Author: tylerheld

Are banks using the BTFP to arb The Fed?

Outstanding’s of the Bank Term Funding Program held steady from June to December of ’23, but are up ~24% since December. Total outstanding’s are now at ~$141 billion. The intent of the program was protect depositors, the idea being banks could leverage this program to shore up capital if deposits were called vs needing to […]

Multi-family Risk

On December 18th the FDIC issued a Financial Institution Letter highlighting the “importance of strong capital, appropriate credit loss allowance levels, and robust credit risk-management practices for institutions with commercial real estate (CRE) concentrations.” The timing of this letter felt strange for a couple reasons, and I contest that may have been the intent of […]

The Un-inversion

I went to check out a live recording of the Compound & Friends in Charlotte last night and their guest was Campbell Harvey, Professor of Finance at Fuqua. The episode is excellent; Cam made an argument that real inflation is currently < 2% (minute 30), he was critical of the Fed pausing vs ‘terminating’ rate […]

The Great Mark to Market

As we roll into Q3 bank earnings after knowing the 10Y yields spiked in the last couple of months, the question(s) become: Its difficult to find any issues in reading through JPM’s Q3 earnings. This thing is an absolute juggernaut, and capital issues are not a problem. But it is worth noting a 4% decline […]

Loan Balances Shrink

Marty Gruenberg and team released their Q2 ’23 Quarterly Banking Profile on 9/7 and given these reports provide dated analysis, I was unable to find anything surprising. What’s worth diving into is the forces behind shrinking loan growth across the industry. See below: As mentioned in the notes of this chart, year over year growth […]

Is the🔥Jobs number misleading?

ADP Released their June 2023 change in U.S. private employment this week and it came in hot, adding 497,000 jobs vs the 220,000 estimate. The market reacted negatively, as the likelihood of the Fed continuing to raise rates increases as job growth helps fuel inflation. Given this increase was largely driven by leisure and hospitality […]

2023 1st quarter numbers are in.

Marty Gruenberg is back with the Q1 QBP, and while I was eager to see data based evidence of a shift in banking to support the observational shifts we’ve all seen in headlines as of late, I realized this data is already stale. Marty was quick to call this out immediately – “…these results, especially […]

Consumer Spending Strength

I’ve seen references to the below in different formats, leading to comments like “the consumer just wont quit” and “the consumer is still strong given headwinds” While the chart looks strong, I argue the source of that strength is fading and likely lags other indicators. This strength started in the form of cash spent by […]

“The Industrial Virality Complex”

The internet is full of hot takes around the series of collapses we just witnessed and I’ve debated how deep to go here. I found a thread that does a good job of providing a time series of events (with one suggested edit by me) and implications going forward. A big shout out to @professorstam.eth […]

How quickly things can change

As part of the FDIC QBP released on 2.28.23, the chart below showed a dramatic swing in unrealized losses in the Available-for-Sale and Held-to-Maturity Securities in bank investments. At first glance, so what? Its an unrealized loss of [likely] longer duration T-bills/bonds paying a fixed rate below what one can get from T-bills today given […]