Insights on markets, emergent trends, history, innovation, risk management, global economics, strategy, policy, and other topics that catch our attention. Inspired by ongoing research, conversations and events. Written and edited by Osbon Capital Management and published every Thursday morning.
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2024 will bring more positive novel surprises. New years always do. In 2023, it was the dramatic acceleration in AI, which touches nearly every industry, and the early stages of an answer to the obesity epidemic with GLP-1s. Here is a list of what’s on our minds going into 2024.
Inflation, Social Buying, AI Level-Set
CPI Inflation The trend is your friend. Thankfully yesterday’s CPI came in just a bit lower than last month’s at 4.9%. From a peak of 9.1% in June ‘22, each of the last 10 reports has ticked progressively lower. The Fed’s rate hikes aim to lower inflation to 2%, which is still far away despite considerable progress. The rate hikes…
Fed, Yield Curve, Honey Pot
Fed & Yield Curve The Fed raised rates yesterday to 5.25% for what will likely be its last rate hike. It’s hard to see what would push the Fed to increase rates even further from here. The next CPI report will be out on May 10th followed by June 13th. The slow monthly periodicity is not helping, but that’s what…
Fed Update, Documentary, AI, Reserve Banking Rant
Fed Updates In all likelihood, the Fed will raise interest rates from 5% to 5.25% next week for their May meeting. The next CPI inflation report is on May 10th. The hope is that inflation continues to tick down again, widening the gap between the Fed Funds and inflation and setting the stage for the Fed to cut rates eventually….
IMF, Banking Competition, AI Notes
IMF on Rates The IMF released its latest World Economic Outlook last week, focusing on the messy state of global affairs and the impact that may have on interest rates. They expect interest rates to return to pre-pandemic levels based on the long-term trends that were present before Covid. Those trends include: slowing productivity, aging demographics, de-globalization and the increased…
Rates, Credit, Robotics, BloombergGPT
Rates vs Inflation Yesterday the March CPI print showed a 5% increase YoY, down from 6% in February. The Fed’s interest rate is also 5%, marking this moment as the first time that interest rates have at least matched inflation. It seems likely the Fed will raise rates to 5.25% in three weeks unless something new gives them a reason…
Dimon and LUI’s
Jamie Dimon released his annual letter this week, giving us some insight into his view of the economy and the largest bank in the US. Here are some notes on what stood out: The term Shadow Banks was highlighted as a major competitive threat to JP Morgan and the entire banking industry. Shadow Banks is a vague term that’s meant…
Fed Balance Sheet, Quick AI, Reserve Currency
Fed Balance Sheet The Fed expanded it’s balance sheet by $390B over the past two weeks as part of the Bank Term Funding Program (BTFP) in response to the collapse of Silicon Valley Bank. Starting in April 2022, the Fed began QT (quantitative tightening) reducing the balance sheet by $623B. Two thirds of that tightening was undone in just two…
Rates, Populism, Banks Shift To Private Markets
Rates The Fed raised rates by 0.25% yesterday, as originally anticipated two weeks ago. That was before Powell spooked markets with talk of higher rates for longer, and then regional banks fell apart due rate hike induced bond losses. Despite all of the noise, the predicted 0.25% hike occurred. The next hike is over a month away, with another CPI…
The Banks, Rates, AI Releases
The Banks Big questions remain following the collapse of Silicon Valley Bank. To start, who is to blame? It’s fair to say that both the Fed and SVB are responsible. The bank clearly mismanaged its risk in the face of rising rates. Social media and mobile apps also dramatically accelerate bank runs. Bond performance doesn’t get the headline coverage it…
