MiB: Cliff Asness, AQR

  This week, we speak with Cliff Asness, co-founder and managing partner at AQR Capital Management. The firm has ~$100 billion in assets under management. An active researcher, Asness contributes to numerous publications and has received a variety of accolades, including the James R. Vertin Award from CFA Institute in recognition of his lifetime contribution… Read More The post MiB: Cliff Asness, AQR appeared first on The Big Picture.   This week, we speak with Cliff Asness, co-founder and managing partner at AQR Capital Management. The firm has ~$100 billion in assets under management. An active researcher, Asness contributes to numerous publications and has received a variety of accolades, including the James R. Vertin Award from CFA Institute in recognition of his lifetime contribution to research. Asness earned his master’s in business administration as well as his Ph.D. in finance from the University of Chicago. He explains how the firm is only “half hedge fund,” as they employ over 40 different quantitative, many of which are specific investments based on their quantitative research. That multi-strategy approach works well when markets go through long periods where value underperforms. Specifically, when Value doesn’t work, strategies like profitability, fundamental momentum, and low-risk work when Value as an investment style did not. Over that period, expensive companies outperformed not on price but because they out-executed and grew more in terms of earnings, sales, and cash flows. We discuss how difficult value investing was over the prior decade. The firm can go decades where they don’t talk about value (Post-GFC to 2017), because most everything else they do was working. Neither he nor AQR engages in market timing, but the spread between value and growth had gotten so huge that he felt comfortable “sinning a little.” You can find him on Twitter here; a list of his favorite books is here; A transcript of our conversation is available here Tuesday. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. Be sure to check out our Masters in Business next week with Dominique Mielle, (retired) partner at Canyon Capital, a $25 billion hedge fund where she worked there for 20+ years. She is also the author of “Damsel in Distressed,” which turns out to be (surprisingly) the very first memoir written by a woman working at a hedge fund. The book is a fun romp covering the 1998-2018 era.       The post MiB: Cliff Asness, AQR appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureMar 18th, 2023

KB Home Strong Results Lift Prices

KB Home has great quarter and gives favorable guidance, but there is a catch. Falling backlogs and dwindling new orders don’t promise strength in 2023. Share repurchases are increased by $500 million. 5 stocks we like better than KB Home KB Home (NYSE:KBH) is raising the roof for 2023; like all house parties, the year […] KB Home has great quarter and gives favorable guidance, but there is a catch. Falling backlogs and dwindling new orders don’t promise strength in 2023. Share repurchases are increased by $500 million. 5 stocks we like better than KB Home KB Home (NYSE:KBH) is raising the roof for 2023; like all house parties, the year may not turn out as investors would hope. The company outperformed consensus estimates and gave favorable guidance driven by its relentless execution of backlog orders. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. This has revenue in Q1 and guidance for the year better than expected but still down on a YOY basis, with declines expected to accelerate into the back half of the year. There was a sequential improvement in order metrics, but backlogs are dwindling almost as fast as new orders on a YOY basis and cannot sustain momentum indefinitely. In this light, the company may be heading for a cliff and is not alone in the race. Lennar (NYSE:LEN) reported similar metrics. Regarding the FOMC and interest rates, the rate outlook might stabilize, but inflation is still hot, and rates are still high and rising, which will impact business. The real risk is bank-sector contagion. Mr. Powell tried to support the system when the FOMC hiked the last 25 bps, but his words rang hollow. With rates still rising, we can assume the banking crisis will worsen before it gets better. It will also impact the home buyer traffic, mortgage demand, and home builder results regardless of the undersupply situation. KB Home Has Solid Quarter, New Orders Down 49% KB Home had a great quarter but was driven almost exclusively by reduced backlogs. The company reported $1.38 billion in revenue, which is down -1.0% compared to last year, but it beat the consensus estimate by 600 basis points, so got the market’s attention. The internals suggests the company has reached the peak of its revenue power due to a 3% decline in volume and a 2% increase in average selling price. The increase in average selling price is a surprise, given competitors have already reported YOY declines, so price growth should not be expected to continue. The company margin contracted but was less than expected, another ray of sunshine for investors to embrace. The margin contracted about 50 bps to leave the GAAP EPS at $1.45 or $0.35 better than expected. The offsetting factor is that EPS is still down compared to last year, and the margin is expected to contract during the year. The guidance, also better than expected but still negative, is that revenue will fall 15% at the top end of the range. Regarding backlog and new orders. The company’s backlog increased sequentially due to the Q1 pullback in mortgage rates and the onset of the spring building season. The bad news is that backlogs are down 42% YOY, and new orders are down 49%, trends that suggest business could slow more than the 15% indicated by guidance. KB Home Still Generates Cash The home builders are cash-generating machines with solid balance sheets and pay reasonably reliable dividends. KB Home added another $500 million in repurchases to its capital allocation plans, worth about 16% of the market cap following the Q1 release. The news has sparked 2 analyst reports with 2 price target increases.   The caveat is the consensus target is only flat compared to last month and last quarter and assumes the stock is fairly valued. This could cap gains for share prices in the near to short term. Shares of KB Home surged following the report, but gains are already capped at a key resistance point. This point has been tested before and may keep the stock range bound in 2023. This level is near $40. Should you invest $1,000 in KB Home right now? Before you consider KB Home, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and KB Home wasn't on the list. While KB Home currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Thomas Hughes, MarketBeat.....»»

Category: blogSource: valuewalkMar 24th, 2023

KB Home Strong Q1 Results Lift Stock Higher: Here Are The Details

KB Home (NYSE: KBH) is raising the roof for 2023; like all house parties, the year may not turn out as investors would hope. The company outperformed consensus estimates and gave favorable guidance driven by its relentless execution of backlog orders. This has revenue in Q1 and guidance for the year better than expected but still down on a YOY basis, with declines expected to accelerate into the back half of the year. There was a sequential improvement in order metrics, but backlogs are dwindling almost as fast as new orders on a YOY basis and cannot sustain momentum indefinitely. In this light, the company may be heading for a cliff and is not alone in the race. Lennar (NYSE: LEN) reported similar metrics.  Regarding the FOMC and interest rates, the rate outlook might stabilize, but inflation is still hot, and rates are still high and rising, which will impact business. The real risk is bank-sector contagion. Mr. Powell tried to support the system when the FOMC hiked the last 25 bps, but ...Full story available on»»

Category: earningsSource: benzingaMar 24th, 2023

What A Mess

What A Mess By Michael Every of Rabobank I start the Global Daily today with the concluding comment to our Fed-watcher Philip Marey’s post-FOMC note titled ‘Credit Tightening’: “A final observation. The Fed continues to stumble its way through the fight against inflation. First they tried to explain inflation away by claiming it was transitory. Consequently, they were late in starting the hiking cycle. Now that they are finally approaching positive territory for the real federal funds rate, they are close to ending the hiking cycle and leaving the rest of the fight against inflation to credit tightening by the banks. Because the Fed in its regulatory role failed to prevent the recent banking turmoil. Failing as a central bank on both fronts, so now it’s up to the banking sector to get inflation under control? What a mess.” Except it’s even worse than that. The Fed hiked 25bps and shifted language such that Philip now sees only one more 25bps step in May. So, closer to a pause. Yet, as I kept saying a few months ago, this is ‘the pause that doesn’t refresh’. Indeed, the 2024 median dot plot was increased from 4.1% to 4.3%, and those cuts were stressed as contingent on inflation coming down, when the UK yesterday showed CPI is quite capable of suddenly surprising to the upside again. Moreover, while Fed Chair Powell was underlining that the US banking system is safe and sound, Treasury Secretary Yellen --who doing Powell‘s job in 2017 told us there would not be another financial crisis “in my lifetime”-- was telling markets the FDIC would not extend deposit insurance, increasing the risks of outflows and credit tightening. It would be nice if Powell and Yellen coordinated their policies rather than working in opposite directions, as yesterday, and over QT vs. the TGA. On the credit tightening front, plucked from FinTwit: “This was the first week of [Citi credit card] data following the disruption within the financial sector, and we were curious if it might have had an impact on the consumer. It sure did….[seeing the] biggest decline in total retail spending .. since the pandemic began (April 2020).” If that trend continues, pressures for greater action, and institutional coordination, will only build. On which, if you think what we have now is a mess, try the Bloomberg long-read about coming paradigm-shifts in banking and central-banking: ‘Finance is going back to the age of mercantilism’. It makes arguments regular readers of the Global Daily will immediately recognise, is of juicy quotes, and worth reading in full, but a summary runs: “Since the history of financial regulation is a history of crisis management, it is inevitable the current chaos in the financial sector will bring forth new rules designed to prevent a repeat. Already, there is a debate on whether there is a better way to govern banks. On one side are those who think depositors should be protected even more fully; on the other are those who say bailing banks out leads to moral hazard. There is some optimism that the rule changes may not be as dramatic as after the crisis of 2008, mostly because banks have much more capital now. But, as John Micklethwait and Adrian Wooldridge point out, regulators are also operating against a very different global backdrop. In 2008, governments everywhere were committed to a liberal finance system. Now the world’s economy is breaking up into competitive regional blocs, and political rhetoric has shifted toward creating national champions and directing consumers toward local providers. The idea of finance as an arm of the state is back. The post-crisis restructuring this time will likely reflect this new mindset: a mercantilist form of finance, in line with the statist policies of modern geopolitics. Already, banks are becoming more intertwined with governments, which in turn are picking winners and trying to back the industries of the future. Politicians welcome this because it increases their control over the economy.” Consider, hypothetically, what that implies for rates. In 2018’s deep dive into the economic strategy of Europe’s Great Powers, I argued the country with the lowest cost of borrowing emerged the winner. That’s true if Great Power struggle-relevant production is funded by it: but not if commodity bubbles or consumer appetites are. Moreover, if a rival mercantilist bloc leans on commodities as an anchor (as Brazil’s President Lula heads to Beijing on March 28 with 240 business representatives), then the risk is that US rates need to be higher, not lower, as a defence or offence. Of course, there would have to be credit exceptions for key Great Power sectors (‘Pentagon Creates Cell to Oversee Expansion of Weapon Production Lines’): so we end up with ‘rate hikes and acronyms’ – which, like mercantilism, is the historical norm, not neoliberalism. Of course, one can push back: In the US, Senator Warren tweets: “The Fed under Chair Powell made a mistake not pausing its extreme interest rate hikes. I've warned for months that the Fed's current path risks throwing millions of Americans out of work. We have many tools to fight inflation without pushing the economy off a cliff.” Such as…? (And see the reply to her Tweet immediately below.) NBC news wails ‘TikTok ban would be 'a slap in the face' to young Democratic voters, activists warn: Gen Z voters lean overwhelmingly Democratic, but some Democrats warn they'll stay home if the White House bans their favourite app’. Expensive lobbying efforts are getting results – but too little too late? In Germany, Handelsblatt reports Deutsche Telekom has been helping Huawei circumvent US sanctions after Deutsche Bahn opted for Huawei for their train control system. Meanwhile, a Bundestag report says at the present rate of rearmament, it will take Germany until 2073 to achieve the shift to military preparedness it pledged in 2022. In short, there may be an extra D --Deutschland-- missing from the recent CSIS ‘Deny, Deflect, Deter’ report on China – though the tech export controls flagged yesterday do suggest mercantilism, not Merkelcantilism. No matter what kind a mess you think the Fed is in today, those looking at things from a ‘Grand Strategy’ perspective are even more worried. Tyler Durden Thu, 03/23/2023 - 10:17.....»»

Category: blogSource: zerohedgeMar 23rd, 2023

Bank chaos has altered the fight against inflation — but the Fed says every tool is still on the table

Even if Silicon Valley Bank's collapse hurts Americans' wallets, the Federal Reserve isn't taking further interest rate hikes out of the equation. Federal Reserve Board Chairman Jerome Powell.Alex Wong/Getty Images The Federal Reserve raised interest rates by 25 basis points on Wednesday. It comes after Silicon Valley Bank's collapse, and Fed Chair Powell said tightening from the bank chaos could be "equivalent" to a rate hike. But he stressed uncertainty with the impacts and said the Fed will continue using every tool it has to fight inflation. Even after weeks of banking industry chaos, the head of the nation's central bank made one thing certain — he'll do everything in his power to keep fighting inflation.On Wednesday, the Federal Open Market Committee (FOMC) announced it is raising interest rates by 25 basis points for the second time this year. It comes just weeks after federal regulators shut down Silicon Valley Bank (SVB) and later bailed out its depositors. The collapse raised heightened scrutiny over the Fed's actions to ensure something like this can never happen again.During the Wednesday press conference following the FOMC's announcement, Fed Chair Jerome Powell was clear that he thinks the banking system "is sound and it's resilient" — but he noted that following SVB's collapse, there's heightened uncertainty over how its aftermath could impact the economy."So we also assess, as I mentioned, that the events of the last two weeks are likely to result in some tightening credit conditions for households and businesses and thereby weigh on demand on the labor market and on inflation," Powell said. "Such a tightening in financial conditions would work in the same direction as rate tightening in principle. As a matter of fact, you can think of it as being the equivalent of a rate hike, or perhaps more than that.""Of course," he added, "it's not possible to make that assessment today with any precision whatsoever."Leading up to the Wednesday interest rate decision, many Democratic lawmakers were urging Powell to pause the interest rate hikes to ensure another increase did not exacerbate the impacts of SVB's collapse. Following the announcement, Massachusetts Sen. Warren — who has been unrelenting in her criticism of Powell over the past few days — wrote on Twitter that "Powell made a mistake not pausing its extreme interest rate hikes.""I've warned for months that the Fed's current path risks throwing millions of Americans out of work," she said. "We have many tools to fight inflation without pushing the economy off a cliff."Powell did note during his remarks that he "did consider" a pause in rate hikes in the days leading up to the FOMC meeting. But recent economic data showed inflation cooling down slightly in February while the economy added 311,000 jobs. The hot labor market and slower but still-high price increases showed that there's still more work to be done to get inflation levels back down to the pre-pandemic 2% goal."All of the evidence says that the public has confidence that we will do so, that we will bring inflation down to 2%. Over time, it is important that we sustain that confidence with our actions as well as our words," Powell said. At this point, it's too early to tell how exactly SVB's shutdown will impact consumers. The Federal Reserve said it will conduct an internal investigation to examine what led to the collapse, and other agencies like the Justice Department and Securities and Exchange Commission have launched investigations, as well. But as those investigations play out, Powell wants Americans to know that the central bank will use all of its tools to bring prices down — and it won't stop until it does."We're very focused on getting inflation down," Powell said. "And because we know in the longer run that that is the thing that will most benefit the people we serve."Read the original article on Business Insider.....»»

Category: personnelSource: nytMar 22nd, 2023

SVB And Signature Bank Were Just The Tip Of The Iceberg

SVB And Signature Bank Were Just The Tip Of The Iceberg Authored by Michael Maharrey via, The demise of Silicon Valley Bank and Signature Bank was just the tip of the iceberg. As it turns out, hundreds of banks are at risk. This explains why the Federal Reserve and US Treasury rushed to provide what is effectively a bailout for the entire banking system. In the first week, the Federal Reserve handed out more than $300 billion in loans through its newly created Bank Term Funding Program (BTFP). According to a Washington Post report, banks would face unprecedented losses if they were forced to liquidate their bond portfolios as SVB did. According to the Post, the total capital buffer in the US banking system totals $2.2 trillion. Meanwhile, total unrealized losses in the system based on a pair of academic papers is between $1.7 and $2 trillion. In other words, if banks were suddenly forced to liquidate their bond and loan portfolios, the losses would erase between 77 percent and 91 percent of their combined capital cushion. It follows that large numbers of banks are terrifyingly fragile.” A second report by the Wall Street Journal cites a study from Stanford and Columbia Universities that found 186 US banks are in distress. As economist Peter St. Onge put it, “In other words, we were already right up against the edge.” This is precisely why the Fed had to create a way for banks to borrow against their devalued bond portfolio. If banks were put in a position where they had to sell those bonds to raise capital, they would have fallen like dominoes. The Fed bailout may have plugged that hole in the dam, but there will almost certainly be more cracks in the future. So, how did we get into this situation? Peter Schiff summed it up during an interview with Liz Claman. It’s because of the government that Silicon Valley Bank was in the position that it was. The reason it owned so many long-term, low-yielding US Treasuries and mortgage-backed securities was because the Fed kept interest rates at zero for so long. And the reason that it chose those assets was because bank regulators kind of pushed banks into Treasuries and mortgage-backed securities because they give them favorable accounting treatment. They don’t have to take any haircuts. They don’t have to mark them to market. So, the government created the problem.” St. Onge went into more detail in an article published by the Mises Wire. In short, while tech bros and loose bankers hog the headlines, what drives hundreds of banks to the edge is our crony banking system. In this case, rapid Fed rate hikes crashed into a banking system that fractional reserve banking and the Fed’s “Lender of Last Resort” (LOLR) permanent bailout have driven to permanently drive as fast as possible, as close to the edge of the cliff as possible. Together, the moral hazard has given a green light to those reckless tech bros, to those loose bankers who hand out millions—it turns out hundreds of billions. And it drives the entire banking industry to use opaque accounting tricks to hustle sleepy regulators and innocent taxpayers and dollar-holders who get stuck with the bill. The bankers themselves sleep like babies because they know you’ll cover their losses, but they keep their wins. What turned this rigged casino into a crisis is in the past year the Fed hiked rates at the fastest pace in 50 years, from 0 percent last March to 4.5 percent to 4.75 percent today. They did this in a desperate bid to cancel the inflation they caused by financing $7 trillion in deficit spending and Covid lockdowns. Indeed, those of us who wondered why voters stood by meekly had only to look at the flood of money going out the door. These reckless hikes savaged long bond prices, by far the most popular asset in bank vaults: Across the board, long bonds fell 20 percent, feeding an estimated 10 percent plunge in all bank asset values. In essence, the bank thought it had a dollar in the vault, but turns out it only had 90 or 80 cents. In the case of high-flyers like Silicon Valley and potentially hundreds more, it was more like 60 cents. Few banks can survive that. So, what’s next? St. Onge said probably “a lot of pain and a lot of inflation” caused by more bailouts even as the economy spirals into a recession. In other words – stagflation. We the People will survive—after all, the real assets don’t vanish: the food, cars, and electricity are all there. It’s a paper crisis, but unfortunately that paper crisis has sucked real Americans in, suckered them into putting their life savings into the care of a bunch of degenerate gamblers in expensive suits. And it can bring enormous collateral damage to the wider economy that, yes, provides that food, cars, and electricity if government steps in, as it usually does.” Schiff sees a similar future. This is going to cost Americans a lot of money, not because their taxes are going to be raised, but because the Federal Reserve is financing this massive bailout by creating even more inflation. So, Americans are going to pay for this at the supermarket, at the gas station. Their cost of living is going to go way up. If you thought inflation was bad last year, it’s about to get a whole lot worse.” Tyler Durden Tue, 03/21/2023 - 15:42.....»»

Category: blogSource: zerohedgeMar 21st, 2023

GOP Headed For Showdown On Social Security And Medicare

GOP Headed For Showdown On Social Security And Medicare Authored by A.B. Stoddard via RealClear Wire, In the prospective 2024 nominating contest, some GOP wannabes are serving up straight talk about the need to fix Medicare and Social Security, even though Donald Trump banished entitlement reform from Republican doctrine in 2016. These fiscally sober, and actually conservative, Republicans aren’t likely to win the nomination, and they’re making Trump giddy. But they could also put House Republicans and Ron DeSantis in a jam. Nikki Haley, who announced her candidacy last month, and likely contenders Mike Pence and Mike Pompeo, have all said the looming insolvency of these programs – which take up 30% of the federal budget – must be addressed. House Republicans vowing to find $130 billion in spending cuts had initially placed entitlements squarely on the negotiating table, but removed them after Trump and President Biden united against reform. Biden taunted congressional Republicans at his State of the Union, saying it was their “dream” to cut both popular programs, which was met with boos. Trump has released a video warning congressional Republicans not to cut “one penny” from either safety net program in their negotiations over the debt ceiling. After both events, House Speaker Kevin McCarthy made it explicit: In their hunt for savings they will look elsewhere and leave both programs alone. “Clean” increases in the debt ceiling passed during Trump’s presidency, while the debt increased by 39%. House Freedom Caucus members, who rode the Tea Party wave and sought drastic spending cuts for years, went all in on the Trump spending bender. One of those Freedom Caucus members who went on to serve as both budget director and then chief of staff to Trump – Mick Mulvaney – told The Dispatch, “The truth of the matter is that the first two years of the Trump administration, when the Republicans had the House and the Senate, we raised spending faster than the last couple of years of the Obama administration.” Current Freedom Caucus members, who have relocated their fiscal rectitude, have insisted House Speaker Kevin McCarthy pledge not to bring up a clean debt ceiling increase for a vote because there is a dire need to curb spending now. Since a debt crisis cannot be avoided without curbing mandatory spending, some Republicans are still willing to acknowledge the third rail, and Haley did so last week. “It’s unrealistic to say you’re not going to touch entitlements,” she said, proposing a new system for younger generations while leaving the program intact for current recipients. Pence has warned about a debt crisis coming in the next 25 years that is “driven by entitlements” and said, “The truth is we’ve got to have that conversation.” Pompeo recently told RCP that “the next Republican president has to be more serious than previous Republican presidents have ever been about getting our fiscal house in order,” and that entitlements must be put “on a sustainable trajectory.” Trump would like nothing better than to be the only person in the primary field opposing reforms to Social Security and Medicare – to claim to be their sole defender against some establishment cabal threatening benefits to the elderly. Even though those Republicans are not recommending any near-term cuts or changes, Trump has never let facts or the truth get in his way. What is true: We are headed for a debt crisis; Social Security and Medicare need reform; and Democrats are not interested in addressing debt reduction. Also true: The pre-Trump Republican Party used to be committed to limited government and debt reduction. Even now, Trump will not brook debate of even reasonable, modest, and interim fixes which could extend solvency. At the Conservative Political Action Conference earlier this month, Trump said some Republicans wanted to raise the retirement age to 70, 75, or 80 and planned to “cut Medicare to a level that it will no longer be recognizable.” And since DeSantis remains the biggest threat to Trump winning the nomination, the Florida governor's past support for entitlement reforms is now Trump’s favorite subject. While serving in the House, DeSantis voted for several budget resolutions that would have made changes to the programs, including phasing in the eligibility age to 70. DeSantis is trying to fend off Trump and recently said on Fox News: “We’re not going to mess with Social Security as Republicans. I think that’s pretty clear.” But Trump claims DeSantis wants to “cut” the programs and called him “a wheelchair-over-the-cliff kind of guy, just like his hero, failed politician Paul Ryan.” Trump was referring to ads Democrats ran against the former House Speaker’s plans to privatize the programs a decade ago, in which someone who resembled Ryan was seen pushing an old woman in a wheelchair off a cliff. Sen. Mike Rounds, who is at work on such reforms as a member of the Senate working group on entitlements, said it was “very unfortunate,” that Trump attacked DeSantis over the issue. “We need an adult as president who is going to take on the tough challenges, the tough problems, and be prepared to share with the American people how serious it is. That we use facts. And not scare tactics,” he told Politico. Yet Rounds may not get that leader in DeSantis either. The governor may bend on entitlement reform, just like he did on support for Ukraine, abandoning policies he believes in to win the nomination. House Republicans are already divided among themselves over their coming budget battle with the Biden administration. And there is no consensus about what to do next spring – rally behind Trump for the nomination, or follow the lead of House Freedom Caucus member Rep. Chip Roy and endorse DeSantis and his record of support for privatizing entitlement programs? What all Republicans can count on is that Trump will distort and demagogue whatever any other candidate says anyway. And it’s more than likely granny will vote for him. A.B. Stoddard is associate editor and columnist at RealClearPolitics and a guest host on Sirius XM's POTUS Channel. Tyler Durden Sun, 03/19/2023 - 09:20.....»»

Category: worldSource: nytMar 19th, 2023

Stockman On Washington"s Panicked Bailout Of Bank Deposits... Here"s What Comes Next

Stockman On Washington's Panicked Bailout Of Bank Deposits... Here's What Comes Next Authored by David Stockman via, Why would you throw-in the towel now? We are referring to the Fed’s belated battle against inflation, which evidences few signs of having been successful. Yet that’s what the entitled herd on Wall Street is loudly demanding. As usual, they want the stock indexes to start going back up after an extended drought and are using the purported “financial crisis” among smaller banks as the pretext. Well, no, there isn’t any preventable crisis in the small banking sector. As we have demonstrated with respect to SVB and Signature Bank, and these are only the tip of the iceberg, the reckless cowboys who were running these institutions put their uninsured depositors at risk, and both should now be getting their just deserts. To wit, executive stock options in the sector have plunged or become worthless, and that’s exactly the way capitalism is supposed to work. Likewise, on an honest free market their negligent large depositors should be losing their shirts, too. After all, who ever told the latter that they were guaranteed 100 cents on the dollar by Uncle Sam? So it was their job, not the responsibility of the state, to look out for the safety of their money. If the American people actually wanted the big boys bailed out, the Congress has had decades since at least the savings and loan crisis back in the 1980s to legislate a safety net for all depositors. But it didn’t for the good reason that 100% deposit guarantees would be a sure-fire recipe for reckless speculation by bankers on the asset-side of their balance sheets; and also because there was no consensus to put taxpayers in harms’ way in behalf of the working cash of Fortune 500 companies, smaller businesses, hedge funds, affluent depositors and an assortment of Silicon Valley VCs, founders, start-ups and billionaires, among countless others of the undeserving. And for crying out loud, forget this baloney about the bailouts aren’t costing taxpayers a dime because they are being paid for by the banks via insurance premium payments to the FDIC fund. Well, yes, when the Congress wants to disguise a tax they call it an “insurance premium”, as if its victims had the choice to elect coverage or not. But when $18 trillion of deposits are being assessed in order to bailout careless large depositors who paid no attention to what was happening to their money, then that’s an onerous tax by any other name. Accordingly, Washington’s panicked bailout of $9 trillion of uninsured deposits held by big and small companies, hedge funds and affluent customers over the weekend was therefore nothing less than a gift to the undeserving. And now we find out the two banks that have been explicitly funded 100% by Uncle Sam—SVB and Signature Bank—were deep into woke investing and conduct. That makes the bailout by Janet Yellen & Co. especially galling. For crying out loud, this is how the poison of wokeness and ESG spread like wild-fire among American businesses in the first place. The latter should have ordinarily been a bulwark of conservative values and common sense, but years of ultra-easy money from the Fed and the precedent of bailout-after-bailout since the 1980s allowed top executives to take their noses off the grindstone of safe and sustainable profitability in favor of a purely political agenda. In any event, inflation is still raging and wage workers are still taking it on the chin. During February real wages dropped for the 23rd consecutive month. So the Fed needs to stay on its anti-inflation playbook, come hell or high water. That means it needs to keep raising rates until their after-inflation level is meaningfully positive, which is not yet remotely the case. Indeed, unlike Tall Paul Volcker back in the late 1970s, who inherited 10-year Treasury yields at -2.0% and raised them to +10% over the next several years, real interest rates are still deeply underwater as we show below. The cries to stop the rate increases, therefore, are just damn nonsense. In fact, in any sane world these are not even “increases”. They are long overdue normalization of interest rates that have been absurdly pinned to the zero bound for upwards of a decade. And the Fed most certainly should not throw in the rate increase towel owing to a Wall Street proclaimed “crisis” in the small banking sector. That’s the long-standing wolf cry of the entitled class of speculators decamped in the digital canyons of Wall Street. Yes, regional banks were playing fast and loose with depositor money, but even the biggest of these did not amount to a hill of beans in the great scheme of the nation’s $25 trillion GDP. As we showed a few days ago, both the recently departed SVB and Signature Bank each accounted for barely one-half of one percent of the nation’s $30 trillion of banking system assets. If a few more local and regional banks need to be closed, therefore, so be it. Sooner or later the piper has to be paid. Y/Y Change In Real Hourly Earnings, March 2021 to February 2023 For want of doubt, here is the pattern of the annual rate of change in the two-year stacked CPI. During the 18 months after January 2021 it soared from 1.9% to 7.1%. Yet notwithstanding the Fed’s purported anti-inflation campaign since March 2022, there has been no meaningful retreat from the June 2022 peak. That is, when you take the “base effects” out if the equation, it is clear that the CPI has been stranded at 40-year high levels at 7.0% ever since. Annual Change, Two-Year Stacked CPI: January 2021: 1.9%; June 2021: 2.9%; January 2022: 4.5%; June 2022: 7.1%; July 2022: 6.8%; August 2022: 6.7%; September 2022: 6.8%; October 2022: 7.0%; November 2022:7.0%; December 2022: 6.8%; January 2023: 7.0%; February 2023: 7.0% Nor is that the extent of the inflationary warning signs in the February CPI report. For example, plunging used car prices and the rollover of asking rents were supposed to be saving the day, bringing the headline CPI rate rapidly back toward the Fed’s 2.00% target. But it’s not happening—-at least in the real world. On the matter of used vehicles there is nothing more authoritative than the Manheim used car auction index. But this real world index is going back up again, even as the green eyershades at the BLS insist that used vehicle prices are still going down. Manheim Used Vehicle Index Change Versus CPI Used Vehicle Index One Month (February): +4.3% vs. -2.8%; Three Months: +7.8% vs. -5.3%; Six Months: +2.0% vs. -11.0% Eventually, of course, the BLS will make revisions and adjustments to catch-up with the real world, meaning that the purported anti-inflation impact of used car prices will soon turn into a booster shot. Likewise, the CPI shelter index for February was up at a near record 0.8% on a M/M basis and 8.1% from last February. As is evident from the chart, this component—which accounts for 24% of the weight in the headline CPI and 40% of the core CPI—is still accelerating, not cooling. Change In CPI Shelter Index, Month/Month (Purple) and Year/Year (Black), 2021 to 2023 As we have previously noted, the argument that “asking rents” fell sharply during the back half of 2022 and that the CPI is therefore mis-reporting rent increases doesn’t wash. That because “asking rents” on new contracts account for just 1/12 of the rental market at best, and the reported numbers from private real estate companies are not seasonally adjusted. As is evident in the chart below, rental rates always go down during the fall, and then come roaring back in the spring and early summer. In fact, right on schedule the February report by the Apartment List was back in positive territory. In any event, what the CPI shelter index captures is the rolling increase in the total rent roll, not just the new contracts executed during the current month. And that means for the balance of this year at least—even if the overall housing market continues to weaken– average rents will be significantly higher on a year-over-year basis. Finally, there was one further component in the February report that makes a mockery of the claim that the CPI is fixing to cliff-dive and that the Fed can therefore take its foot off the neck of the Wall Street gamblers. To wit, upwards of 60% of the CPI is accounted for by services less energy services, and this component was up 7.3% on a Y/Y basis, marking the largest such gain in 41 years! So the Fed needs to keep its nose to the anti-inflation grindstone. It is not yet even close to turning the tide. Y/Y Change In CPI For Services Less Energy, 2000 to 2023 As to the matter of imprudently managed banks, isn’t it finally time that all parties concerned - including large depositors - are made to pay the price for their feckless and reckless indifference to financial risk? As a reminder, the unfolding of financial markets during 2022 was a screaming wake-up call that mis-matched bank portfolios were a train wreck waiting to happen. After all, last year the 30–year UST tanked by 39.2%, marking the greatest one-year decline since, well, 1754! Likewise, the 10–year UST fell by 17.8%, another record vaporization of value. That’s why, of course, unrealized bank portfolio losses went from $15 billion in Q4 2021 to a staggering $650 billion in Q4 2022. And no one was hiding the ball—every dime of these potential losses were reported in the quarterly SEC filings. Yet, and yet, bank executives and uninsured depositors sat on their hands because these soaring risks were not running through the income statement and thereby causing bank stock prices to fall even further. The whole theory behind this greatest ever outbreak of benign neglect was that all of the impacted Treasury and Agency securities generating these potential losses would be held to maturity and repaid in full. Alas, that predicate was valid only to the extent that uninsured depositors sat on their hands permanently, and that imprudent folks like Peter Thiel and Ken Griffin would never yell “fire in the theater”. They did, of course, and then the even greater fools in Washington enacted a $9 trillion deposit guarantee during the course of panicked deliberations in the White House Sunday afternoon. So now that $18 trillion worth of US bank deposits have been totally euthanized economically by the geniuses in Washington, how do you stop bank managements from running wild on the asset-side of their balance sheet? After all, they have already been making ungodly sums of money by mismatching their balance sheets, and now its Katie-bar-the-door. Indeed, the Signature Bank fiasco is a poster boy for the art of minting fake profits off dangerous balance sheets. Not far below the surface we find the same old bank failure culprit: Namely, dirt cheap deposits thanks to the Fed, mismatched with substantially higher yielding but problematic assets. Thus, in 2022 Signature Bank earned an average of 3.11% on its $114.3 billion of earning assets, while its cost of funding was just 0.88% on its $103.4 billion of deposits. In dollar terms, the assets generated $3.56 billion of gross income, while the bank paid out just $0.913 billion on its deposits. Alas, if this were the widget business the above figures would amount to a sterling gross margin of 74%. And the resulting $2.54 billion of net interest margin wasn’t eaten up by SG&A, either. Net operating expense/fee income amounted to just $700 million, making Signature Bank an apparent goldmine in 2022 Yet just like that it was gone! The reason is that its income statement was way too good to be true. The bank primarily catered to business operations in law, real estate and other professional services. Accordingly, like the case of SVB, fully 90% of its deposits base was not FDIC insured mom and pop savings accounts, but consisted of the working cash balances of its client firms. At the same time, $70.2 billion of its $114.3 billion of earning assets were in commercial loans, mortgages and leases, which accounted for $2.80 billion of its $3.56 billion in gross income, owing to an average 4.0% yield on this part of the portfolio. So at the heart of the operation was a 4% asset yield matched with a 0.88% deposit cost. And also a highly illiquid, sticky asset book (e.g. taxi medallion loans and low income housing mortgages) matched with deposits which were potentially hot and mobile, should its uninsured depositors ever get nervous and take flight. They did, and in a New York minute the Signature Bank profits machine vaporized. And that’s to say nothing of its fixed income book which was drastically underwater owing to last year’s fixed income market bloodbath. The only thing missing from Signature Bank’s financial picture is that it was not one of the 30 too-big-to-fail SIFIs (systemically important financial institutions), which were given a backdoor guarantee of uninsured depositors by Dodd-Frank. Then, like JP Morgan, its deposit costs would have been even cheaper and its fake profits even more fulsome. As of 6:15 Pm Sunday night, of course, every bank now has the 100% safety net for uninsured deposits. This means that the 5,000 still living banks will have every opportunity to ignore their depositors and play even more artificial and remunerative games by mismatching their assets and liabilities. Stated differently, banks have been way the hell too profitable thanks to the Fed’s insane financial repression and the rampant moral hazard of the bank regulatory and deposit insurance schemes. The top half dozen or so SIFI banks have actually booked more than $1 trillion of net income in the last eight years exactly because the geniuses in Washington have back-stopped and drastically cheapened their deposit carry costs. The stock answer to all this from Washington and Wall Street alike is not to worry because new powers to the bank regulators will keep the cowboys from gestating more SVBs and Signature Banks. Well, here is what Michael Barr, the top bank regulator on the Federal Reserve Board, had to say last Thursday morning when the fire at SVB was already raging:  “The banks we regulate, in contrast, are well protected from bank runs through a robust array of supervisory requirements.” Or, as Elon Musk might have said, funding secured! So at the end of the day there is no preventable financial crisis. What there is amounts to a systematic financial travesty that goes back to the hideously low money market regime that the Fed maintained since the eve of the financial crisis back in 2008, coupled with the evil of deposit insurance, both de jure and de facto. The implicit policy of the Federal Reserve, as measured by the inflation-adjusted level of its target Fed funds rate, has been to blow-up the banking system by flooding it with dirt cheap deposit costs. In fact, during the 180 months since Lehman there have been only seven months when the real rate was positive; and even then it was positive by just a hair as depicted by the blue bars peeking above the zero line in the chart below during early 2019. Inflation-Adjusted Federal Funds Rate, 2008-2023 Likewise, it should be evident by now that deposit insurance has nothing to do with either sound money or a prudent banking industry. It has remained in place for decades because it is a social policy-–protection of the little guy—parading as a financial stabilization measure. But it doesn’t stabilize—it inherently and egregiously de-stabilizes, as has been implicit in every financial crisis during the last half century. So if they want “social policy” for the little guy and the blue-haired ladies, give these folks access to a $250,000 government savings account paying 50 basis points of interest as far as the eye can see. For every one else, let them be the watch-dogs of their own money in the commercial banking system. That’s the very predicate of a stable banking system and sustainable free market prosperity. *  *  * The truth is, we’re on the cusp of an economic crisis that could eclipse anything we’ve seen before. And most people won’t be prepared for what’s coming. That’s exactly why bestselling author Doug Casey and his team just released a free report with all the details on how to survive an economic collapse. Click here to download the PDF now. Tyler Durden Sat, 03/18/2023 - 19:00.....»»

Category: blogSource: zerohedgeMar 18th, 2023

"Too Big To Fail" Credit Suisse Domino Effect Far More Potent Than SVB

"Too Big To Fail" Credit Suisse Domino Effect Far More Potent Than SVB By Ven Ram, Bloomberg Markets Live reporter and strategist Should the markets’ worst fears on Credit Suisse come true, the euro-area economy will fall off a cliff, upend the global financial system and bring policy tightening by major central banks to a screaming halt. Unlike Silicon Valley Bank and Signature Bank, the Swiss lender is classified as systemically important by the US Financial Stability Board — meaning it’s too big to fail as a collapse has the potential to trigger a financial crisis. European Central Bank officials contacted lenders Wednesday to ask about their financial exposure to Credit Suisse, the Wall Street Journal reported. Credit Suisse reported that its assets under management were almost 1.3 trillion Swiss francs, or the equivalent of $1.4 trillion, as recently as last month. For perspective, that would amount to almost 10% of the 14.5 trillion euro-area economy The cost of insuring Credit Suisse’s debt against default for one year jumped to a record 2728 basis points on Wednesday. Meanwhile, the company’s shares tumbled to a record and its bonds plunged to levels typically associated with distress. The latest leg lower was spurred by comments from Saudi National Bank — Credit Suisse’s top shareholder — that it had no intention of investing more into the Swiss lender, which is in the midst of a complex three-year restructuring in a bid to return to profitability. Over in the US, a swift response from policymakers including the Federal Reserve staved off a crisis that loomed over the financial landscape following the failure of SVB. The California-based lender collapsed after a loss of depositor confidence compelled the bank to sell assets that had lost value amid the Fed’s tightening. The Fed lost little time before unveiling a term-funding program that essentially allowed US banks — presumably those that may be in a predicament similar to SVB amid the increase in interest rates — to borrow against bonds that may have lost value at 100 cents on the dollar. That quick backstop helped assuage some of the worst fears of depositors and investors. It’s not exactly clear how the plot will play out in Europe, with UBS Group AG chief executive officer Ralph Hamers commenting that he won’t answer “hypothetical questions” about its struggling Swiss rival and that UBS is “focused on our own strategy.” Credit Suisse’s Chief Executive Officer Ulrich Koerner earlier this week pleaded for patience, citing its CET1 capital ratio of 14.1% in the fourth quarter and a liquidity coverage ratio of 144% that has since increased to about 150% on average Still, that patience may be in short supply in the global financial markets, with investors showing increased sensitivity to any perception of additional risk. For policymakers in Europe and the US, though, what is at stake here is an entity that has a far greater domino effect in its ability to damage sentiment than Silicon Valley Bank and Signature Bank combined. Tyler Durden Wed, 03/15/2023 - 12:00.....»»

Category: smallbizSource: nytMar 15th, 2023

Wharton professor Jeremy Siegel blames the Fed for SVB"s collapse - and warns of more failures and a painful recession

The Fed's interest-rate increases put pressure on Silicon Valley Bank, and further hikes could cause other companies to implode, Siegel said. Jeremy Siegel.Scott Mlyn/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images The Fed's inflation fight was a key factor in Silicon Valley Bank's collapse, Jeremy Siegel said. The Wharton professor warned more interest-rate hikes could cause other companies to crumble. Siegel flagged the growing risk of recession if the Fed keeps raising rates. Blame the spectacular collapse of Silicon Valley Bank on the Federal Reserve, Jeremy Siegel says."Make no mistake about one of the prime reasons for SVB's implosion: Fed shrapnel killed this bank and may send the economy into recession in the process," the Wharton professor said in a Fortune column he coauthored with two Yale academics, Jeffrey Sonnenfeld and Steven Tian.Inflation spiked to 40-year highs last year, spurring the Federal Reserve to hike interest rates from nearly zero to upwards of 4.5% over the past 12 months. Higher rates increase borrowing costs and encourage saving over spending, which typically pulls down asset prices, saps demand, and increases the risk of a recession.One of SVB's key mistakes was investing its deposits in long-duration bonds, which plunged in price as interest rates rose. Surging rates have also weighed on the valuations and fundraising potential of lossmaking, VC-backed companies — a big chunk of SVB's customer base.When SVB's customers began withdrawing their money in droves last week, the lender found itself short of cash. The Federal Deposit Insurance Corp. took control of the bank on Friday, and guaranteed SVB customers' deposits on Sunday."This crisis is more evidence that the Fed has gone too far and might steer the economy not just off the highway, but right off a cliff," Siegel and his coauthors said.They warned that if the US central bank hikes rates by 50 basis points in March, that would increase the risk of more SVB-type implosions."Continuing to tighten monetary policy in this environment of bank blowups and declining consumer and business confidence is a surefire recipe for disaster," they said, adding that the Fed's hikes have caused "collateral damage and general carnage."Siegel, Sonnenfeld, and Tian slammed the Fed for continuing to wage war on inflation, when they see evidence of "pervasive disinflation across virtually the entire economy."The trio pointed to high mortgage rates slowing construction of new houses and the prices of many commodities plunging by over 70% from their peaks last year. They also noted the sharp declines in shipping and cargo rates as consumers' pandemic savings run out.They called for the Fed to replace rate hikes with alternative policy measures that would bolster the US labor supply, slash the costs of consumer goods and services, and increase market competition."Maybe now, with the collapse of SVB and other banks, the Fed will realize that its impatience risks dire consequences for the whole economy," Siegel and his fellow academics wrote.The veteran finance professor said in his WisdomTree commentary this week that the SVB fiasco would likely mean the Fed only hikes by 25 basis points this month. The disintegration of a $20 billion bank within a couple of days would fuel concerns about further bank runs and the safety of deposits, Siegel believes."It's the psychological implication that is important; understandably regional banks were hit really hard," he said. "This must be on the minds of the Fed Governors."Read the original article on Business Insider.....»»

Category: personnelSource: nytMar 14th, 2023

2023 Q1 Earnings Preview: What Are Estimates Telling Us?

The 2022 Q4 earnings reports displayed that contrary to fears of an impending earnings cliff, companies were largely able to protect their bottom lines. Can they do the same in 2023 Q1? The 2022 Q4 earnings reports displayed that contrary to fears of an impending earnings cliff, companies were largely able to protect their bottom lines.We are not suggesting that the earnings picture that came out through the preceding reporting cycle was great, but rather that it proved to be much more stable and resilient than many had been willing to give credit to. Actual Q4 results came in better than expected, but that didn’t mean much in terms of earnings growth. Not much of a surprise on that count either, given where we are in the economic cycle and the multitude of headwinds facing corporate profitability.We all know that the lagged effect of the extraordinary tightening already implemented and the incremental rate hikes ahead, including in this month’s Fed meeting, will at least slow down the economy, if not push into a recession as many have started to fear.In fact, many in the market fear that the unusual strength in the U.S. economy, as reconfirmed by Friday’s February jobs report, will force the Fed to stay in the tightening mode longer than would have been the case otherwise. This is showing up in the market’s evolving expectations of the Fed Funds ‘exit rate’, the final level at which the central bank concludes the ongoing tightening cycle. Many are now penciling in an exit rate of 6% or higher, up from their earlier projections of about 5.5%.All of this has direct earnings implications for the U.S. economy’s growth trajectory and the health of corporate profitability.To get a sense of what is currently expected, look at the chart below that shows current earnings and revenue growth expectations for the S&P 500 index for 2023 Q1 and the following three quarters.Image Source: Zacks Investment ResearchAs you can see here, 2023 Q1 earnings are expected to be down -9.4% on +1.8% higher revenues. This would follow the -5.7% earnings decline in the preceding period (2022 Q4) on +5.6% higher revenues.Embedded in these 2023 Q1 earnings and revenue growth projections is the expectation of continued margin pressures, which has been a recurring theme in recent quarters. The chart below shows net income margins for the S&P 500 index.Image Source: Zacks Investment ResearchAnalysts have been steadily lowering their estimates for Q1, a trend that we saw ahead of the start of the last few reporting cycles as well. To give full context, this behavior of negative estimate revisions just ahead of the beginning of the reporting cycle for that period is far from the course, historically speaking. We saw this shift during Covid when estimates started going up for some time. But that trend ‘normalized’ last year and hence the negative revisions to 2023 Q1 estimates, as the chart below shows.Image Source: Zacks Investment ResearchPlease note that while 2023 Q1 estimates have come down, the magnitude of negative revisions compares favorably to what we saw in the comparable periods to the preceding couple of quarters. In other words, estimates haven’t fallen as much as they did in the last few quarters.Estimates for full-year 2023 have also been coming down, as we have consistently pointed out in these pages. The chart below shows how the aggregate 2023 S&P 500 earnings.Image Source: Zacks Investment ResearchAs we have been pointing out all along, 2023 earnings estimates peaked in April 2022 and have been coming down ever since. Since the mid-April peak, aggregate earnings have declined by -12.6% for the index as a whole and -14.5% for the index on an ex-Energy basis, with the declines far bigger in a number of major sectors.You have likely read about the roughly -20% cuts to S&P 500 earnings estimates, on average, in response to recessions.Many in the market interpret this to mean that estimates still have plenty to fall in the days ahead. But as the aforementioned magnitude of negative revisions at -11.7% on an ex-Energy basis shows, we have already traveled a fair distance in that direction. Importantly, some key sectors in the path of the Fed’s tightening cycle, like Construction, Retail, Discretionary, and even Technology, have already gotten their 2023 estimates shaved off by a fifth since mid-April.We are not saying that estimates don’t need to fall any further. But rather that the bulk of the cuts are likely behind us, particularly if the coming economic downturn is a lot less problematic than many seem to assume or fear.Please note that the $1.903 trillion aggregate earnings estimate for the index in 2023 approximates to an index ‘EPS’ of $114.86, down from $221.22 in 2022. The chart below shows how this 2023 index ‘EPS’ estimate has evolved over time.Image Source: Zacks Investment ResearchThe chart below shows the earnings and revenue growth picture on an annual basis.Image Source: Zacks Investment ResearchThis Week’s Reporting DocketThe reality of an earning season is that it never ends completely. In fact, every quarter has this one period when the older reporting cycle hasn’t completely ended yet, but the new one has gotten underway.We are in such an overlapping period at present, with a couple of 2022 Q4 results still awaited while the 2023 Q1 earnings season has gotten underway. Quarterly results in recent days from three S&P 500 members, Oracle ORCL, AutoZone AZO, and Costco COST, for their respective fiscal periods ending in February, form part of our 2023 Q1 tally. We have another four index members on deck to report fiscal February quarter results this week, including FedEx FDX, Adobe ADBE, and Lennar LEN.The Q1 reporting cycle will really pick up steam when the big banks come out with their quarterly results on April 14th.For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>> Will Tech Sector Earnings Growth Resume in Q1?  4 Oil Stocks with Massive Upsides Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."  Zacks Investment Research has just released an urgent special report to help you bank on this trend.  In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations. Download your free report now to see them.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oracle Corporation (ORCL): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report AutoZone, Inc. (AZO): Free Stock Analysis Report FedEx Corporation (FDX): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis ReportTo read this article on click here.Zacks Investment Research.....»»

Category: topSource: zacksMar 11th, 2023

Elon Musk is behaving "like the local drunk," says a former Twitter executive

Elon Musk recently accused a former Twitter director who has muscular dystrophy of using his disability as an "excuse" to do "no actual work." Elon Musk took control of Twitter in late October.Justin Sullivan/Getty Images A former Twitter exec told i News that Elon Musk was behaving "like the local drunk." Bruce Daisley said that meant employees would no longer be as proud to work at Twitter. Musk has fired thousands and accused one of using his disability as an "excuse" to do "no actual work." Elon Musk, who recently publicly lashed out at a former worker, is behaving "like the local drunk," an ex-Twitter vice-president told i News.Bruce Daisley, who was Twitter's vice-president for Europe, the Middle East, and Africa until January 2020, criticized Musk's leadership of the company in an interview with the outlet. He referred to Musk's clash with Haraldur Thorleifsson, a former Twitter director whom the tech mogul accused of using his disability as an "excuse" to do "no actual work.""The more Musk behaves like the local drunk – getting into slanging matches with disabled ex-employees – the less current employees will be proud to say they work there," Daisley told i News. Musk has since apologized for his comments towards Thorleifsson, who has muscular dystrophy.Daisley also referred to the chaos caused by the company's much-reduced workforce. Just a week after taking control of Twitter, Musk laid off around half of its workers. Since then, more have been fired, been laid off, or quit, and the site has suffered from a number of outages which some critics have attributed in part to the reduced headcount."It's a little bit like the character in the cartoon who runs off the cliff but doesn't fall straight away," Daisley told i News. "Initially a lot of commentators were willing to say that the Twitter business was full of slackers, Elon had fired 75% of the employees, and it was still running. Well now Wile E. Coyote has looked down and realised gravity does apply to him, too."Musk said this week's outage, which affected images and external links, was caused by a "small API change" that had "massive ramifications."Twitter did not immediately respond to Insider's request for comment on whether jobs cuts may have contributed to the outages.Criticism of Musk's leadership and treatment of staff has mounted. He's argued publicly with workers who disagreed with him, told staff they needed to work "extremely hardcore" or be laid off, and set up beds in Twitter's San Francisco headquarters for staff to sleep in as they work long hours, in some cases through the night.Musk has also called in engineers and execs from his other companies to work at Twitter, given workers strict deadlines, and taken drastic measures to cut costs and boost revenues.Under Musk, Twitter has become "a pressure cooker," an employee who still works at the company and who spoke on the condition of anonymity told i News."There are no guidelines," the worker continued. "There's no respect. There's absolutely zero transparency. It's awful."Read the original article on Business Insider.....»»

Category: smallbizSource: nytMar 10th, 2023

Bernie Sanders says Marianne Williamson will run a "strong campaign" and raise "very important issues" in 2024

Sanders backs Biden for re-election. But in contrast to fellow progressive Elizabeth Warren, he praised Williamson for touting progressive causes. Independent Sen. Bernie Sanders of Vermont and 2024 presidential candidate Marianne Williamson.Anna Moneymaker/Getty Images; Mike Jordan/Getty Images for SXSW Marianne Williamson is challenging Biden for the 2024 nomination, running on a progressive platform. Bernie Sanders told Insider that she'll run a "strong campaign and raise very important issues." Sanders has said he supports Biden in 2024, but his praise for Williamson contrasts with other Democrats. Independent Sen. Bernie Sanders of Vermont offered tepid praise on Tuesday for Marianne Williamson's 2024 presidential campaign, telling Insider at the Capitol that he expected her to raise "very important issues" during the campaign.Williamson — a self-help author, spiritual leader, and 2020 presidential candidate — is currently the only well-known Democrat to officially launch a presidential campaign. President Joe Biden is widely expected to announce a re-election bid, but has yet to officially do so.Sanders has said he will support Biden if he seeks re-election, and told Insider on Tuesday that he doesn't "want to speculate" about Williamson's chances. But Williamson endorsed Sanders in 2020 after dropping out of the campaign, and he indicated a respect for her that other Democrats haven't shown."I know Marianne," said Sanders. "I'm sure she's going to run a strong campaign and raise very important issues."Democratic Sen. Elizabeth Warren of Massachusetts, by contrast, was firm in her support for Biden when asked about Williamson's campaign."I think that President Biden is going to be the Democratic nominee, and he's going to be re-elected," said Warren, saying she supported Biden because he's "accomplished a tremendous amount in the last two years, and he's got real momentum to keep on delivering for the American people."Williamson announced her campaign to a packed room at Union Station in Washington, DC on Saturday, drawing applause from the crowd for her critiques about a "sociopathic economic system." While she made clear in her speech that she was glad to see Biden prevail over former President Donald Trump in 2020, she said that America still remains "six inches away from the cliff.""This country is drowning in information and starving for understanding," she declared during the speech.Williamson's platform includes a host of progressive staples including universal healthcare, free childcare, a wealth tax, and creating a green economy.But so far, Williamson's nascent presidential bid has been largely dismissed by most Democrats.Asked about Williamson's campaign on Monday, White House Press Secretary Karine Jean-Pierre made snide references to a "crystal ball" and Williamson's "aura," prompting Williamson to issue a video statement arguing her campaign is about "substantive issues and policy."—Marianne Williamson (@marwilliamson) March 7, 2023A recent Morning Consult poll found that just 4% of Democratic voters say they would vote for Williamson if the 2024 election were held today, versus 77% who said the same of Biden.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 8th, 2023

How A Country Goes Bankrupt... In 10 Steps

How A Country Goes Bankrupt... In 10 Steps Authored by John Rubino via Substack, The past few decades of unnaturally easy money have created a world of “moral hazard” in which a ridiculous number of people borrowed far more than they should have. Now, with money getting tighter, not just businesses and individuals but some governments are staring at the “suddenly” part of that old saying about bankruptcy. Japan is the poster child for this slow walk towards – then quick rush over – a financial cliff. Here’s how it works for a government, in 10 steps. Step 1: Build up massive debt. A bursting real estate bubble in the 1990s confronted the Japanese government with a choice between accepting a brutal recession in which most of that debt was eliminated through default, or simply bailing out all the zombie banks and construction companies and hoping for the best. They chose bailouts, and federal debt rose from 40% of GDP in 1991 to 100% of GDP by 2000.  Step 2: Lower interest rates to minimize interest expense. Paying 6% on debt equaling 100% of GDP would be ruinously expensive, so the Bank of Japan pushed interest rates down as debt rose, thus keeping the government’s interest cost at tolerable levels. Step 3: Continue to borrow at virtually no cost. While interest rates fell, the zombie companies soaking up public funds were joined by a growing number of retirees who began drawing on japan’s versions of Social Security and Medicare. Government spending, as a result, continued to rise and deficits kept growing, further intensifying the pressure to lower interest rates. The BoJ began buying bonds with newly-created yen to force interest rates down to zero and even below (meaning that the remaining private sector buyers of Japanese government paper actually paid for the privilege). Since the government now earned money by borrowing, there seemed to be no reason to stop, and debt soared to the current 262% of GDP, which might be the highest figure ever recorded by a major government. Step 4: Experience sudden, sharp inflation. In 2022, all that new currency finally caused the inflation that critics of easy money had been predicting. Japan’s official cost of living is now rising at a 4% annual rate, making the real yield on a zero-percent government bond -4%. Step 5: Experience a plunging currency. With most other central banks tightening to combat inflation, the BoJ kept buying bonds to keep its interest rates low. Investors noticed this yield differential and stopped buying yen-denominated paper, sending the yen’s exchange rate down sharply versus the US dollar. Step 6: Reluctantly allow interest rates to rise. Also in 2022, the BoJ realized that unless it wanted to buy all the paper the government was issuing, it would have to let interest rates rise a bit. Which they very quickly did, from 0% to .25% and then .5%. Step 7: Get swamped by interest expense. Now all the debt issued or rolled over by Japan’s government carries a cost. Let’s say the average yield rises to the current 0.5%. On debt equaling 260% of GDP, interest expense equals 1.3% of GDP, a crushing burden that adds to already massive deficits, raising overall debt and therefore interest expense going forward.  Now For The “Suddenly” Part All of the above has either happened or is happening. The next steps are scheduled for the near future:   Step 8: Desperately try to lower rates. Recognizing that soaring interest expense spells national bankruptcy, the BoJ tries to stop and reverse the trend by buying even more government debt with ever larger amounts of newly created yen. But the world’s other central banks are much slower to ease, so the gap between yields on Japanese paper and that of, for instance, the US and Germany, continues to widen. Step 9: Watch impotently as the yen craters. With government debt rising parabolically and no one other than the BoJ willing to buy the resulting tsunami of paper, Japan enters the realm of full-on Modern Monetary Theory, where the government just finances itself with newly created currency. The rest of the world, recognizing the inflationary implications, dumps the yen and the currency’s exchange rate goes into free fall. A falling currency raises the cost of imports, which increases inflation, which weakens the yen further, putting upward pressure on interest rates, and so on, in what headline writers call a “death spiral”. Step 10: Game over. Japan is forced into an official devaluation/currency reset which limits its ability to spend and inflate going forward. Everyone who trusted the government and held the old currency is impoverished while those who recognized the scam and converted cash and government bonds into real assets are enriched. It’s a familiar story. But this time it’s happening to a serious country. Questions The possibility of a major country going off a financial cliff raises questions about how widespread the effects might be and how US investors might prepare. And of course: “How do we short Japan”? That discussion is coming in a separate post next week. *  *  * Subscribe to John Rubino's Substack to survive and thrive in the coming crisis Tyler Durden Tue, 03/07/2023 - 06:30.....»»

Category: blogSource: zerohedgeMar 7th, 2023

This chronically online writer believes he gamed Twitter"s For You algorithm. Here"s how he made his tweets go viral.

The first tweet in which he put his hypothesis to work got over 1,500 retweets and about half a million views, the most engagement he saw in months. Ryan Broderick, who writes a Substack newsletter about the internet, believes he may have the key behind viral tweets on Twitter's new For You tab.Ryan Broderick Ryan Broderick noticed engagement on his tweets sharply dropped in recent months. He closely watched what tweets landed on Twitter's For You tab, including those from Elon Musk. The first tweet employing his hypothesis got over 1,500 retweets and about half a million views. A few months ago, Ryan Broderick noticed engagement on his tweets "fell off a cliff.""I don't want to toot my own horn, but I had a regular amount of engagement on Twitter," he told Insider. "I had 60,000-something followers and they seemed to react when I would post stuff."On average, Broderick, who writes regularly about the internet in his Substack newsletter, Garbage Day, estimated he received a few hundred to around a thousand retweets on his posts once a week or every other week. It had been that way for several years.Broderick began writing Garbage Day in 2019 and it became a Substack featured publication last year. He was a senior tech reporter at Buzzfeed before being fired in June 2020 for plagiarism, The Wall Street Journal reported. Broderick did not comment on his Buzzfeed exit.Broderick doesn't like to dwell on his numbers too much — "Because it's so lame" — but around the time Elon Musk purchased Twitter, he noticed his retweets dropped to around 5 per tweet; 10 if he really tried to push them. Musk also lamented about his own engagement and fired an employee over it, according to Platformer."I was really dispirited because, as a freelancer and as someone who's independent, Twitter was like a main way of advertising my stuff," he said. "I was looking for alternatives and kind of giving up on it."Musk made many changes to the site, including a For You tab unveiled in January that became Twitter's equivalent of Instagram's Explore page or TikTok's For You feed. But when the Twitter CEO announced another change to the platform in February, regarding block counts and how it was supposedly impacting Twitter's "recommendation algorithm," Broderick gave Twitter another shot — this time paying closer attention to the patterns of viral tweets.After tweaking the format of his posts and tweeting habits, Broderick's first tweet employing his methods got over 1,500 retweets and about half a million views. The second post got retweeted about 8,000 times and received 13.8 million views as of Friday.Broderick published his hypothesis in his newsletter and on Twitter. The post received 600 retweets and 1.3 million views and landed on Twitter's For You page.—Ryan Broderick (@broderick) February 27, 2023 Which Tweets were going viral?There were a few things Broderick noticed about tweets on the For You page.One, the topics were typically evergreen and basic. An example he gave was Derek Guy, the menswear tweeter who inexplicably started to appear on everyone's Twitter."My timeline was also full of gimmick accounts, but, specifically, ones focused on very basic topics," Broderick wrote. "So my working theory became that the For You algorithm initially launched using accounts tagged for Twitter Topics, the sorting tool the platform created in 2019."Broderick also saw that Twitter's algorithm was prioritizing "already-viral" content, which he suspects might be the reason why everyone was seeing the same tweets. This includes quote tweets or tweets that are trending topics.—Ryan Broderick (@broderick) February 27, 2023Videos were another type of media that Broderick noticed the platform kept prioritizing."If I had to sum it all up very, very succinctly, the For You tab, based on what I've been trying to reverse engineer, seems to want people to quote tweet and reply to posts about [viral] videos."Clues from Elon Musk's tweeting habitsMusk, who has been preoccupied with his own Twitter view counts and firing away tweets, also provided Broderick with a clue: The Twitter CEO kept replying to his own tweets.Broderick specified during the interview that Musk wasn't just making typical Twitter threads."What he was doing was tweeting and then waiting like 54 minutes or something, which is like a weird amount of time. And you can go through his timeline and see it — just waiting a little bit of time and then just replying to the tweets with additional comments," he said.Putting the hypothesis to workBroderick's first thread that went viral, at least relative to his typical engagement, wasn't as pointed or deliberate in methodology, but he did write about a subject that's having its moment and one that he's highly opinionated about."To be totally honest, I was walking to go see Ant-Man, and I was really angry about a tweet I saw about AI," he said. (He believes the idea that AI will go sentient is total "bullshit" and decided to write up a thread.)—Ryan Broderick (@broderick) February 16, 2023His tweet was the first post that broke 1,000 retweets since November.About a week later, Broderick came across a video that showed the ending of "Captain America: The First Avenger." Marvel movies were another topic Broderick was genuinely passionate about so he decided to put his theory to the test again.If you want to go viral "it's always best to focus on something you sincerely care about," he wrote in his newsletter.This time, he quote-tweeted the video he saw, replied to his own post, and spent about 45 minutes replying to other commenters and started a dialogue.—Ryan Broderick (@broderick) February 25, 2023"The tweet went nuts overnight," Broderick wrote in his newsletter. "Over 8,000 retweets, millions of 'views,' and, immediately, I remembered why going viral on Twitter sucks so bad."Broderick cites his view count with caution because it's unclear how accurate the numbers are, but he noticed that the numbers indicated when a tweet gets stuck on the For You tab."That to me indicates that it's like getting stuck in some weird automated system, but that's all anecdotal, I'm not really sure if that's true," he said.Broderick's thread explaining his hypothesis — or "Occam's razor assumption" — got under a thousand retweets but clocked in 1.3 million views.This Insider reporter saw Broderick's tweets about Marvel and his theory about Twitter's algorithm on the For You tab before following or interviewing Broderick. The virality is the problemIf Broderick found a solution to underperforming tweets then it could benefit independent writers like himself or aspiring content creators.But he said that his hypothesis only points out a problem with Musk's new Twitter.His overarching critique is that Twitter now appears to rely on a "basic algorithm" that purely prioritizes engagement over sentiment. It's partly why he said that vanilla tweets like "the best movies you saw in 2021" or favorite album will not go viral."You kind of have to be a little controversial," he admitted. "And this is kind of true about viral content in any algorithmic environment, whether it's YouTube, Facebook, Instagram. Things that are 100% agreeable don't typically go viral."Broderick believes this emphasis on engagement undermines what made Twitter so useful in the beginning not only to journalists but to users who wanted to stay informed.What set Twitter apart and made the platform useful was that users could open the app and see what was happening in the world, he said. "And up until Elon Musk took it over, almost all of the innovations of the site were to make that experience more seamless."Broderick encourages the idea of other people using his method to try to game Twitter's algorithm and further highlight the problem."Twitter could be better and hopefully if enough people mess with this algorithm it will be better but I don't know," he said.Twitter and Musk did immediately respond to a request for comment.Read the original article on Business Insider.....»»

Category: smallbizSource: nytMar 5th, 2023

Silvergate Capital Plagued By "Regulatory And Liquidity Challenges," JPMorgan Analyst Says

Shares of cryptocurrency-focused Silvergate Capital Corp (NYSE: SI) fell off of a cliff Thursday, plummeting 45% on its warning of a delay in its annual report and concerns over its Latest Ratings for SI DateFirmActionFromTo Jan 2022Goldman SachsUpgradesNeutralBuy Jan 2022JP MorganMaintainsOverweight Dec 2021B. Riley SecuritiesInitiates Coverage OnBuy View More Analyst Ratings for SI View the Latest Analyst Ratings.....»»

Category: blogSource: benzingaMar 2nd, 2023

How Much Longer Before The "Most Aggressive Hiking Cycle In History" Triggers The Recession

How Much Longer Before The "Most Aggressive Hiking Cycle In History" Triggers The Recession Everyone knows that monetary policy acts with a lag, but the $64 trillion question - and in the case of global capital markets, literally - is how big said lag is at a time when central banks have engaged in one of the most aggressive hiking cycles in history to stem the runaway inflation spawned by the Helicopter Money unleashed during the covid shock, and not just by the Fed, which in 2022 saw the most rate hikes in a calendar year in history... ... but by all developed central banks. Why this obsession with the lag? Because, as DB's head of thematic research (and in house credit guru not to mention aspiring piano player) Jim Reid writes in a recent note, "Most (but not all) big hiking cycles bring recessions with a lag"... ...  and the ones that do "tend to be when the Fed is furthest away from its dual mandate and that invert the curve." In case it's unclear, both apply to this cycle, but certainly inflation is the outlier with prices still rising at a 6%+ annual clip. So with that in mind, let's take a look at some of the key "lag" indicators, starting with the US Senior Loan Officers Survey (SLOOS), which as we noted recently has painted a "dire picture" for the economy as "Loan Standards Are Approaching Record Tightness As Loan Demand Plummets", and which leads GDP by two quarters... ... and leads a surge in HY defaults by around 3 quarters... To be sure, the banks may not discuss it openly but they are ready: as shown below, we’re halfway between 2007 and 2008 in terms of banks’ forecasting 2023 delinquencies; specifically, US banks forecasting rising 2023 delinquencies is worse than Jan'07 levels. Taking another look at the SLOOS, the survey showed expected delinquencies across a broad range of sectors, which to Reid is "a good correlation to future charge-offs." Then there is the yield curve: the 2s10s has inverted before ALL of the last 10 US recessions, and it takes 12-18 months for the lag on average but some cycles take longer.... But here is a way to improve the fit: as Reid notes, the “3-month rule” tightens up the gap between US 2s10s inversion and recession to 8-19 months. That takes us to March ‘23 - February ‘24. The one exception is the Fed policy error of mid-60s. As an aside, Reid believes that Fed hikes to recession and inversion to recession are likely compressed in this cycle: the shortest cycles are very biased to those where the 2s10s curve inverted during the hiking cycle.. The longest cycles tended not to invert the curve during hiking cycles... Here are some practical consequences of the accelerating rate inversion: Impact 1. By May US IG (investment grade) should yield same as Fed Funds... "which would you prefer? 11yr credit risk or safe front end risk?" Impact 2: Whether it matters or not is a moot point but it’s striking that 6m US rates matched the earnings yield (1/PE) for the S&P 500 for the first time since 2001 in mid-February What about Europe, and the ECB, where today's red hot inflation data moved up expectations for rate hikes to 3.75% by June? According to Reid, the peak impact from ECB hikes will likely be in Q2 2024... And while lending standard in Europe might ease in Q1 vs. Q4 as war/energy shock dissipate, will the lag of policy then take over? And there there is broad money supply, or M2, which has (very) long and variable lags, and has seen a Boom and Bust in last 3 years: the biggest increase since WWII and now first fall since just after.. And since over the very long run the two move in tandem, will the fact that M2 YoY is now negative impact growth with a lag? (spoiler alert: yes). Turning to markets, Reid then shows S&P 500 Performance in Fed Tightening Cycles since 1955 by day: normally the weakness starts to materialize only 9-10 months after the first hike and lasts a year or so, but not this time since the Fed was hiking when the economy and earnings were already slowing; "So either lag is shorter now or we soon move on from the shock of a once in a generation rates move to the economic lag of monetary policy." And while equities may diverge from trendline, all is going to script in rates, as shown in the chart of the average movement in 2s10s US yield curve in Fed Tightening Cycles since 1955 by month. Where there are variations from trendline, is in core CPI, where Core CPI is declining more than the average... ... and unemployment which is notably falling far less than average at this stage, and which "probably reflects a Fed that was well behind the curve.... On average it turns higher 18 months after the Fed starts hiking" Going back to capital markets, a nagging question: why have risk assets held in as well as they have? For the answer look not to stocks but bonds, and specifically bond volatility (i.e., the MOVE index). As Reid notes, the risk market bottom on October 12th was exactly when the MOVE index reversed from 2009 highs (ex. one day at start of pandemic): the first 9 months of 2022 was a shock after a decade of ultra low rates and lower and lower bond vol. Once Fed Terminal rate assumptions plateaued, rates vol fell sharply... hence the sweet spot between max fears over rates and before lag of policy on economy kicks in. But since the shock payrolls print on Feb 3rd, the terminal rate is edging up again though complicating the picture a bit. The bottom line is that rates vol has driven equities over last year or so. Rates vol falling since March has been a support for equities but when the recession comes this correlation will break down... Finally, some hard landing slides. First, Reid notes that DB's recession probability model has risen to 90% over the next 12 months (on the other end, Goldman sees recession odds at 25% over the next year). Why note a soft landing? Take one look at the Fed Misery Index: according to Reid, soft landings have only occurred in hiking cycles where the Fed was around its mandate (unlike now). And then there is the actual weakness in the economy with trend growth rapidly weakening. As noted in the last GDP report, we are seeing the softest growth in final sales to private domestic purchasers since GFC (ex-Covid). ... or the Leading Index: anything more than a -1% YoY decline in US LEI has always led to a US recession within a few months. We’re now at -6% YoY There are similar observations to be made regaring declines in the US new Mfg orders, the Philly Fed index (another one in the camp of “never been this bad without a recession swiftly following”), and others, but understandably all eyes remain glued to the surprising strength in jobs.  And understandably so... but as shown below, that can and will change furiously and on a dime: in the next chart, Reid shows that US unemployment barely budges between recession (R) minus 6 months and R minus 1 month.... and then surges in the recession. Finally, while payrolls don’t suggest we’re in recession now - not by a long stretch - look at the non-linearity when the recession hits shown by Reid in the chart below: a sharp fall with little warning... this is especially true as we wait to see how much of Jan 23’s gains were seasonals. The irony here is that not just stock markets (or at least the bulls) are hoping the recession starts as soon as possible: the Fed does too, as it can finally go back to what it does best and brrrrrr. The only question is whether anyone in the Biden admin realizes that hopes of perpetuating the growth fallacy into 2024 - a key election year - will end in disaster, and it behooves the president to push the economy over the cliff now rather than wait... There is much more in the full must read presentation from Jim Reid, available to pro subscribers in the usual place. Tyler Durden Wed, 03/01/2023 - 08:40.....»»

Category: smallbizSource: nytMar 1st, 2023

Millions of Americans are facing a hunger cliff as food stamps are slashed: "The poorer you are, the poorer you eat"

Millions of Americans are about to see their food stamps slashed. Some told Insider that that means losing a sense of security and nutrition. People line up for Thanksgiving food pantry distribution organized by Council of Peoples Organization in Brooklyn, New York on November 23, 2021.YUKI IWAMURA/AFP via Getty Images At the start of March, a pandemic-era expansion of food stamps is set to abruptly wind down. Those emergency allotments ending will leave some with hundreds less in SNAP benefits each month. Impacted SNAP recipients told Insider that they're bracing for tough times and high bills ahead. After a stroke and heart attack, David Welch is "trying to do something with the rest of my life."Welch, 50, just went back to school. He's trying to get a degree in psychology, and help others who have struggled like him. But Welch, who lives in Texas with his dog Tinkerbell, will soon face a new struggle: His food budget is about to be slashed from $258 monthly to just $26, while he subsides on a fixed income from disability benefits and continues his schooling.David Welch.Courtesy of David WelchWelch is one of the millions of Americans suddenly contending with the end of pandemic-era expanded food stamps. In 2020, the federal government stepped in with a slew of extraordinary measures to beef up the social safety net. One of those was temporarily doing away with income testing SNAP benefits, and instead bumping all recipients to receive the maximum amount of money available. The lowest earners, who already qualified for that maximum benefit, received an additional $95 monthly.SNAP recipients told Insider that those benefits didn't just mean a little extra cash at the grocery store. They meant stability and relief, and an assurance that they'd be able to eat. "I wish people knew that it provides such a sense of security for people who are on fixed income to not have to worry about where they're gonna get their next meal," Welch said. "It really improves your mental health and your outlook on life." The emergency allotments also helped keep many out of poverty. According to a brief from Laura Wheaton and Danielle Kwon published at the Urban Institute, the emergency allotments of SNAP specifically helped keep "4.2 million people out of poverty in the fourth quarter of 2021."But the December omnibus bill suddenly stipulated that the emergency allotment program would come to a close in March. That has left states scrambling to inform residents that their cards will have a whole lot less in them when they try to buy groceries this month. For those seeing their benefits slashed amidst still-high food prices, there's not much to do other than brace themselves."A lot of people feel very powerless that these decisions are made, and it's affecting people deeply. People are trying to live their lives and it's incredibly hard because food is such a staple," Gina Plata-Nino, deputy director for SNAP at the Food Research & Action Center (FRAC), told Insider. "There's certain things that you can live without, right? You can make do sometimes without a car — but you can't survive without food."A sense of security and nutrition stripped awayFor Welch, the emergency allotments have meant the security of knowing there will be food in the fridge. Tania Jividen, who has a fixed income, lives on disability, and is in her 40s, said the extra benefits meant "that my son can eat.""My rent is $700," Jividen, who lives in Oklahoma, told Insider. "Paying utilities, water, gas, electric, phone, internet, things of that nature. That doesn't leave me a whole lot of money." Food stamps are mainly how her family can afford food.For some, the emergency allotments meant more than just sustenance — it also meant nutrition.Barb, who is in her 50s and lives in Kansas, said that the emergency allotment meant being able to eat healthier."It's been helping me because I can actually afford to eat better," Barb, whose last name is known to Insider, said. "I can afford more items that are healthier. It's really helped a lot because $23 doesn't buy anything, and the extra $200 a month is a huge help because I live off disability and I don't make that much money a month."People shop for fruits at the Union Square Farmers Market on July 13, 2022 in New York City.Liao Pan/China News Service via Getty ImagesJay Carano, a 70-year-old in Michigan who is partially disabled and on a fixed income, similarly said the boost was helping him get healthier items."I didn't have to budget, and it was really a nice added benefit every month," Carano said.For Welch, the benefits meant a healthier diet and eating more nutritiously. One big difference: Being able to buy fresh vegetables at the grocery store, rather than ones with a shorter shelf life donated to pantries."The truth of the matter is, and I hate to say this, but the poorer you are, the poorer you eat," Tonyia Canales, a disabled grandmother raising her grandson on her fixed income in Texas, told Insider.She's losing both the emergency allotment and about $130 in regular SNAP benefits, because her Social Security check got an inflation-adjusted bump, pushing her above the income threshold. She's now receiving just $36 for March."It was so nice to be able to go to the store and actually buy groceries," Canales said. "But now that that's over, we're going to have to go right back to where we were, which is struggling, and now it's going to be worse because the prices have all gone sky high."Not sure what they're going to do now"How do I afford the electric, the water, the toilet paper, the shampoo, and conditioner, the laundry soap?" Jividen said. "How are people supposed to take care of their children without this?"Barb, knowing that the emergency allotment is coming to an end, said she's been trying to stock up on some items."I still have to pay bills, still have to eat, I still have to put gas in my car, and it's just going to take a big chunk out of $200 out of my pay that I get a month," Barb said.To prepare for the ending of the emergency allotment, Carano said that he had "been trying to keep whatever little bit of benefits I have just to have a surplus." He's already cut back on going to the store — partly due to inflation — something he described as a nice way for him to get outside.Jay Carano.Courtesy of Jay Carano"I'm going to have to go back to my old ways," Carano said. "I just won't be able to get as many good items as I was in the past."Welch, meanwhile, is preparing to return to his local food pantries, and freeze whatever he can to supplement the food he gets.The recipients Insider spoke to are just a handful among the millions of people who were still receiving the emergency allotments. And, as they prepare for the benefits to be slashed, they're also facing overburdened food banks bracing for a coming onslaught. The upcoming "hunger cliff" has some recipients saying it's time for change."What we're getting with the allotment actually should be what we're getting every month in order to give us the food that we need and to eat healthier," Barb said.Carano said that he hopes lawmakers realize this transition is not going to be easy."I want the lawmakers to come down to our levels of common folk," Jividen said. "I don't know how to say it other than that.""I want them to make it off less than $2 a day on groceries," she added. "I want them to come here and live my life and worry about it, and then go back to Washington, DC, and tell them how it is."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 1st, 2023

The Rate Of Falling Earnings Estimates Is Slowing

In his Daily Market Notes report to investors, Louis Navellier wrote: More Good Bad News More bad news is good news this morning: Durable Goods came in soft, bond yields are down, and stocks are up. After the worst week of the year, the headline Durable Goods Orders for January, projected to be down 4%, […] In his Daily Market Notes report to investors, Louis Navellier wrote: More Good Bad News More bad news is good news this morning: Durable Goods came in soft, bond yields are down, and stocks are up. After the worst week of the year, the headline Durable Goods Orders for January, projected to be down 4%, the weakest forecast since the pandemic began, came in -4.5%. Inside that number, however, the Core Durable Goods Orders which exclude transportation orders came in +0.7%, above the +0.1% forecast, and Non-Defense Orders were +0.8%. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   It is important to note that the Dec'22 headline Durable Goods Orders were up 5.6%. For the trailing 3 months the cumulative number was -0.1%, and the Core number is +0.8%. Clearly, orders are not falling off a cliff. The bond market has shaved off a handful of basis points in yield on the weakness in the headline number, and that's all stocks needed to break the strong downtrend they had been in. For February, technology and banks have been flat while retail is down 5% and energy is down 6%. Gold has had a minor bounce, crude oil is modestly down, natural gas is up 5% erasing the February lows, and the US dollar index is down half a percent to back below 105. Falling Estimates Slowing Earnings season may be winding down but today there are dozens of smaller companies reporting, most with no Street estimates. The notable names reporting after the close include Occidental (NYSE:OXY), Universal Health Services (NYSE:UHS), Workday (NASDAQ:WDAY) and Zoom Video (NASDAQ:ZM). Pending home sales for January came in at a surprising +8.1%, albeit -24.1% y-o-y, but it's not expected to last given 30-year mortgage rates are back up to 6.88%. While the estimates for the 2023 S&P earnings continue to fall, from $229 on January 1st, to $222 today, the rate of decrease is slowing. Today, the forward P/E is now 17.8X compared to the historic average of 17X. Stocks hit their highs in the first half hour of the trading day and after the first hour moved back to the opening level. The S&P is trying to hang on to 4,000, the NASDAQ to 11,500. Tesla is helping, up 4.6% as their investor day is this week and hopes are that Elon Musk will have a strong story to tell about sales and margins going forward.   Sell the Rip The big unknown remains whether earnings and P/E multiples can grow while interest rates continue to rise. Will investors find 5% CD rates more attractive than a volatile stock market that seems to be going sideways? It's become a sell the rip market this month, putting a cloud over Index investing. Stock picking looks to be the better strategy until the Fed actually pauses. Coffee Beans: The payments to Ukraine have already exceeded the annual military expenditure of the U.S. in the war in Afghanistan from 2001 to 2010. The U.S. military costs in the Vietnam War, the Iraq War and the Korean War were significantly higher. Source: Statista. See the full story here......»»

Category: blogSource: valuewalkFeb 27th, 2023

Stainless Steal

Stainless Steal Authored by Charles Hugh Smith via OfTwoMinds blog, The decay in quality reveals that the collapse of the neoliberal-hyper-financialization-hyper-globalization model has already occurred. I've often addressed the dismaying decline of quality over the past 30+ years, for example, The "Crapification" of the U.S. Economy Is Now Complete (February 9, 2022). I have attributed this to: 1) hyper-globalization, which pushes manufacturers to buy the cheapest components to lower costs. The failure of any one poorly made component renders the entire device useless junk which is dumped in the landfill. 2) Planned obsolescence as the corporate strategy to boost profits in an economy where everyone already has everything. By reducing the quality, product failure is accelerated, and the hapless consumer is forced to replace a device every few years that 30 years ago would have provided decades of trouble-free service. 3) Consumers have been trained to consume, no matter how poor the quality. Tossing stuff in the landfill is wonderful because this gives us another excuse to go shopping. 4) Since global production and distribution is dominated by rapacious cartels and quasi-monopolies, they don't care about the terminal decay of the quality of their product/service. They know we're going to buy their low-quality rubbish anyway because we have no choice, and they know the quality of "competing" (hahaha) products is equally abysmal. Longtime correspondent Bart D., who coined the term Landfill Economy, pointed out a fifth source of decaying quality: resource depletion. It's not just hyper-globalization / corporate profiteering driven cost reductions at the expense of durability; it's also the increasing cost and difficulty of obtaining quality materials and components at any price. Here are Bart's comments on "stainless steel": "I found, what was for me, the most profound evidence of the ascendancy of the Fraud Economy that underpins the Landfill Economy. I found it in the term and substance 'stainless steel.' I own some old and by the standards of the day in the 1970’s 'cheap' stainless steel knives and cutlery. I use a few of these pieces as garden tools. They lay around in the dirt and weather 24-7 and 365 days a year. They are used for purposes never intended by their manufacturers, uses that they would classify as abuse. And I can pick these items out of the dirt, rinse them under a tap and they come up looking like new. They are shiny, silver and have no sign of rust. And I also own some 'quality' stainless steel items that were manufactured in the last 5 years in China. They were not priced in the 'Cheap and Nasty' bracket. These items do nothing more than live in a kitchen or out under the pergola and get wet with clean water. With Plain water. And they rust. Prolifically. So it seems that since the 1970s, we have managed to figure out how to make Fraud Stainless at a price point above actual stainless (inflation adjusted). I have come to realise that we are now a VERY long way past 'Peak Quality' and Peak quality of life. And we seem to accept this degradation as normal. We are now living in a comprehensive illusion of what is quality. I'm starting to wonder if there are any products being produced today that are genuinely superior to those produced 30+ years ago. Advertising tells us that products are 'Premium,' but 40 years ago products with similar or superior specifications were produced as 'cheap.' Todays standard grade products would be regarded as Defective in the economy of pre-1990s. Why is this happening? Almost certainly it's a product of resource depletion and substitution of superior and fit-for-purpose materials with inferior and faulty materials. I have seen this also in copper pipe and road bitumen. The pre-90s versions of these products were durable and fit for purpose … whatever watered down substitutes we use now are defective grade products that degrade quickly even under normal working conditions. I wonder how far quality can degrade before our economic model fails? Maybe we're just arriving at the point of failure now?" Thank you, Bart, for illuminating how stainless steel is now stainless steal: an ersatz simulation that is pure fraud and theft. Claiming that a product that corrodes within months is actually "stainless steel" is fraud, and given that consumers are paying premium prices for this fraudulent product, it is also blatant theft: the consumer is paying a premium price for a product which is known by its manufacturer and distributor to be defective / not the high-quality material that was promised. Tossing all the low-quality goods in the landfill and replacing them with even lower quality goods is now the global model of "growth." But since very few of the discarded goods have recyclable materials that are actually recycled, this waste is growth model runs into limits of materials availability and cost: when even low quality becomes too costly, the bottom 80% of consumers can no longer afford to buy replacements. As I explain in my recenty books Self-Reliance in the 21st Century and Global Crisis, National Renewal, once the economies of scale of mass production are lost, production is shut down as it is no longer profitable / viable at lower run-rates / capacity utilization. Which brings us to Bart's projection of what happens on the downside of Peak Quality: when the system can no longer replace all the low-quality goods dumped in the landfill with equivalent quantities of low-quality replacements at affordable prices, the entire waste is growth model collapses. The decay in quality reveals that the collapse of the neoliberal-hyper-financialization-hyper-globalization model has already occurred. We're simply waiting for the second stage, where it's not just the production of quality goods that collapses: the production of even low-quality goods tumbles off the cliff as economies of scale are no longer enough to keep production profitable. Stainless steal won't survive impact. Fraud and theft eventually catch up with economies which have made them the centerpieces of "prosperity." New Podcast: Turmoil Ahead As We Enter The New Era Of 'Scarcity' (53 min) *  *  * My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.  Read the first chapter for free (PDF) Become a $1/month patron of my work via Tyler Durden Mon, 02/27/2023 - 13:25.....»»

Category: blogSource: zerohedgeFeb 27th, 2023

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Category: blogSource: crainsnewyorkFeb 27th, 2023