In this episode, Scott discusses 10 stories we are following today.
1.The markets finished up Friday with the S&P 500 finishing up .56%, the Nasdaq up .31% and the Dow up .41%.
2. The S&P 500 index after a solid week last week is now up 3.4% YTD and down 17% from its 2022 high.
3. Futures point up so far this morning. We will see if that holds.
4. Oil is near $70 a barrel, the 10 year treasury is around 3.38%, the 1 year is up slightly at 4.38%, Bitcoin is near $28000 and Cannabis stocks based on the CNBS ETF are down 62% over the last 52 weeks and 17% YTD.
5. Bitcoin is down 40% over the last 52 weeks. One year ago it was at $46820. Two years ago it was near $69000. YTD it’s up 68%.
6. Bloomberg “Fed preferred inflation gauge seen staying elevated.” Here the article notes that the Fed and Jerome Powell closely watch the “Personal expenditures consumption price index” or PCE index. This is expected to be up again .4% this past month or close to 5% year over year. The Fed’s goal is 2%. The PCE is similar to the CPI but excludes housing and fuel costs. At the end of the day, analysts may state that this running at 4 to 5% is too high while one might counter that it is serious improvement from what it was running at a year ago.
7. Fed Minneapolis President Neel Kashkari says the the bank situation has led the US one bit closer to inflation.
8. Ford CEO says that the mining and refining of batteries and the battery supply chain is the limiting factor in producing more EVs. The four key minerals are lithium, cobalt, graphite and nickel, most of which is mined overseas. Then most of the refining happens in China. So most of the mining and processing is done overseas. See “Ford CEO on EV transition-Batteries are the key constraint”. Grace O’Donnell. Ford’s stock is down 31% over the last year and it projects to lose $3 billion this year on electric vehicles.
9. Tesla is up 76% YTD.
10. First Republic Bank- 6 Points. 1. 68% of its deposits were uninsured, i.e. above the $250k FDIC guaranty. 2. It’s paper losses on its loans and investment portfolio are measured at nearly $9.5 billion to as much as $13.4 billion. 3. It has doubled down the last few years on pursuing high net worth clients. Those clients often borrow more and more importantly deposit more than $250k. The deposits above the $250k mark are uninsured and this means they are more likely to move their money quickly at signs of trouble. 4. It has pushed the concept of offering big loans at very competitive rates. This allowed the bank to grow the business for a period of time in a very profitable way. However, when their own borrowing costs rose, this put them in a much more difficult situation. 5. It’s government debt holdings show a current unrealized loss of nearly $5 billion up from $53 million a year ago. 6. The banks stock is down 90% YTD. See ‘How First Republic’s courtship of the wealth led to meltdown”. Reuters.
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