The DC Today - Wednesday, March 22, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 22 March 2023
⏱️ 10 minutes
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Summary
Today's Post - https://bahnsen.co/3TAGcni
All that matters today is what the Fed did and said. And what they did was raise rates a quarter point. And what they said was that “financial conditions have tightened” (well, there you go). And he said that these tighter financial conditions and tougher lending criteria from banks will “factor into their policy decisions” (phew).
As for a First Republic deal – the bank whose depositors basically now have a backstop from the FDIC but has now seen enough deposit withdrawals to warrant a deal with a bigger back to shore up its capital strength – the issue appears now to be what government backstop or assistance will be a part of any deal (something I predicted last week … any buyer in a position of strength knows the issue is systemic risk, and therefore has the leverage to ask for some sweeteners to come with the deal). Some of the items being discussed (per reports) are liability protection and/or relief on capital requirements and/or other regulatory relaxations. Keep your popcorn handy.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:14.8 | Well, hello and welcome to the DC today. It is Fed Day, which is the best day. |
| 0:23.5 | And you may think that today wasn't the best day because the market dropped in the final minutes of trading, but I will make a case for something |
| 0:30.2 | different. First, let's just talk about what the Fed did. The as expected raised rates, a quarter point. As as expected they've more or less telegraphed that I think |
| 0:42.8 | that they're done in fact the futures market as I got up from Bloomberg was at 58% chance |
| 0:51.7 | of the Fed not raising rates at the next meeting, 42% chance that they'd raise another |
| 0:57.5 | quarter point. |
| 0:58.9 | So it's not quite 50-50, but it's also not quite 100-0. |
| 1:02.9 | So we'll see how those futures kind of process this in the days and weeks ahead. |
| 1:07.9 | The next Fed meeting isn't until the first week of May, so you have about |
| 1:11.7 | five, six weeks to go here. Look, Chairman Powell said the incredibly profound and bold thing |
| 1:20.8 | that financial conditions are tightening. So there you go. They are. And then he said that tightening and the |
| 1:32.8 | restriction, the more restrictive lending conditions would factor into policy decisions. |
| 1:40.4 | So there you go again. I do think those are two ways of saying that we're done or we think |
| 1:48.2 | we're done. All of it really could be interpreted as we know we already should be done and |
| 1:56.1 | have already gone too far, but we're kind of stuck here. It doesn't really matter. |
| 2:01.3 | I don't think a critique of face saving or something like that is very helpful. |
| 2:06.9 | I'm not looking to dunk on anyone. |
| 2:08.6 | I mean, there's nothing like that. |
| 2:09.8 | It's just simply that the, I don't believe in the objective they have of stating, well, we think we're going to counter inflationary pressures by trying to slow down economic activity. |
| 2:25.7 | But to the extent that one would say that is, in fact, the objective, whether I believe in its legitimacy or not, I will tell you that the chairman is |
| 2:37.5 | exactly right, that the slowing down is being done for them, what you would call tightening |
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