The Four Key Factors for Analyzing Fed Events Amid a Deepening Banking Crisis

Stansberry Investor Hour

Stansberry Research

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4.4 • 677 Ratings

🗓️ 1 May 2023

⏱️ 68 minutes

🔗️ Recording | iTunes | RSS

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Summary

This week's episode of Stanberry Investor Hour features John Netto, author of investing book The Global Macro Edge.

Dan and Corey start the episode by examining the recent failure of First Republic Bank – the second-largest U.S. bank failure to date – and its acquisition by JPMorgan Chase. They raise concerns about the ongoing banking crisis and the role the government plays in backing "too big to fail" banks. With three of the four largest bank failures in U.S. history happening in the past two months, there's growing uncertainty heading into this week's Federal Reserve meetings.

Then, John joins the conversation and shares insights from his book, including the concept of how emotions act as the lubricant for decision-making. He says that traders often make the mistake of analyzing their success based solely on the results rather than how well they executed their process. To combat this phenomenon, John created the "Netto number." He explains how it can help investors recognize when their strategy begins to decay and how they can use it to maximize returns.

The discussion then shifts to central banks and monetary policy, with John describing his four factors for analyzing Fed events. Based on his analysis, John argues that the Fed will not be cutting rates this year and will instead be keeping them near a 4.5% to 5.5% pace until the second quarter of 2024...

"Because we have interest rates at 7%, it's going to take a long time for this housing inventory to roll over."

He asserts that if we go into a recession, it will be a very mild one. You can hear his full reasoning in today's Investor Hour.

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Transcript

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0:00.0	Hello and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and the Ferris Report, both published by Stansberry Research.
0:09.7	And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with John Netto, author of Global Macro Edge.
0:17.3	And today we'll also talk about banks. We'll talk about J.P. Morgan's takeover of First
0:21.9	Republic and some interesting comments from the Bank of England. And remember if you want to
0:27.5	send us a note, send your feedback to Feedback at InvestorHour.com and tell us what's on your mind.
0:32.8	That and more right now on the Stansbury Investor Hour.
0:46.9	Well, it happened. We all knew it would happen. First Republic Bank was essentially taken over. It was seized and sold to J.P. Morgan. It is the second largest
0:54.0	U.S. bank failure. Of course, it came after a huge
0:58.8	bank run, right? They had a bank run, the bank failed. The thing got seized by the government,
1:05.0	and essentially all the assets were sold to J.P. Morgan. My first thought about this is, boy, it's good to be J.P. Morgan,
1:14.3	isn't it? Yeah, they were already the largest bank. Now they're bigger. Yeah. And the stock,
1:20.7	if they had had to really buy the company, I think the last quoted price was like $1.76.
1:27.0	You know, so, and the 52 week high is like what looks like
1:31.2	21 something um and it was much higher than that before so yeah i'd say it's good to be jp morgan it's
1:39.1	good to be a big bank with you know with a big too big to fail bank with the government behind you, you know,
1:46.1	sort of backstopping you because you get to do things like this. I mean, Jesus, Corey,
1:51.3	has anybody ever seized a bank and let you buy all the assets for dirt cheap? You know,
1:58.6	this never happened to me. No, it hasn't happened to me.
2:01.8	I mean, this is, you know, like you said, it's kind of a bit expected.
2:05.6	You know, we were talking about the stuff, the run on Silicon Valley Bank and the other
2:13.2	back in March that like the bigger banks were going to kind of swoop.
2:19.9	If there was more problems ahead, you know, the likely outcome would be these big banks like
	...

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