Asia Session: The Peak-Virus Trade Goes Viral
Asia Session: The Peak-Virus Trade Goes Viral
Asian asset markets are positive this morning as headlines continue to be dominated by Moderna’s trial vaccine headlines. I most certainly hope that Moderna has managed to help the planet avoid a bullet. The result of the news was entirely predictable, equities rose sharply, the US Dollar faded, oil jumped and gold, quite significantly fell and avoided an outside reversal day by the narrowest of margins. That story may yet contain heartbreak for bulls. Sectors I would characterise as “the little shop of horrors,” comprising big oil, airlines, leisure industries such as cruises, and consumer discretionary in general, all, unsurprisingly, outperformed.
As ever, in my role as the voice of reason, floating alone on a sea of non-thinking FOMO-ness that characterises the world’s financial markets in this day and age, I should point out a few things. Moderna’s trial is terrific news, but the sample size was eight. Not statistically significant. The experiment was to make sure that dosages didn’t make recipients fall over dead, or otherwise suffer serious side effects. It didn’t, which is pleasing. At least two more large scale trials will be required, and Moderna’s CEO himself said that he was hopeful of results by the end of the year. After that, even with fast approval, the vaccine would have to be manufactured on a previously unimaginable scale, and then the whole world will have to receive it.
Thus, in the best-case scenario, it will probably be another year before normal life will make a comeback, at best. That is a long time in this day and age, especially if you are unemployed or shortly to be; or a company that is running tight on cash flow in the next few months. The zombie apocalypse may well finally occur, in the shape of many corporations existing on paper as zombies only due to central bank and government life support. The amount of debt issued by governments globally, and will continue doing so, will compete for capital with private sector requirements for a generation. Let’s all hope for some decent inflation to make it inflate away, as markets price in return to normal life by July. Did I also mention we have a US Presidential election in November?
Climbing off my soapbox, alone in speakers’ corner, and back into the here and now, the peak-virus trade has been supercharged by last night’s news. That sentiment is unlikely to fade anytime soon and has left some interesting set-ups, to my wizened eyes, in various markets—more on that below.
In other news, the Euro out per-performed overnight, as did the Eurostoxx 600, as France and Germany agreed on a EUR 500 billion recovery package for the region. Although only members of a larger grouping, everyone is sure to fall into line behind the two biggest kids in the playground. The elegant solution allows the EU to borrow cash through an EU entity, which will then give it all to Italy, I mean those countries within the EU that need it to rebuild devastated economies. The solution elegantly circumvents EU countries jointly guaranteeing Italy’s I mean the broader groups national debts.
Attention today will be focused on Indonesia’s latest rate decision due at 1530 SGT. The Indonesian Rupiah has staged a spectacular, if quiet, comeback since the start of April, and give the Bank of Indonesia (BOI) plenty of breathing room to cut rates again. We are expecting a 25-basis reduction to 4.25%, as the BOI will have one eye on the currency still. Fifty bps, though, is not out of the question.
UK unemployment and Germany’s ZEW survey are expected to print at nightmarishly poor levels this afternoon. Luckily for both, the results will be largely ignored as both expected, and irrelevant in the context of the peak-virus sentiment sweeping financial markets. They should both be sending thankyou note to the Moderna CEO.
Equities march boldly forward on peak-virus sentiment.
The Moderna news spurred the peak-virus trade to new heights overnight, with European markets and Wall Street enjoying an out-sized positive day. The S&P 500 leapt by 3.15%, the NASDAQ rose by 2.44%, and the Dow Jones, home to many previously unloved stocks, jumped an impressive 3.85%.
Asia has needed no second chance, and markets across the region are a sea of green today. The Nikkei 225 and the South Korean Kospi are 1.80% higher, as are the Hang Seng, Straits Times Index and Jakarta Composite. China’s Shanghai Composite and CSI 300 are 1.0% higher> Australia’s ASX 200 and All Ordinaries have climbed 2.0%.
We expect the positive momentum to be maintained through the remainder of the Asian session. Europe had an excellent day yesterday, and with no data surprises on the horizon that haven’t already been priced in, that should continue today. The peak-virus trade continues to gather momentum after last night’s Moderna headlines, and there is no reason to doubt that will not continue.
The US Dollar retreats as haven positioning is reduced.
The Moderna vaccine headlines accelerated the rotation out of defensive positioning in currency markets overnight. The US Dollar fell across the board with the dollar index of developed currencies falling 0.78%. Both the GBP and EUR made notable advances, GBP/USD rising 0.77% to 1.2200, and the EUR/USD rising 0.95% to 1.0915. In Euro’s case, the potential EUR 500 bio EU support package also supported the single currency.
EUR/USD is notable, as it has been tracing out a symmetrical triangle pattern since the nadir of mid-March. Today, the top of the triangle lies at 1.0955, and a daily close above that level implies that the EUR/USD could rally strongly, targeting the 1.1400 region. GBP/USD must still overcome strong resistance at 1.2250 before the technical picture swings strongly positive. Brexit and data nerves may temper its gains.
Light at the end of the return-to-normal-life tunnel saw the trade-sensitive and China proxy Australian Dollar, strongly outperform overnight. AUD/USD rose 1.70% to 0.6525 in overnight trading. Although unchanged this morning, it looks set to test resistance nearby at 0.6570. A daily close above sets up the Antipodean for further advances.
Locally, the Indonesian Rupiah has now recovered around 65% of its mid-March losses. It is trading at 14,800 this morning, having fallen to a low of 16,750 during the March asset market capitulation. That will allow the Bank of Indonesia to cut rates today, but may also, therefore, temper further gains to what has been a mighty rally.
Currency markets are, for the most part, sedate and unchanged in Asia today. More than likely, they are awaiting the arrival of London, from whence we expect to see the US Dollar once again, pick up steam.
Vaccine hopes propel oil aggressively higher.
Oil continues to bask in a combination of falling production from OPEC+, a return to regular consumption by China, a short squeeze in the WTI futures, the ending of lockdowns globally and, as of last night, hopes that a COVID-19 vaccine is on the horizon. It is no surprise, therefore, that Brent crude and WTI strongly outperformed overnight. Brent crude rose 9.0% to $35.40 a barrel, and WTI leapt 10.60% higher to $32.55 a barrel.
Both contracts have seen profit-taking in Asia tempering the overnight gains, with Brent and WTI easing by just over 1.0%. The dips are shallow, however, and appears technical. Brent crude will be eyeing resistance at $36.50 a barrel, and a daily close above there implies further gains to $40.00 a barrel. WTI has resistance at $33.00 and $36.00 a barrel, with $40 a barrel also the target if the later gives way.
Today, the June WTI deliverable futures expiry. Open interest fell once again overnight, from around 55,000 contracts to 34,000 contracts. That still leaves a significant position that needs to either be closed out, rolled, or delivered by today. Interestingly open interest fell by 12,000 contracts in the July tenor, but rose by around the same in the September one, implying that being exposed to the front-month contract remains. The squeeze has definitely been on short positioning in the June contract, and thus, sharp spikes higher cannot be ruled out into the expiry today. That is in complete contrast to last month’s expiry.
Gold narrowly avoids an outside reversal day implying heartbreak for long positions.
Gold avoided an outside reversal day by the narrowest of margins overnight. Having traced out new highs at $1765.00 an ounce, gold then plunged on the Moderna vaccine news to close at $1733.00 an ounce. That was a mere two dollars above the previous days open.
Although the reversal pattern has been narrowly avoided, investors should be alert to the possibility that gold could now suffer a sharp reversal as peak-virus sentiment reaches new levels. A failure of support around $1725.00 an ounce sets up further losses to the next support at $1700.00 an ounce. I also note that gold has tested, but failed, to close above $1750.00 an ounce for two days in a row.
Gold has risen slightly by 0.25% in Asia, mostly driven by profit-taking flows from short-term traders after the overnight drop. Caution should be exercised though; gold could potentially suffer an aggressive downward whipsaw price correction following the price action overnight.
Bitcoin has failed multiple times at the $10,000 mark.
Bitcoin has tested and failed to close above $10,000 multiple times during May. With the Moderna vaccine hopes invigorating the rotation into recovery positioning and out of defensive plays, Bitcoin is vulnerable to a deeper downward technical correction. Bitcoin is trading at $9,542.00 this morning and a failure of the $9,500.00 region, sets up a potentially sizeable downward correction to $8,500.00, and possibly as far as $8,000.00.
Adding weight to this theory, a good friend of mine in Singapore, who has no experience with this market, asked me yesterday if it was a good time to invest in cryptos? Sell signals come in all sorts of forms. This is one of them.
The Bitcoin aficionados who believe 5G towers, or Bill Gates, are the original of COVID-19, should prepare to wrap an extra layer of tinfoil around their heads.
Uncategorized
Top 3 commercial real estate REITs to avoid amid a triple whammy
Commercial real estate REITs have been under intense pressure as the industry faces a tripple whammy of high-interest rates, work-from-home, and white-collar…

Commercial real estate REITs have been under intense pressure as the industry faces a tripple whammy of high-interest rates, work-from-home, and white-collar layoffs. On Wednesday, the Fed decided to hike interest rates by 0.25% and signaled that more rate hikes were coming.
And recent data shows that the percentage of people working from home is still sharply higher than where it was during the pandemic. Worse, many large companies like Amazon, Salesforce, and Meta Platforms are laying off thousands of employees.
Therefore, with debt maturities coming up, there are concerns that the industry will be in trouble for a while. Further, as I wrote in this article on the SCHD ETF, REITs are now competing with cash, with short-term bonds yielding over 5%. So, these are some of the top commercial real estate REITs to avoid during the sell-off.
Boston Properties
Boston Properties (NYSE: BXP) stock price has been in a strong sell-off in the past few months. It is trading at $49.63, which is about 63% below the highest level in 2022. This decline is mostly because of the cities where the company operates.
It is mostly concentrated in places like New York, Los Angeles, San Francisco, and Seattle. These are some of the most troubled cities in the commercial real estate industry. In the most recent earnings statement, the company’s CEO said:
“Many of our clients are experiencing a slowdown in growth or reductions in top line revenue and as a result are focused on cost control including moderating headcount and space use.”
Therefore, in the near term, I suspect that the Boston Properties stock price will continue falling as investors embrace the new normal of high interest rates. In the long term, investors will likely buy the dip as the dividend yield become more attractive.
Kilroy Realty Corporation
Kilroy Realty Corporation’s (NYSE: KRC) stock price has also been in a freefall. It was trading at $29 on Wednesday, sharply lower than its 2022 high of $79. As a result, its forward dividend yield to 7%.
The stock’s collapse is mostly because of the triple whammy facing the industry and the fact that billions of dollars are coming due. And like Boston Properties, the company’s operations are concentrated in high-risk cities like San Francisco, Seattle, and Austin.
The only benefit for Kilroy is that it has staggered debt maturities, which meaning that it has more room to adjust its books. As a result, it has no debt maturities until December 2024, as the CEO noted:
“Net debt the fourth quarter annualized EBITDA remains about six times. And we have no debt maturities until December of 2024 and limited interest rate exposure with all of our debt fixed or subject to cap.”
Vordano Realty Trust
Vornado Realty Trust (NYSE: VNO) stock price has dropped lower than most commercial real estate trust stocks. It was trading at $13.80, down by over 72% from the highest point in 2022. This performance is mostly because Vornado is highly concentrated in New York, where occupancy rate remains low.
Like Kilroy, Vornado has no maturities this year, with the next one coming in mid-2024. Still, because of its focus on New York, Vornado stock will likely continue falling in the near term. The other commercial REIT stock we recently recommended exiting was SL Green. It stock is down by over 10% since the article went live.
The post Top 3 commercial real estate REITs to avoid amid a triple whammy appeared first on Invezz.
bonds pandemic stocks fed reit real estate etf interest ratesGovernment
How Fauci’s Wife Used NIH Position To Backstop Her Husband’s Pandemic Health Directives
How Fauci’s Wife Used NIH Position To Backstop Her Husband’s Pandemic Health Directives
Authored by Adam Andrzejewski via OpenTheBooks,
It’s…

Authored by Adam Andrzejewski via OpenTheBooks,
It's the Washington, D.C. power couple that cost taxpayers nearly $1 million per year.
While Dr. Anthony Fauci gave the nation its pandemic public policy prescriptions, his wife, Dr. Christine Grady, the Chief Bioethicist at Fauci’s employer, the National Institutes of Health (NIH) provided the moral framework.
The Faucis are important to the center-left, because they represent the pinnacle moment of the administrative state – top-down public policy run by an elite group of government scientists.
Conversely, to the center-right, the Faucis represent “the fatal conceit of the elites.” As Noble Laureate economist Friedrich Hayek theorized, the elites are no match for billions of free people acting in their own best interests.
MEET THE FAUCIS
While Tony Fauci was the top paid federal bureaucrat and out-earned the U.S. President at $480,654 per year, Christine Grady, as the chief bioethicist at NIH out-earned the U.S. Vice President ($243,749). When adding 35-percent in benefits, the couple cost taxpayers an estimated nearly $1 million per year.

It’s difficult to know where Anthony Fauci ends and Christine Grady begins. Here’s how Tony Fauci described Grady’s influence on his public policy decisions:
“I've benefited greatly from this partnership of overlapping interest and common interest. So, a lot of the things that I do with regard to the development of vaccines, the development of therapies, being involved with outbreaks and pandemics, have ethical overtones to them. I can say that I am very blessed to be living with someone who is very likely, most people think, one of the most outstanding ethicists in the world. To have her in the house -- you know, as a consultant on ethical issues—is pretty advantageous.”
So, the Faucis lived a conflict of interest at the breakfast table, the office, and back home around the dinner table. However, NIH has never acknowledged this.
In fact, NIH forced our organization to file two federal lawsuits with the public-interest law firm Judicial Watch as our lawyers to finally bring transparency to the Fauci/Grady job descriptions, conflict of interest documents, financial and ethics disclosures, contracts, and other documents.
Then, NIH slow-walked thousands of pages of production. Yet, no nepotism waivers were produced, no acknowledgement of conflicting interests, and no records documenting violations of federal ethics policy.

While Grady’s work during the pandemic was described as “invaluable” by then-NIH director Francis Collins, the general public knows little about her day-to-day responsibilities.
An open records request for Grady’s job description reveals she, too, is meant to use her position to influence policy.

Advocating Lockdowns
Dr. Fauci knew that his “draconian policies” on social isolation and economic lockdowns would have “collateral negative consequences,” and admitted Christine Grady was a driving force behind his hardline approach.
In a November 2021 interview with the couple, Fauci said that he gained strength from his wife’s support saying, “background and her experience in really core ethical principles [helped] me to really feel much more comfortable in what I was saying.”
In the interview, Christine Grady described how she mind-mapped national policy with her husband:
"But we've had conversations about the sort of consequences of telling people to stay home and what it would do for the economy. And there were a lot of people in those days that, and still who said, it's ruining the economy. It's much more important to just keep things going and not worry about transmitting virus…I said, that one of the messages should be, how many lives are you willing to sacrifice? And that message would be pretty stark and pretty brutal, but that's really what the trade-off was…And so we've had that kind of conversation over dinner more than once, actually.”
Fauci replied that these conversations “sharpened [his] resolve” to move forward with lockdown policies.
Social isolation was one of the individual sacrifices Grady and Fauci thought were necessary to make on behalf of “public health.”
Vaccine Development & Public Safety
Like her husband, Grady exclusively focused her attention and remarks on vaccine development rather than other potential ways to treat and combat the spread of COVID-19.
One major paper she co-authored in 2020 advocated for vaccines to be distributed under emergency use authorization (EUA), which is how the federal government ultimately proceeded.
In this paper, Grady’s advocacy for vaccines came with a troubling acknowledgement:
“even with mandated safety monitoring after EUA distribution, it would be difficult or impossible to ascertain vaccine-induced adverse events.”
However, during most of her public presentations, she asserted that vaccines were developed in a fast, but “safe and rigorous” manner. Just one of many examples can be found here.
By November 2021, she said the risk of unknown long-term effects were “not zero” but that “there is a balance between benefiting the public health now versus waiting for all the information we might get.”
Despite these admissions, Grady often said she was “disturbed” by vaccine hesitancy, implying that safety concerns were somehow unreasonable.
Vaccine Mandates
Grady’s stance on vaccine mandates changed radically throughout the pandemic.
In June 2020, a presentation she gave suggested “immunity passports” could cause “discrimination without much overall gain.” A passport system would allow businesses to limit or deny access to those who remained unvaccinated.
Six months later, in January 2021, Grady said, “I do believe that healthcare providers, like everyone else, should have the choice” whether to take the vaccine or not.
But by early October 2021, Grady had decided the choice facing health care workers was a drastically different one: whether to get the vaccine or lose their jobs.
Later that month, she also flipped her position on vaccine passports. What once was a potential source of discrimination was recast as a way to access “social benefits” like restaurants and movie theaters.
It’s a disturbing way to describe Americans free association of movement.
Grady went on to co-author a March 2022 report approving of social ostracization for the vaccine-hesitant and encouraging employers to pressure their workers:
“While some employers might understandably feel hesitant to pressure employees to get vaccinated, our analysis suggests that it is often ethically acceptable to inform, encourage, strongly encourage, incentivize, and subtly pressure unvaccinated people to benefit them, the organization, and other employees.”
In fewer than two years, Grady had completely altered her assessment of vaccine mandates and widespread restrictions on the behavior of unvaccinated Americans. Gone were concerns about discrimination and freedom of choice.
As Dr. Fauci pushed and pressured the public to get vaccinated for the sake of their neighbors and family members, Grady began considering it ethical to fire workers who did not comply.
Likewise, it became a “social benefit” to get a vaccine passport that would allow people to avoid government restrictions on their free movements.

Mask Mandates
While her husband advocated masking and double masking—even when “fully vaccinated”—Dr. Grady consistently backed his position.
In July 2020, during an InStyle interview, Grady answered questions about masking:
Interviewer: Let me ask you, Chris, as a bioethicist, what do you make of this moment we're in, when even a mask has become more of a divisive issue?
Grady: Well, I would say that masks shouldn't be divisive. It's a relatively easy way to protect one's self and others. And so for public health reasons, I think everybody should do it. From an ethical perspective there is always this tension between what you ask people to do that feels like a restriction of their liberty and what is required for public health. And in this case, it seems like a slam dunk. It's not restricting liberty much, and it's very helpful for public health.
Grady was consistent and in November 2021 spoke to the ethical balancing test of public safety versus individual freedom and never viewed mask wearing to be much of an infringement on individual rights:
“There's a classic tension between public health, and individual interests and freedoms. Where there seems to be this conflict to the things that we do to protect the public health, and to protect the population for the common good. Sometimes they are perceived to be, and sometimes they do in small ways, infringe on people's freedoms. There are principles of public health ethics that help you sort out the kinds of interventions that we should use: Things that are effective, that are proportional, where the benefits outweigh the risks that are necessary, that are least infringement possible, that are transparent, that we can publicly justify.
…What's striking to me is that, the kinds of burdens that we've asked people to undertake, like putting on a mask, don't really infringe on one's freedoms very much. They're low burden and they have an effect. They do protect the person who's wearing the mask, as well as the people that are around them.”
A recent credible study on mask wearing during the pandemic argued there is no clear impact of masking on Covid-19 infection rates.
Patients Dying in Isolation
During the pandemic, Grady revealed a default preference for government control over individual rights and responsibilities. Grady was an early proponent of one of the most heinous pandemic polices: patients dying in isolation.
For example, while uncritically accepting dying in isolation as a fact of the pandemic, Grady’s primary solution was to expand funding for health care workers to have access to therapy and other resources to heal from their “moral distress.”
As early as April 2020 Grady said:
“Because of visiting policies and fear of contagion sometimes when somebody is really sick their family cannot visit them, they can't see them…the stress and the sadness and the isolation on families is and is going to be great.”
In a November 2020 NIH presentation she called these “lonely” deaths “understandable:”
"It’s a lonely kind of death, many institutions, understandably have visitor policies which either restrict the number of visitors to one or zero so sometimes people are dying without having their family nearby and that puts an additional burden on the healthcare staff.”
In one co-authored paper urging healthcare workers to “temper these potentially dehumanizing scenarios with imaginative solutions that do not sacrifice compassion and equal respect on the altars of safety and efficiency.”
She interrogates the tension between individual freedom and community safety in a book published April 26, 2022, as a co-author proposing a radical “solidarity model” for ethics in healthcare, stating that rather than emphasizing a respect for individuals to make decisions in their own interest:
“We should recognize that there are times when solidarity takes precedence over individual liberties, and broadening our concept of “respect for persons” means uniting as a profession to protect all those who expect to receive care from nurses in whatever healthcare setting they find themselves.”
She co-edited a section in the same book arguing this extends to dying in insolation:
“The solidarity model may apply to restricted family visitation, which generated moral distress for nurses, particularly when patients died without loved ones present…”
CONCLUSION – GRADY AND THE NEXT PANDEMIC
As demonstrated by her own words, Grady’s record evinces an understanding of ethics that begs fundamental moral questions, regularly subordinates individuals beneath an amorphous “public health,” and relies on subtle but unacknowledged shifts to retain an alleged moral high ground.
While some of her observations early in the pandemic did show an interest in providing nuance to policymaking—questioning the usefulness of immunity passports and highlighting issues with long-term vaccine effects under a EUA rollout—this quickly gave way to conformity to broader political zeitgeist, painting pushback as ignorant, uncaring, and simply wrong.
By 2021 her public statements never suggested a limit to sacrifices the individual should ethically make on behalf of “public health,” from masking, to taking vaccines, to foregoing family gatherings even at the point of one’s own death.
Both Fauci and Grady made clear that they wish for ethicists like Grady to have more power and more influence over political decision-making.
As Grady remains the chief NIH bioethicist, Americans should ponder: does Grady’s philosophy advance what is “fair” and “just” in public health policy? What does her continued leadership mean for the future of American policy.
Taxpayers compensate Grady generously, and they’re owed full transparency about her role, responsibilities and influence – during the pandemic and into the future.
Note: We reached out to Dr. Christine Grady and NIH for comment. While acknowledging our requests, no statement or comment was received before publication.
ADDITIONAL READING
Dr. Anthony Fauci: The Highest Paid Employee In The Entire U.S. Federal Government Published January 21, 2021 | Forbes
Dr. Anthony Fauci’s Little Known Biodefense Work. It’s How He Became The Highest Paid Federal Employee. Published October 20, 2021 | Forbes
No, Fauci’s Records Aren’t Available. Why Won’t NIH Immediately Release Them? Published January 12, 2022 | Forbes
Breaking: Fauci’s Net Worth Soared To $12.6 Million During The Pandemic – Up $5 Million (2019-2021). Published September 28, 2022 | OpenTheBooks.Substack.com
HISTORIC RELEASE: Dr. Anthony Fauci’s Official Work Calendar (November 2019 – March 2020) | Published October 20, 2022 | OpenTheBooks.Substack.com
ABOUT US
OpenTheBooks.com – We believe transparency is transformational. Using forensic auditing and open records, we hold government accountable.
In the years 2021 and 2022, we filed 100,000+ FOIA requests and successfully captured $19 trillion government expenditures: nearly all federal spending; 50 state checkbooks; and 25 million public employee salary and pension records from 50,000 public bodies across America.
Our works have been featured at the BBC, Good Morning America, ABC World News Tonight, The Wall Street Journal, USA Today, C-SPAN, Chicago Tribune, The New York Times, NBC News, FOX News, Forbes, National Public Radio (NPR), Sinclair Broadcast Group, & many others.
Our organization accepts no government funding and was founded by CEO Adam Andrzejewski. Our federal oversight work was cited twice in the President's Budget To Congress FY2021. Andrzejewski's presentation, The Depth of the Swamp, at the Hillsdale College National Leadership Seminar 2020 in Naples, Florida posted on YouTube received 3.8+ million views.
Government
“We Are Headed For Another Train Wreck”: Bill Ackman Blames Janet Yellen For Restarting The Bank Run
"We Are Headed For Another Train Wreck": Bill Ackman Blames Janet Yellen For Restarting The Bank Run
Yesterday morning we joked that every…

Yesterday morning we joked that every time Janet Yellen opens her mouth, stocks dump.
Yellen opens mouth and stocks dump
— zerohedge (@zerohedge) March 21, 2023
Well, it wasn't a joke, and as we repeatedly noted today, while Jerome Powell was busting his ass to prevent a violent market reaction - in either direction - to his "most important Fed decision and presser of 2023", the Treasury Secretary, with all the grace of a senile 76-year-old elephant in a China market, uttered the phrase...
- YELLEN: NOT CONSIDERING BROAD INCREASE IN DEPOSIT INSURANCE
... and the rest was silence... or rather selling.
Commenting on our chart, Bloomberg's Mark Cudmore noted it was Yellen who was "to blame for the stock slump", pointing out that "the pessimistic turn in US stocks began within a minute of Janet Yellen starting to speak."
The S&P 500 rose almost 1% in the first 47 minutes after the Fed decision. Powell wasn’t the problem either: the index was 0.6% higher in the first 17 minutes after his press conference started.
Why am I picking that exact timing of 2:47pm NY time? Because that is the minute Yellen started speaking at the Senate panel hearing. The high for the S&P 500 was 2:48pm NY time and it fell more than 2.5% over the subsequent 72 minutes. Good effort.
Picking up on this, Bloomberg's Mark Cranfield writes that banking stocks globally are set to underperform for longer after Janet Yellen pushed back against giving deposit insurance without working with lawmakers. He adds that "to an aggressive trader this sounds like an invitation to keep shorting bank stocks -- at least until the tone changes into broader support and is less focused on specific bank situations." Earlier, we addressed that too:
*YELLEN: NOT CONSIDERING BROAD INCREASE IN DEPOSIT INSURANCE
— zerohedge (@zerohedge) March 22, 2023
At least until spoos drop below 4K again
Looking ahead, Cranfield warns that US financials are likely to be the most vulnerable as they are the epicenter of the debate. Although European or Asian banking names may outperform US peers, that won’t be much consolation for investors as most financial sector indexes may be on a downward path.
The KBW bank index has tumbled from its highs seen in early February, but still has a way to go before it reaches the pandemic-nadir in 2020. Traders smell an opening for a big trade and that will fuel more downside. Probably until Yellen blinks.
And if Bill Ackman is right, she will be doing a whole lot of blinking in days if not hours.

While we generally make fun of Ackman's self-serving hot takes on twitter, today he was right when he accused Yellen of effectively restarting the small bank depositor run which according to JPMorgan has already seen $1.1 trillion in assets withdrawn from "vulnerable" banks. This is what Ackman tweeted:
Yesterday, @SecYellen made reassuring comments that led the market and depositors to believe that all deposits were now implicitly guaranteed. That coupled with a leak suggesting that @USTreasury, @FDICgov and @SecYellen were looking for a way to guarantee all deposits reassured the banking sector and depositors.
This afternoon, @SecYellen walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered.
We have gone from implicit support for depositors to @SecYellen explicit statement today that no guarantee is being considered with rates now being raised to 5%. 5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don’t accelerate effective immediately.
Ackman concluded by repeating his ask: a comprehensive deposit guarantee on America's $18 trillion in assets...
A temporary systemwide deposit guarantee is needed to stop the bleeding. The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back.
... but as we noted previously pointing out, you know, the math...
Math: $18 trillion in deposits, $125 billion in the deposit insurance fund. https://t.co/Zsu2RsJk41 pic.twitter.com/nb3Ypnt1gd
— zerohedge (@zerohedge) March 21, 2023
... absent bipartisan Congressional intervention - which is very much unlikely until the bank crisis gets much, much worse - this won't happen and instead the Fed will continue putting out bank fire after bank fire - even as it keeps hiking to overcompensate for its "transitory inflation" idiocy from 2021, until the entire system burns down, something which Ackman's follow-up tweet was also right about:
Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero. When combined with the higher cost of debt and deposits due to rising rates, consider what the impact will be on lending rates and our economy.
The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital.
Trust and confidence are earned over many years, but can be wiped out in a few days. I fear we are heading for another a train wreck. Hopefully, our regulators will get this right.
Narrator: no, they won't.
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