The Higher Standard Chris Naghibi & Saied Omar

In a morning where more banking turmoil emerged and stocks opened sharply lower on Wall Street, traders shifted pricing to indicate that the Fed may hold the line when it meets March 21-22. According to CME Group data, the probability for no rate hike shot up to as high as 65%. Trading was volatile, though, and the latest moves suggested nearly a 50-50 split between no rate hike and a 0.25 percentage point move. Chairman Jerome Powell and his fellow policymakers will resolve the question over raising rates by watching macroeconomic reports that continue to flow in, as well as data from regional banks and their share prices that could provide larger clues about the health of the financial sector.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss the Census Bureau's most recent Household Pulse survey, which indicates that about 36% of consumers say it has been "somewhat" to "very difficult" for them to pay their usual bills in the last seven days.

Chris and Saied look at data from the Labor Department, revealing that inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil. The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%.

They also offer some thoughts on news that Credit Suisse Group AG is borrowing up to 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss central bank to shore up its liquidity, capping a day in which fears about the health of global banks leapfrogged to Europe from North America and the giant lender’s shares dropped as much as 24%.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:
Why the CPI will likely continue to come down.The real cause of the recent bank failures.Why Bank of America received more than $15 billion in deposits after the failure of Silicon Valley Bank.The levels of regulatory scrutiny banks are required to have as they grow.And so much more...

Resources:
"Bank stocks rebound, but crisis makes the Fed’s next move harder" (article from The Washington Post)
"Where inflation is... and isn't" (Yahoo! Finance via Instagram)
"BofA Gets More Than $15 Billion in Deposits After SVB Fails" (article from Bloomberg)
"What’s going on with Silicon Valley Bank?" (Dave Ramsey via Instagram)
"Goldman Sachs no longer expects the Fed to hike rates in March, cites stress on banking system" (article from CNBC)
"Stablecoin USDC breaks dollar peg after firm reveals it has $3.3 billion in SVB exposure" (article from CNBC)
a...

As we already know, Silicon Valley Bank, one of tech’s favorite lenders, has collapsed, becoming the second-largest bank failure in US history. The bank’s blowup has sent shockwaves across the tech sector, Wall Street, and Washington, amid concerns that other banks could be in trouble or that contagion could set in. In the days after SVB’s collapse, the panic appeared to spread, leading to the failure of additional banks, including Signature Bank of New York, which had bet on crypto. But it’s not clear how serious the fallout will be.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss news that Goldman Sachs no longer believes that the Federal Reserve will deliver a rate hike at its meeting next week, citing “recent stress” in the financial sector.

Chris and Saied look at comments from US Treasury Secretary Janet Yellen indicating that a major government bailout of Silicon Valley Bank is not an option.

They also offer some thoughts on the departure of Silicon Valley Bank CEO Greg Becker from the board of directors at the Federal Reserve Bank of San Francisco.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!


What You’ll Learn in this Show:
What actually happened at Silicon Valley Bank and which sector has been hurt most by its collapse.Why 14 years of artificial interest rate deflation and unprecedented interest rate increases were guaranteed to create problems.The bizarre phenomenon of new jobs being implemented on a monthly basis while layoffs continue to happen.How Silicon Valley Bank made the Forbes list of America’s Best Banks for the fifth consecutive year.And so much more...

Resources:
"What’s Going on With Silicon Valley Bank?" (article from The Wall Street Journal)
"US Discusses Fund to Backstop Deposits If More Banks Fail" (article from Bloomberg)
"Treasury Secretary Janet Yellen says U.S. government won’t bail out Silicon Valley Bank" (article from CNBC)
"Strong jobs report shows 311,000 jobs added in February" (article from CBS News)
"Fed Rate Pivot Is Back in Play" (article from Bloomberg)
"Goldman Sachs no longer expects the Fed to hike rates in March, cites stress on banking system" (article from CNBC)
"CEO of failed Silicon Valley Bank no longer a director at San Francisco Fed" (article from Reuters)
a href="https://www.cnbc.com/2023/03/11/stablecoin-usdc-breaks-dollar-peg-after-firm-reveals-it-has-3point3-billion-in-svb-exposure.html" rel="noopener...

Federal Reserve Chairman Jerome Powell has cautioned that interest rates are likely to rise higher than central bank policymakers had expected. Citing data showing that inflation has reversed the deceleration it showed in late 2022, Powell warned of tighter monetary policy ahead to slow a growing economy. His remarks imply that the peak, or terminal, level of the federal funds rate is likely to be higher than the previous indication from the Fed officials, and also that the switch last month to a smaller quarter-percentage point increase could be short-lived if inflation data continues to run hot.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss an announcement from automaker Rivian indicating a drop in its cash position. Rivian had cash and cash equivalents of $12.1 billion on hand at the end of December, down from $13.8 billion at the end of the third quarter and $15.5 billion as of June 30.

Chris and Saied look at news that investors have dumped shares of SVB Financial Group and a collection of other U.S. banks after the lender said it lost nearly $2 billion selling assets following a larger-than-expected decline in deposits.

They also offer some thoughts on data from ADP, indicating that private payrolls increased by 242,000 in February, versus the estimate for 205,000 and above the 119,000 in January.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:
Results of the most recent Job Openings and Labor Turnover Survey (JOLTS) report.The voluntary liquidation of Silvergate Bank.Demystifying concepts such as 'index plus margin' and a 'run on the bank.'Why there is much more at play in banking than just finance.And so much more...

Resources:
"Dow closes 570 points lower, turns negative for 2023 as Powell ignites higher rate fears: Live updates" (article from CNBC)
"Fed's Powell again rejects idea of raising inflation target" (article from Reuters)
"Rivian Stuns Investors With Very Bad News" (article from The Street)
"US unemployment is falling even as the economy slows. What the heck is going on?" (article from MarketWatch)
"Fed Chair Powell says interest rates are ‘likely to be higher’ than previously anticipated" (article from CNBC)
"Job openings declined in January but still far outnumber available workers" (article from CNBC)
"Private payrolls rose by 242,000 in February, better than expected, ADP says" (article from CNBC)
a...

Home prices have finally fallen from a year-ago levels, according to a commonly used indicator of data. Last month, investors received a slate of home price data for December and January from the National Association of Realtors and S&P Dow Jones Indices. The Realtors Association indicated that the median single-family home sold for $363,100 in January, up 0.7% year-over-year, while December data from the S&P CoreLogic Case-Shiller Home Price Indices' reflected a national price increase of 5.8% year-over-year. More frequent data shows the housing market may have reached a turning point in February, with thin price gains turning into declines. Redfin said on Thursday that its measure of the median home sale price fell by 0.6% over a four-week period covering most of February.
In this episode of The Higher Standard, Chris and Saied examine this news as well as other articles on the US housing market. Housing price and mortgage application indices have reached their lowest levels since the Great Recession in 2007.
Chris and Saied will debunk Dave Ramsey's concept of supply and demand. They also talk about why they believe house prices must fall. Chris will discusses the younger generation's sense of entitlement in the office as well as the concept of communication in the workplace.
 
Billionaire Charlie Munger expressed his opinion on cryptocurrencies by saying, "It's just ridiculous that anyone buys this stuff." They offer their insights on cryptocurrencies and Charlie Munger's interview. They look at CNBC's reports about crypto bank Silvergate Capital, whose shares have plummeted. According to MarketWatch, Silvergate shares have lost over 97% of their value since hitting an all-time high in November 2021.

Join Chris and Saied for this fascinating and informative conversation about debt, especially for people in their 30s, and what's best thing to do with your money. Spoiler alert: It just might be to keep it in cash.


What You’ll Learn in this Show:
Why affordability is a powerful factor.Why house prices have fallen more slowly in the Midwest.How CPI is significantly affected by home prices.Shoul you get a salary adjustment if you moved to Utah?Some of the biggest misconceptions for consumers when submitting their financial information to a bank.Millennials' growing debt.And so much more...

Resources:
The housing market correction, as told by 4 charts | Fortune
Billionaire Charlie Munger: Cryptocurrency is 'crazy, stupid gambling,' and 'people who oppose my position are idiots'
Here’s the real challenge facing Silvergate and other 'crypto banks,' says this short seller - MarketWatch
Americans in Their 30s Are Piling On Debt - WSJ

In recent episodes Chris and Saied have highlighted some of the things that get people excited in the current market. Today, however, Chris emphasizes that conditions have changed and there is a new call for concern. Time to be extra observant. Stocks move lower as bond yields extend their gains. The 10-year Treasury hit 4% and the 1-year treasury rose 3 basis points. The Minneapolis Fed Reserve President Neel Kashkari has said that he is open to the possibility of a larger interest rate increase at this month's policy meeting on March the 22.
But first Chris and Saied explore Tim Cramer and the inverse ETF (Exchange Traded Funds) of Cramer. One can literally bet against him to make money. Cramer is well known for his show Mad Money on CNBC. Chris describes how Cramer rose to popularity and still receives a lot of coverage but doesn’t actually have a profitable track record to follow.  He once urged listeners to dump HP stock in 2011 just before it shot up, and he did the same with Netflix and Best Buy in 2012. Is all this being done for entertainment value?

Chris and Saied get into the evolution of social media and what's next for that whole industry. Enjoy a discussion about the second wave of social media and how it may be driven by Gen Z's fundamentally different mindset. They discuss the Be Real app that will encourage people to be truly authentic.

Finally, Chris and Saied dive into Blackstone and the news that it defaulted on a $562 million bond backed by a portfolio of Finnish offices and stores. They dissect the implications of this news.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!


What You’ll Learn in this Show:
Why betting against Tim Cramer is a good idea.What the big concerns are in the market and why you should be vigilant.How home prices and sales can really be a lag indicator.What happens when there is less revenue for companies and why some of the ramifications of a recession take time to show themselves.Interesting discussion about how Americans get over big news easily, including that of the Chinese balloon and disappearances of Chinese moguls in finance and tech.How Gen Z, and in particular teenage girls, will shape the social media landscape of the future.

Resources:
https://apple.news/Av_puaSbTSg6aOiM7mGvBtQ
https://www.cnbc.com/amp/2023/02/28/treasury-prices-fall-slightly-to-close-out-bumper-month-for-yields.html
https://apple.news/Au83a5dJwTwOxXU-n5MTiNw
https://apple.news/ALcINeqAzSoypvOQOMmD5vg
https://apple.news/AsFGWviHCTmmgdYfWEo827g
https://www.thestreet.com/etffocus/blog/inverse-cramer-etf-is-live
https://www.wsj.com/articles/fed-official-says-hotter-data-will-warrant-higher-rates-a0162583
a href="https://www.cnbc.com/2023/03/01/mortgage-demand-falls-interest-rates-rise.html" rel="noopener noreferrer"...

A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices. According to a report by the Commerce Department. The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago. Wall Street had been expecting respective readings of 0.5% and 4.4%. The core PCE gains were 0.4% and 4.6% in December.
In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss a survey from the Philadelphia Fed that indicates 39% of crypto owners said last October that they would likely buy more cryptocurrency as a way to gain wealth.

Chris and Saied look at a research white paper that examines the history of central bank efforts to create disinflation, which states that the Federal Reserve is unlikely to be able to bring down inflation without having to raise interest rates considerably higher, causing a recession.

They also offer some thoughts on ‍a report from Goldman Sachs, which says that, out of the country's 25 largest metropolitan areas, four cities stand out for having particularly dim housing forecasts: Austin, Seattle, Phoenix and San Francisco.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:
Why the Fed believes that wages and wage inflation will put upward pressure on prices.What could happen to the sub-markets of San Francisco and Silicon Valley.Why Open Door closed out 2022 with two straight quarters of losses and where it goes from there.The duties and role of a Chief Financial Officer.And so much more...

Resources:
"Roger Ferguson: The Fed has more work to do as inflation still presents danger" (article from CNBC)
"Key Fed inflation measure rose 0.6% in January, more than expected" (article from CNBC)
"Despite high inflation, Americans are spending like crazy — and it's kind of puzzling" (article from CNBC)
"Fed can’t tame inflation without ‘significantly’ more hikes that will cause a recession, paper says" (article from CNBC)
"Are we headed for a recession? More economists think a 2023 downturn may come later than they thought" (article from USA Today)
"Subprime auto lender folds as more Americans fall behind on car payments" (article from Fortune)
"Home prices will sink in these cities that were once red hot as supply starts to overwhelm demand" (article from Markets Insider)
a...