Option Professor-Banks Beat-Metals & Oil Up-China’s Run at US $$-Fed What’s Next? Read It.
April 15th 2023 Option Professor OPINIONS & Observations
We got got bank earning and no surprise with us. When you pay depositors no interest and take their deposits and buy Treasuries yielding almost 5%…duh…you make money. Regional banks are the ones to watch with their exposure to Commercial Real Estate (CRE’s big ReFi in next 12-24 months at LOWER LTV)-Mobile Deposit Base-Need to REDUCE lending to small business. They’ve been HIT but more to come??
The FEARS on EARNINGS recession probably PREMATURE? We got 3.5% unemployment and reatil sales mostly down on lower gasoline prices which have reversed. Spring is here so out and about we go (spending money with our rebound in stocks and pay raises). We question this FED is DEAD mantra we hear everywhere as the 10 yr Treasury FAILED to sustain UNDER 3.30%.. Big Cuts?? Only if we fall off cliff.
Inflation/Owners Equivalent Rent?? Hard fever to break. EXAMPLE My buddy sells his house in Atlanta and moves to San Diego area to rent. Not only are rents high but the ABNB people are still HIKING. Also: NYC rents hit a RECORD. Mortgage applications are RISING and inventories on houses low (noboy’s giving up their 3% mortgages!). We see some food prices drop (egg prices have cracked:):) We see prices on our items like this e.g.–box of cereal was was $4 went up toward $8 now at $6.50. Inflation was 9% probably goes back to 4.5%-5% and then ahs trouble going down from there. RATES higher for longer- Fed says so
China is trying to become the new world leader and getting everybody to do trade in your currency is a good first step. They set up a crude oil contract in Hong Kong/Shanghai in 2018. They want settlement in YUAN which nobody trusts so they create a conversion into GOLD feature to soothe nerves thus they have been buying Gold and mining it like crazy to create the reserves necessary. HOWEVER before you put the cart ahead of the horse….88% of all global trade settled in Dollars &% in Yuan…lead will be cut?? Also; must recall China had TANKS in the streets enforcing a leave your money in bank-UNABLE to make withdrawals. This may EXPLAIN why any run on any bank is met with SWIFT ACTION by our Central Bank.
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