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Did You See These Earnings?

I had mentioned before that I thought WR Berkley (WRB) was one of the best run insurance companies around–and their earnings announcement from Tuesday shows just how well they are doing. The company release is here – when one says a company is run like a ‘well oiled machine’ you think of WRB. WRB has 4 baby bonds outstanding with current yields of 5.62% to 6.04%–these are long dated maturities.

Also the small banks have been reporting–tiny Bridgewater Bank (BWB) reported earnings yesterday–earnings were decent, but I personally continue to worry about commercial real estate write downs. This bank has had virtually zero write downs–is it too good to be true?

GDP was just reported and the number came in softer than forecast—but jobless claims and continuing claims came in hotter than predicted. The 10 year treasury has popped up to 4.69% on the news—ugh! Stocks are down sharply based on earnings announcements last night–could be an ugly day all around–we will see.

Tomorrow we have PCE released–honestly for no special reason this worries me. With the 10 year at 4.69% now can we see 4.80% or higher if the number comes in hot–are 5% rates just around the corner?

12 thoughts on “Did You See These Earnings?”

  1. Several new agencies have written as though there was something that came out TODAY to indicate inflation was accelerating? Was there? And if so what was it? Thank you!

  2. On the money printing and inflation, I have the same inclinations. HOWEVER, I read the following from David Zervos yesterday and it has definitely made me stop and think.

    “First up, there is a pervasive notion across most swaths of the investment community that reckless US fiscal policy has been an important contributor to the highly unpleasant inflation experience of the last three years. In order to debunk that thesis, I have put together a table below on the cumulative rise in headline consumer prices from Jan 2021 through Mar 2023 for a host of developed countries. I have included the Bloomberg tickers for this data as well, so folks can easily check the exact series I am referencing. Here are the numbers:

    Austria (ATCP2010) 22.95%
    Sweden (SWCPI) 22.54%
    UK (UKRPCHVJ) 21.38%
    Belgium (BECPI) 19.79%
    Netherlands (NECPIND) 19.48%
    Greece (GLCPNEWL) 19.16%
    USA (CPI INDX) 18.94%
    New Zealand (NZCPCCPI) 17.88%
    Spain (SPIPC) 17.51%
    Germany (GPCP2000) 17.43%
    Norway (NOCPI) 16.21%
    Australia (AUCPI) 15.44%
    Canada (CACPI) 14.91%

    In order to remain as consistent as possible in this analysis, I tried to use the best available representation of an official all-items headline CPI figure. Of course, some countries calculate inflation a bit differently than others, but in general these are all highly comparable measures. And importantly, these are NOT some sort of super-duper special core numbers which leave out random portions of the consumption basket. They are all generic headline measures of the consumer inflation experience over the last three-odd years.

    The first thing to notice here is that all the countries in this exercise suffered a massive inflation shock. And while each experience had its own unique transmission through the economy, average annual inflation rates jumped from something in the subdued 1-2% region pre-Covid, into the lofty 5-7% region after the reopening. This type of synchronized behavior suggests that global forces, like supply chain disruptions and/or the war in Ukraine and/or the zero-COVID policy in China, were the source of this inflation shock. These data are NOT consistent with a storyline driven by country-specific experiences with demand side fiscal stimulus policies. For example, Sweden saw one of the highest inflation rates in the list above, while their debt/GDP barely budged from 36% pre-Covid to a peak of 40% during the early stages of the pandemic. And today it has fallen all the way back to 29%. As another ex ample, German debt/GDP went from 60% to 70% and is now back to 65%. Those experiences are hardly comparable to the massive fiscal response which occurred in the US.”

    1. The central banks of all these countries were synchronized indeed and followed U.S. leadership and printed a bunch of money. Not to mention that due to the dominance of the dollar globally that when we print we export inflation as well.

      Blaming inflation on supply chain issues is intellectually dishonest without talking also about increases in the supply of money.

      1. Dan,
        I agree with most of what you say, but the other countries didn’t have to print money (and many didn’t). the US printed enough for everyone. As you say, we just export inflation globally.

    2. mrinprophet,

      I think the study you cite misses one key point that makes most of the argument not very meaningful (IMHO).

      The US deficit is more than the entire GDP of most of the countries listed (more than an order of magnitude greater than some). Out deficit is greater than the entire GDP of all but about 15 countries. Other countries’ fiscal policies are simply swamped by the magnitude of US’.

      As the US’ massive deficits continue to drive increasing inflation, it will drag the entire world economy along. Byproduct of our size and of the dollar being the world’s currency. It can’t last forever, but for now, the global economy is being whipsawed by the US economy (and by our deficit spending).

      Its a supply-side problem, and out leaders/fed/many economists are still talking about demand-side solutions. Raising interest rates (to reduce demand for $) won’t fix the problem of a tidal wave of trillions of dollars of deficit spending flooding into the economy.

  3. Second paragraph is to note and will most likely be reflected in the report tomorrow.

    “First-quarter GDP data released on Thursday showed that the economy grew less than the 2.2% median estimate of economists polled by The Wall Street Journal. Even so, the report contained little evidence that the economy is headed for trouble.

    The GDP report also revealed that core inflation, excluding food and energy, came in at a 3.7% annualized rate based on quarterly data from the personal consumption expenditures price index. That’s up from a 2% rate in the fourth quarter.”


    The talking heads this am made the following observations:
    Q3 2023 (4.9%)
    Q4 2023 (3.4%)
    Q1 2024 (1.6%)

    Take out all the government and seasonal holiday spending reality start to hit in these numbers. When you have inflation above or at the pace of economic growth, I’m not sure how stagflation is avoidable.
    This situation is one sour pickle.

    1. Come on Eladio, Just drink the kool aid.
      The current administration from the top through Treasury and beyond say that modern monetary theory allows them to print all the money they want to finance unlimited deficit spending without consequence. If they have a theory to back it up, it must be true.

      1. Inflation begs to differ with their lame theory.

        We’ll probably end up in some sort of “inflationary” default here in the next 20 years.

        1. Current set of politicians doesn’t care about 20 years from now (or even 5). They will be out of office by then (and collecting big speaking fees) and it will be somebody else’s problem.

      2. Cynically they do not adhere all the tennants of MMT. That is fiscal spending is used to control inflation. Cheers!

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