Category: Daily Instagraph

The larger US banks who are not threatened by imminent bank runs are currently earning risk-free returns as, on average, they still provide deposit rates of 0.48% while money market funds currently pay 4.42%. This means a 3.94% net interest margin while placing the deposits with little additional credit or duration risk. With such juicy … Continued

Global financial stocks have lost $465 billion in market value in two days as investors run for the exits. The mood remains downbeat throughout Asia this morning. The banks that considered the weakest are being hurt most. Close to home, Credit Suisse Group’s stock lost 9.6% on Monday. What is more worrying to us is … Continued

That was quick: late Sunday US authorities announced a new backstop for banks that should be big enough to protect all bank deposits. This news came after the closing of New York’s Signature Bank and will fully protect depositor’s money. With this important move, the risk of contagion and more bank runs has been significantly … Continued

There is some stress amongst investors in the US banking sector: the US index of banking stocks ( KBW Bank Index ) experienced its biggest drop yesterday since June 2020. Hold on a second: the current environment should be good for banks as rising interest rates support net interest margins and the profits for banks. … Continued

Economic trends in the manufacturing and service sectors have been improving worldwide in 2023 and are now solidly in expansion territory (index above 50). This is a positive sign for economic growth to come but creates a dilemma for central banks who need to tighten financial conditions in order to fight inflation. For as long … Continued

We cannot avoid writing about inflation again after the hawkish comments from the Fed Chair yesterday before Congress. The Fed has managed to shift market expectations for future Fed policy rates over the last weeks and bond investors are no longer hoping for a decrease in the magnitude of interest rate increases this year. They … Continued

Today’s graph compares the today’s US government yield curve to the one of the end of 2021. In 14 months, the world has profoundly changed for investors with major implications. First and foremost, there is a risk free rate again giving a nominal yield and providing a juicy alternative to investors who preferred for years … Continued

Inflation has many faces and the overall CPI figures are made up of many different constituents. Since 2000, the biggest increase in US consumer goods and services prices has been hospital services, followed by college tuition, fees and text books. On the other side of the spectrum, prices of TVs, toys, software and cellphone services … Continued

“If we don’t get clear signals that core inflation is going down, we will have to do more,” Belgium central bank chief and European Central Bank Governing Council member Pierre Wunsch told journalists in Brussels yesterday. Core inflation reached an all-time high in the Eurozone in February and currently shows no sign of easing. We … Continued

Time in the stock market is superior to timing the stock market. This graph from Julius Baer impressively demonstrates the power of being a long term investor. Missing out on the 10 best days of the S&P 500 over the past 25 years would have cost the investor half of his return compared to the … Continued