Today was the type of day we should all like–equities were up while interest rates have trended down closing at 4.57%. I know that our accounts got a decent lift in the rally.
Today we got economic news that was kind to us. 1st time jobless claims were on forecast, continuing claims were near forecast. I focus on jobless claims since it is my belief that the FED watches them closer than anyone knows–and certainly the unemployment rate and job creation numbers tomorrow are key pieces of news. If new jobs are being created and folks are employed the drumbeat for rate cuts is lessened (at least in my mind).
I have been watching the earnings reports of the smaller banks–community and regional banks and most of them are soft compared to a year ago, but surprisingly few are showing major write downs of commercial real estate loans. I continue to believe–with no evidence to back my belief–that a ‘shoe is yet to drop’. One thing that bothers me–and just maybe there is no answer–is that there remains high levels of non interest bearing deposits at banks. I was just reviewing the earnings release from New York Community Bank (NYCB), which has a perpetual preferred outstanding, and they have about $18 billion in non interest bearing deposits–we all know how fast deposits can leave a bank in this day and age. My accounts are ‘linked’ to bank accounts and I can deposit or withdraw in less that 1 minute. Maybe I worry too much? Well for now I am staying away from the small banks–maybe my fears will pass–maybe not.
So now I am off to review some ‘safe bucket’ CEF preferreds and see if there is anything ‘on sale’ tonight.
If NYCB has $18B in non-bearing accts, I wonder what it was before the prior blow-up they experienced. Were they sticky, or is this all that is left, and why is there still a good bit of $ on deposit? How much was acquired in the recent bank take-over.
Yet there are some banks buying back their own shares well below book value
How much of the non interest paying deposits are business accounts? When Silicon valley crashed, there was major businesses that had accounts way over what would be covered by depositers insurance. That was a wake up call to business that left them scrambling to spread out their deposits with multiple banks.
I know of a smaller regional bank that has no accounts over the insured amount at least as of last year that I have been following hoping the stock price hits it’s 2 year low again. But on the other side of the coin I have no idea what it’s loan portfolio looks like, but it has a long history and is well respected.
If there was no shoe left to drop, the Fed could raise rates or keep on with the same amount of QT or even more. They are taking baby steps to go dovish so that clearly means there is still a ‘shoe left to drop’ risk somewhere.
Been watching Monarch lately so the expression I’ll use is that Janet and the Fed are trying to tippy toe past Godzilla.
legend.vs–seems ideal to have no uninsured deposits-should be sticky money.
On the flip side, because banks are not paying same levels as brokerages offering money markets with banking services, maybe it’s SIPC and uninsured deposits in brokerages versus FDIC that blows up now??
Seems failure scenarios just move where they are versus actually disappearing.
I was in WFC yesterday and they had on a big screen behind the tellers they were offering 4.92% Not enough to get me to lock in funds.