The Fed Facts JUST Flipped.

now we gotta talk about the federal

reserve's actual stabilization of the

banking crisis yes the banking crisis is

actually

stabilizing now this is a little bit

mind-blowing to folks to hear because

the liquidity numbers are actually

starting to come down at the Federal

Reserve that's not what we were

expecting we thought this might be the

return to QE and that's it we're screwed

we're turning the money printer back on

already yikes now fortunately that is

not actually what's continuing so

through the week of March 29th we've had

borrowings outstanding through these new

liquidity facilities of

152.6 billion dollars in borrowings the

prior week sat at

163.9 and since this is sort of a a

rolling uh uh account not sort of a

constant borrowing but it sort of it

adds it together not borrowing every

single week in this measure here it's

just the total balance outstanding

through these facilities what do we see

we actually see that the facility has

shrunk but by about 11.3 billion dollars

this is actually outstanding because it

suggests that wait a minute maybe the

banking crisis is starting to fade and

some of that money is already starting

to get paid back to the Federal Reserve

which is fantastic so what we should see

at the Federal Reserve is actually sort

of this this quantitative tightening uh

then we should see this sort of Spike of

liquidity this injection and that should

actually slowly start waning down which

is fantastic because the last thing we

want is in a an inflationary environment

to continue to essentially tighten uh uh

or or rather I should I say loosen by

printing more money because as the

Austrian economic economists tell us if

you expand the money supply you should

expect nothing other than inflation and

that's obviously stands in contrast to

the Keynesian Economist who were

generally those who follow the thesis of

our our political leaders so take a look

at the chart right here total assets

outstanding at the Federal Reserve it's

pretty hard to see but if you look

closely enough you could see that

quantitative tightening you see the

explosion of liquidity and look at that

folks boom an inflection point to the

downside and again those are the numbers

that I mentioned to you that's

outstanding now I want to get into some

more of the details here but I first

want to ask you do you know how to

compliment a farmer obviously you tell

him he's outstanding in his field

yay all right so anyway uh of these two

uh there are 88.2 billion dollars

outstanding in the discount window

compared to 110.2 in the prior week uh

and

152.9 total now the discount window

loans by the way keep in mind the

discount window loans are usually 90-day

loans and the bank term funding facility

loans are those shrunk as well so both

the discount window and the bank term

funding facility uh shrunk Bank term

funding facility shrunk from 64.4 to

53.7 so good fantastic news on

shrinkages here and generally on this

channel we don't like talking about

shrinkage we like talking about

expansion uh all right so now let's look

at what some of the reactions on Wall

Street are to this and what I want to do

is I want to specifically start by

talking about

the uh uh some of the bank stresses as

outlined by T.S Lombard and Bank of

America TS Lombard they're usually are

bears but let's go first and start with

maybe a more neutral piece here from

Bank of America so take a look at this

Bank of America sentiment has stabilized

but excess tightening remains a concern

what do we have we cannot declare all

clear yet but actions by policy makers

have calmed fears of Regional Bank

spillovers for the moment thankfully we

haven't been hearing about more bank

failures which is fantastic

still this still leaves open the degree

to which bank lending standards might

tighten over time excess tightening

remains a risk and this is true a lot of

people are measuring that near term we

haven't actually seen any kind of

tightening we haven't seen any kind of

funding restrictions near term that was

according to NatWest but that tightening

may come in the future emergency actions

have stabilized sentiment that's

fantastic they give us a little bit of a

rundown over here of some of the numbers

that we've already gone through which is

great uh we let's see here this is the

composite tightening indicator on loans

this here is sort of a when when you

hear composite it's really just a

combination of multiple different

indicators together and really what

they're saying is look we've already

been in this tightening process for over

a year here uh this is the unanticipated

changes in Bank tightening and you could

actually see an inflection down over

here at the end so of of Q4 last year so

basically we went into the year with a

little less tightening than expected

we've got a little bit of a review here

on GDP which we covered yesterday which

is good but let's look at some of their

core views so GDP growth has slowed to

0.9 in 2022 based on the Q4 over Q4

numbers and we expect it to further

decline to negative point four percent

in 2023 fourth quarter over fourth

quarter as the lagged effects of

monetary policy and financial conditions

cool the economy before recovering in

the fourth quarter of 2024. in other

words Bank of America has this core view

that we're going to see this kind of

recovery where basically this right here

is uh where we're at a zero Line Bank of

America says Hey right now we're at

about four percent point four percent

GDP we're going to go about negative 0.4

and then by the fourth quarter of 2024

we should be back out at about point

four percent growth which is below Trend

growth uh so this could this what's

still coming here what is still ahead of

us which I'll highlight in green here

this segment is really still ahead of us

and obviously everything to the right of

that

that's where we could really see

earnings estimates uh come in slower and

maybe Morgan Stanley's Mike Wilson will

end up being right a mild recession this

year an ongoing Goods deflation should

lead to disinflation next year it's

interesting I think a lot of people were

hoping that 2023 would be the year of

disinflation but it looks like it might

end up being next year before we can

actually shout game the lead yeah in

headline pce grew at 5.7 well we just

reviewed pce for this last uh a month

which is I think is more important than

the quarter over quarter numbers uh the

federal raised the target for the FED

funds rate uh two four seven five to

five as expected we no longer expect the

25 BP hike in June and now foresee a

terminal rate so one more hike in May

this is Bank of America's base case

basically

construction spending moved up about 0.1

percent in uh February it's actually a

little bit surprising uh given the real

estate slowdown that you would see even

any kind of take-up over here but you

did a little bit uh ISM Manufacturing

edged up slightly but still in

recessionary territory expecting Auto uh

seasonally adjusted uh sales rates

basically to drop to 14.3 million for

the year in March that would be the

annualized figure Services still coming

in a little bit hotter than uh than the

50 anything under 50 is generally a

recessionary read uh and so this kind of

gives you a little bit of a core view

from Bank of America on some of their

thoughts but now I want to look at TS

Lombard because they're usually are

bears over here I mean this person

basically has bearish in their name one

letter away and that's their Chief

Economist Beamish I haven't heard of

that one before but anyway Global

liquidity is drying up M2 growth is

negative year on year that's the

expansion of the money supply is

actually negative which means it's

Contracting which is a disinflationary

force in the U.S and already falling at

the margin in the Euro area in the

United Kingdom Chinese M1 growth is

solventedly falling

falling to rise significantly what I

have no idea what that line is I think

they have a typo there but anyway money

growth is a good leading indicator of

nominal GDP growth in the bank in

banking Centric economies of Northeast

Asia and Europe Hench our forecast of an

L-shaped recovery in Europe uh and China

now l-shape that's generally not what

you want to hear l-shape is like down

and then very slow recovery that

compares to a Nike Swoosh which looks a

lot more like that right so LL is

usually not what you want to hear just

think about it like taking it out it's

bad

will the systemic drain on deposits slow

obviously a lot of people moving to

money markets and such we'll talk about

where you might be able to get some

yields in just a moment as well Global

liquidity growth is likely to remain

slow or negative if policy makers

continue as planned quantitative

tightening which destroys deposits was

just about justifile if the economy had

been powering ahead while credit

generation which uh or creation which

generates deposits counterbalances qt's

withdrawals that just gives you a little

background on how QT versus QE works and

to stem the bleeding banks will have to

raise their deposit rates of course

so could China come to the rescue if it

were the 2010s right about now would be

the time when China would begin

re-pumping the system

however China has a China's ability to

do so has waned through the 2010s and

the transmission of stimulus through

that M1 growth which is ultimately

needed to bring a turnaround of things

in China is sputtering loudly okay let

me try to translate this so far really

what they're saying is look in the 2010s

China was able to pump uh the liquidity

machines as we after we came out of the

Great Recession China was basically able

to turn on the money printer and uh the

black line here which is the year over

year money growth was uh was positive

massively positive I could Circle right

here massive money printing to get out

of the session massive printing over

here in 2016 as well uh and and then

they kind of just sort of enjoyed the

surpluses here

the issue now is there are some real

questions about is China actually

growing as much as people expect I

referenced this yesterday within another

video as well but this was a Bloomberg

live blog on there on the bloomberg.com

website and the reporter wrote The

Following while the premiere was touting

this resurgent tourism industry and I

could generally agree with the premiere

I could say as someone who's been

booking hotel rooms in China there are a

lot of vacant rooms and they capitalize

a lot now they don't they didn't have to

inject that opinion in a live blog but

they did and it really makes me wonder

is China potentially is TS Lombard right

here is China not able to basically

stimulate the way they used to uh coming

out of the Great Recession and is it

likely that that China basically won't

be very useful in terms of carrying the

global economy out of a recession I

think so I think maybe the Chinese

recovery could be a little overblown

here gives you a chart of small Bank

deposits under particular strain we see

that leaving obviously discount window

we saw that explode although that's

already inflected down and they don't

reflect that inflecting down but if I

were to draw that here it would because

we just got these numbers late yesterday

it would probably look something like

that so a tiny little inflection down at

least it's not exploding again which is

good

so it really gives us an indication that

uh the the banking crisis is starting to

stabilize the question now is just okay

look if we can't rely on China to carry

us out of a recession then maybe what

Bank of America suggests is accurate

look we're not going to face another

banking crisis but we're going to have

these lags of the tightening that we've

already experienced hit us hard by the

end of the year it seems that most

economists are projecting a recession

somewhere between Q3 and Q4 that's

actually when I want to be buying for

house hack I think that's going to be

potentially sort of a peak fear high

inventory period of Time For Real Estate

obviously we don't have a crystal ball

we can't guarantee that we'll be able to

make money no matter what I expect in

house hack knock on wood we do have a

funding deadline for accredited

investors today March 31st and then

hopefully we'll get to non-accredited by

june-ish or so it depends we're

expecting to file within the next week

or two here uh this is always something

else that we're trying to we're trying

to put together a very nice package for

the SEC they haven't looked at any of it

yet and so we're excited to submit that

in but uh in terms of uh banking

stresses it does I do think there is

good news that we can conclude out of

this I think the good news is the

banking stresses have faded the bank

contagion has actually been prevented so

like what the policy makers did or not

I've had very strong opinions on this uh

they did you know in hindsight here it

looks like they did the right thing they

prevented more Bank collapses I think

most of us were expecting this was just

going to be the beginning of the bank

collapses they prevented more Bank

collapses yeah there may be some moral

hazard in what they did

in terms of the the way uh the banks

were bailed out with taxpayer backstops

especially in Switzerland but also here

in America taxpayers are backstopping

Silicon Valley depositors uh you know

outside of that banking contagion has

been limited the banking crisis I don't

want to say is over but and and our eyes

are still on the banking crisis but the

banking crisis is is not a crisis

anymore uh the crisis has mostly been

averted dare I say now it could pop up

again I think everybody sort of woken up

now to banking risk but the the vast

majority of this crisis is over now

we're dealing with the leftover of the

crisis which is inflation which

fortunately today reiterated an

inflection down which is fantastic so

the banking crisis is limited inflation

is limited what's the remaining problem

well the remaining problem is global and

U.S growth and Global and you West

growth May shrink us into a recession in

Q3 and Q4 so we'll see

but what we ultimately want is the

Federal Reserve to you turn on interest

rates

not because of a recession

but because inflation has been conquered

If the Fed Cuts rates at the same time

as they declare that inflation has been

conquered

stocks will Skyrocket I'm highly

confident of that if inflation stays

High and the FED Cuts because of

stability concerns the market will tank

so TBD but right now it looks like

shallow recession no banking crisis and

disinflation is still on its way which

is fantastic but we're not out of the

woods yet and since we're not out of the

woods I have to remind you to get life

insurance in as little as five minutes

via the link down below paid promo

motion one day I'll actually fix the

spelling of them

the 12 free stocks would withhold by

going to kevin.com free and you can now

use buy now pay later to sign up on the

programs of building your wealth link

down below we have after pay clarina and

a firm the most popular is actually a

farm so shout out to a farm while I

couldn't invest in your stock past Jan

of 2022. hey thanks for providing a

service to those who want it

[Music]

thank you

foreign