Hedged Remarks
When Prognosticators Just Don't Know
Prognosticators, you know those soothsayers who every day tell you what the markets, from oil to wheat, from the S&P to Bitcoin, will do are “sitting on the fence” when it comes to tomorrow’s bank earnings. They feel positive except for the month of March when all hell broke loose thanks to SVB and Signature Bank.
Everything is fine, they proclaim . . . except for a couple of the largest bank failures in US history. Fine, an interesting adjective more often grossly misrepresenting what is actually taking place. The reality of the current banking situation is far from “fine”. It’s subject to unraveling with repercussions that will be felt worldwide.
So with this in mind, the “predictors” hedge. There’s more language out there than I care to talk about regarding “forward” statements. Yeah, right, no one saw the SVB or Signature Bank failures a month ago but these gurus can tell you what’s coming in the months ahead to next few quarters. Let’s get real; they can’t, no one can.
Common sense however tells you there’s a dark lining cloaking the banks due in part to their desire to regularly “beat” estimates. SVB and Signature did it for years all the while killing their balance sheets; wanna guess if there’s any more banks exhibiting similar characteristics? I bet there are but tomorrow you’re going to see numbers framing a solid quarter. But watch out; the “end is nigh”, the days of twenty and thirty percent quarter-over-quarter growth in bank earnings are about to come to an end.
The set-up appears to be in; let the newbie trader get a gander of what last quarter’s numbers are, bid up their prices then watch the street sell ‘em off. Markets just had two days to celebrate the “end of inflation”, brought to you by lower CPI and PPI numbers, but the S&P June future hit its head twice at 4,175 . . . not a whole lot of conviction but who knows; I’ve been wrong before and I’m sure it will happen again.
Nonetheless, if there is a rally above this level it’s going to be short lived. Those bank skeletons are not only out of the closet, they’re frolicking in the “street” just dancing around and in a short period of time we’ll all see the problems we’ve created, just like we’ve done before . . . damn that history; we never learn.
Hope you enjoyed this post. I’m just a young 68 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s in my head. It’s not always pretty but it’s based on history . . . and history, unchecked, repeats itself.
Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at dzimmer@substack.com so we can further help.