pushed hard and banks did not risk adjust

- Bad oversight  - SVB - Moodys was going to downgrade, Theil makes some noise about problems, stock offering to raise capital, sold bonds at loss - run on bank

- Started with other banks and the problems from overlevearaging with Crypto - all the dominoes falling had to impact firms (tech pulling cash to meet needs, other companies trimming up)

- Realization hit that regional banks could have more problems

The Fed is Actually Looking At Itself

- EPIC lack of oversight, blinders on as usual

- The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1.

- "The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve," said Chair Jerome H. Powell.

- "We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience," said Vice Chair Barr.

- There will be findings, many many months out as to how they could have done better, but nothing will come of it.

----- Fox guarding the hen house. Should be independent but Fed is above it all - right?

Late Call - Or is it Early?

- Moody's cuts outlook on U.S. banking system to negative, citing 'rapidly deteriorating operating environment'

- The firm, part of the big three rating services, said it was making the move in light of three key failures that prompted regulators to step in Sunday with a dramatic rescue plan for depositors and other i...

China making moves. Elon gets his crown back and reversal of fortunes.

March is just ahead - rates could spoil the party.

Baby Bonds are back on the menu...

PLUS we are now on Spotify and Amazon Music/Podcasts!

Click HERE for Show Notes and Links

DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar.

Love the Show? Then how about a Donation?

Follow John C. Dvorak on Twitter

Follow Andrew Horowitz on Twitter

Warm Up

- Lots of News - same old...

- China making moves

- Elon gets the crown back

- Jamie Dimon Speaks Up

- Cool Update From Apple

- And Baby Bonds ....

Market Update

- A down month - short and out

- Large Cap Growth - Beating Large Cap Value this year (small caps tied)

- S&P 500 up ~ 4% for 2023 NASDAQ 100 up 10%!

- Bonds - taking back some of the last month gains

- Gold, Silver walking back on higher USD - Switcheroo

***NO SHOW NEXT WEEK****

Inflation - Not Giving Up

- - The U.S. Federal Reserve may hike interest rates to nearly 6%, BofA Global Research said, as strong U.S. consumer demand and a tight labor market would force the central bank to battle inflation for longer.

- PPI, CPI and PCE come in hot...

- Don't think this is all over, but clearly not moving as fast - looks like we will settle in this area for a while

Vape Wars

- Altria Group Inc. is in discussions to acquire vaping startup Njoy Holdings Inc. for at least $2.75 billion in cash, according to people with knowledge of the situation.

- A deal could be announced as soon as this week, said the people, who asked not to be identified because the talks are private. There is also $500 million in follow-up payments if Njoy hits certain regulatory milestones, the people said.

- Altria recently wrote down the value of its investment in Juul to $450 million. The decision to end the noncompete “maximizes our flexibility to compete in the e-vapor space while maintaining our economic interest in Juul,” Altria said in a statement.

- BUT - original investment was $13 billion

- GENIUS PLAN - kill the vaping industry so cigarettes are back in vogue

China Area

- Great slow play for markets...

- Turn from ZERO-Covid to 100% - then keep rolling out more and more

- Hong Kong will drop its COVID-19 mask mandate, chief executive John Lee said on Tuesday, in a move to lure back visitors and business and restore normal life more than three years after stringent rules were first imposed in the financial hub. (945 days)

- ---- Egg Freezing - A member of China's top political advisory body said she would propose allowing unmarried women to access egg freezing as a measure to preserve their fertility after the country's population fell last year for the first time in six decades.

----------- Lu's recommendations come as authorities try to bolster a faltering birth rate with incentives including expanding maternity leave, financial and tax benefits for having children as well as housing subsidies.

More China

- China Renaissance Holdings said in an exchange filing on Sunday that its missing chairman and star dealmaker Bao Fan was currently cooperating with relevant Chinese authorities conducting an investigation.

- Reuters previously reported, citing sources, that authorities took Bao away earlier this month to assist in an investigation into a former colleague, Cong Lin, the company's former president.

Even More China

- Chinese authorities have urged state-owned firms to phase out using the four biggest international accounting firms, signaling continued concerns about data security even after Beijing reached a landmark deal to allow US audit inspections on hundreds of Chinese firms listed in New York.

Target Earnings

- Target (TGT) reported a quarter similar to Walmart's (WMT) last week with a solid Q4 beat on the top and bottom line offset by weak guidance for Q1 and FY23. Q4 adj. EPS fell 41% from an impossible comp while comp sales grew 0.

Markets are feeling the pain of a Fed that just can't make up its mind.

Earnings from retail - not so good.

Global warming is the reason for this all!

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Warm Up

- A quick apology to Hobby Lobby

- Inflation ticking up - CPI and PPI not what the market wanted

- Change up, this Zip Code - now most expensive in country

- Arctic melt is coming - Doomsday Glacier

- WHAT? Water BillFlation

- Announcing the Winner of the CTP !

Market Update

- Bullard and Mester - Not liking the markets euphoria (50bps talk coming back)

-- Ever since they opened their mouth - market been in a tailspin

- Bird Flu - expanding - watch out chicken and egg prices

- Tesla flying high - stock back in vogue

- All-time high's for this country's main stock market

- Earnings finishing off - mixed bag, but points to concerning quarters to come

Bad Bullard (H/T Bespoke)

Bullard Speaks

Continuing on....

- Worst day of the year today...

- S&P 500 Down 2%, DJIA off by 700pts (2%, NASDAQ down 2.5%

- 10-year climbing toward 4% again|

- Blame placed on unusual strength of the economy - turning better last several weeks.

Water Bill

- $1,578 this month at the house - that is inflation!

- Full Story - No Leaks

Hot Real Estate

- Miami’s Star Island is now the nation’s most expensive neighborhood while the number of New York City areas where buying a home would set you back at least $1 million is on the decline, according to a new survey.

- The average price of a single family home on Star Island, the man-made enclave off the coast of Miami Beach that is home to celebrities including Shaquille O’Neal, Gloria Estefan, and Rosie O’Donnell, was valued at an eye-popping $40.2 million as of December, according to Zillow.

- 71% increase over 3 years

- Star Island is now four times as expensive as Beverly Hills Gateway in Beverly Hills

- NY real estate not lagging behind by much

--- January average rent for Manhattan apartment - ALL TIME HIGH

Bird Flu

- Could bolster inflation (food) again

- Outbreaks of the virus have continued in North and South America, Europe, Asia and Africa

- Farmers thinking about vaccines - once unheard of

- A company farm in Weld County, Colorado, was infected twice within about six months, killing more than 3 million chickens, Rust said. He thinks wind blew the virus in from nearby fields where geese defecated.

Twitter

- The Taco Bell of social media - introducing a new product update almost daily

- Twitter said on Friday it will allow only paid subscribers to use text messages as a two-factor authentication (2FA) method to secure their accounts.

- The company believes phone-number-based 2FA is being abused by "bad actors,"

- Twitter owner Elon Musk tweeted "Yup" in reply to a user tweet that the company was changing policy "because Telcos Used Bot Accounts to Pump 2FA SMS," and that the company was losing $60 million a year "on scam SMS."

Glacier melting

- Antarctica's vast Thwaites Glacier - nicknamed the Doomsday Glacier - say warm water is seeping into its weak spots, worsening melting caused by rising temperatures

- Thwaites, which is roughly the size of Florida, represents more than half a meter (1.6 feet) of global sea level rise potential, and could destabilize neighboring glaciers that have the potential to cause a further three-meter (9.8-foot) rise.

- Is this concern all about the displacement of the above the line ice?

Brexit - Who Cares

- The FTSE 100 is at an all-time high.

- With all of the problems in Europe, world... ALL TIME HIGH

- Obviously the best decision England made was to leave the EU

Cisco Earnings