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Recession probably here; Fed meeting next week

The User's Profile davefairtex April 30, 2023
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There were a bunch of reports this week:

  • Q1 2023 GDP: 0.26% q/q, expected 2.0%, +1.25% y/y.  Recessionary.  Allegedly adjusted for inflation.
  • Durable Goods: New orders: +3.2% m/m, expected 0.9%, previous -1.2%.  Expansionary.
  • Dallas Fed Mfg: Actual: -23.4, expected -11.5, prior -15.7.  Recessionary.
  • New Home Sales: Actual: 683k, expected 634k, prior 640k.
  • Consumer Sentiment: Actual: 63.5, expected 63.5, prior 63.5.  Recessionary.
  • Personal Income: Actual: 0.3% m/m, expected 0.2%, prior 0.3%.  Well below inflation.

The GDP number was awful, once adjusted by the Chapwood Index (Source), which for New York, came in at 15.57% annualized.  When your Personal Income rises at 6% (annualized)  in March, and your expenses increase by around 2.5 times as much, it is almost as if someone wants you to Own Nothing.  Inflation is a tax on the little people.  As always.

We had another likely-bank-failure this week – First Republic (FRC), which dropped 75% this week alone.  I crossed it off the list below – I might have been a trifle hasty – but it sure was hit hard.  And there are hints that Uncle Sam isn’t going to intervene on this one.  Perhaps “someone” didn’t “donate” enough to the Handlers.  Breaking News from CNBC’s David Faber: Government Currently Unwilling to Intervene on First Republic – Sources (Source – cnbc).  Or maybe, as Ed Dowd says, they’re systematically getting rid of regional banks because – CBDC.

Interestingly, rates on the “safe haven” 1-month Treasury bounced back this week – almost as violently as it plunged last week.  Was there a crisis-resolution meeting I wasn’t invited to?  Or perhaps Uncle Sam decided to sell an absurd amount of 1-month bills?   Dunno about the meeting, but 1-month sales were the same (roughly $47 billion), and there were $25 billion fewer bidders ($123 billion vs  $143 billion) this time.  [Data here – treasury direct; open “bill”, then “4-week”, and then download the PDF in the “Competitive Results” column]. My interpretation: looks like less panic this week.  Perhaps: last week’s move was just Big Money doing a panic-in-advance – they knew something we didn’t – and the stock price reacted this week. 

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Stagflation
My old question was: can we have a recession if nobody loses their job? My answer is yes: I believe we are now in a 70s-style...
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