Special: The FDIC Fund and Bailout

Founders special...for Premium

Note: This is a Founders special done to keep people updated made available for Premium readers. It made sense given today’s events.

 If you arent premium and not in the mood to upgrade… do this: Upgrade and take the free week. But don’t forget to cancel. Your card will only get debited on the 7th day. We don’t think you will regret it today and tomorrow. Heres what we sent earlier on the topic: BANK CRISIS: Update

Overview:

This is a dynamic situation. We believe they will get things papered over to stop the crisis cold. They cannot mess around with this. Why? Because banking confidence is not something you can fix overnight if the public decides to not trust you.

Therefore they will do everything to financially cure this ASAP while minimizing the risk because they are worried about more bank runs. This is a classic bank run, not a complicated derivatives trade.

If they are worried about wage-price self reinforcing spiral, they are worried about this much more. Which means no default to depositors and more inflation for Americans.

We really don’t know if they will lower rates. More accurately: If they do then all is lost for years…. They might just keep them here for a little.

The Fed and the Treasury are not friends right now. If Powell steps down, then you get enhanced inflation…

All of these reports are from today….

Nomura:

We expect a 25bp rate cut and a halt of balance sheet reduction in March while a new lending facility is possible.

They tend to be aggressive on calls in both directions. They like to be earlier than the rest. Also: they make a good case for why.. the main issue is that it isn’t just the US now.

Goldman:

For now, we see considerable uncertainty about the Fed’s path in March and beyond. In particular, we think the odds of a downside scenario have risen and near-term rate cuts have become more conceivable

They also say re CPI:

We expect the February CPI report to be firm on Tuesday, with a 45bp increase in the core

If CPI is soft, they may join Nomura.

BOA:

The Federal Reserve also announced on Sunday that it would provide additional funding for eligible institutions through a new facility entitled the Bank Term Funding Program (BTFP). The fund will offer loans up to one year in length to eligible banks, savings associations, credit unions, and other depository institutions pledging US Treasuries, agency debt, and mortgage-backed securities, in addition to other qualifying collateral.

Explains things well

DB CPI:

With seasonally-adjusted gas prices roughly unchanged from January, headline CPI (+0.37% forecast vs. +0.52% previously) should come in pretty close to a stillsturdy print for core CPI (+0.36% vs. +0.42%). Should our forecasts hit the mark, they would have the effect of lowering the year-over-year growth rate of headline by about 40bps to 6.0%, while core would only fall by about a tenth to 5.4%.

Barclays:

With remaining uncertainty regarding SIVB, we expect follow-on pressure on banks to persist, but the ultimate fall-out appears limited for the industry overall. We screen the assets and liabilities of over 300 banks to determine potential vulnerabilities.

In depth analysis of 300 banks.. look for yours

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Also: Chris Marcus and I did a live Q&A for the Arcadia Economics group. It may help.

It answers many of the questions others have asked with a comment on gold and silver pricing from here on out. Bank Q&A recorded live

Full analysis below…