#200 Chris Whalen: The Fed 'Jumped The Shark' With Its Rate Cut
The Julia La Roche Show
Intro
This chapter discusses the Federal Reserve's decision to cut interest rates by 50 basis points, and its implications for the banking sector. The episode also highlights upcoming bank earnings, current financial risks, and potential influences of the election on the market.
Investment banker and author Chris Whalen, chairman of Whalen Global Advisors, who is also the author of The Institutional Risk Analyst, returns for episode 200 to discuss the economy, the Fed, upcoming bank earnings, the 2024 election, and more.
✨ This episode is sponsored by Public.com. Lock in your 6.6% yield: https://public.com/julia ✨
Paid endorsement for Public Investing, Inc. Not investment advice. All investing involves the risk of loss, including loss of principal. Brokerage services for US Listed and registered securities, options and Bonds in a self-directed brokerage account are offered by Public Investing. ETFs, options and Bonds are available to US members only. *A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 fractional investment-grade and high-yield bonds. The 6.6% yield is the average annualized yield to maturity (YTM) across all ten bonds in the Bond Account, before fees, as of 9/18/2024. A bond’s yield is a function of its market price, which can fluctuate, and a bond’s YTM is “locked in” when the bond is purchased. Your yield at time of purchase may be different from the yield shown here. The “locked in” YTM is not guaranteed; you may receive less than the YTM of the bonds in the Bond Account if you sell any of the bonds before maturity, or if the issuer calls or defaults on the bond. While corporate bond yields should fall in reaction to a Federal Reserve rate cut, we cannot know whether that will be true of the bonds in the Bond Account, how quickly bond yields will respond, or how much they will decline. Public Investing charges a markup on each bond trade. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. Fractional Bonds also carry risks including liquidity risk, interest rate risk, credit risk, inflation risk, and potential tax liabilities. Read more about the risks associated with fixed income and fractional bonds and learn more about the Bond Account at https://public.com/disclosures/bond-account.
Links:
Twitter/X: https://twitter.com/rcwhalen
Website: https://www.rcwhalen.com/
The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/
Stanley Middleman book: https://www.amazon.com/Seeing-Around-Corners-Achieving-Business/dp/B0D5PTSJVC/
00:00 Introduction and welcome Chris Whalen
01:10 Macro view and Federal Reserve actions
02:56 Fed's rate cut mistake and implications
05:14 Fed's credibility and narrative challenges
07:12 Global economic outlook and banking sector issues
09:13 Inflation and its impact on different economic segments
12:09 Analysis of proposed first-time homebuyer policy
15:01 Discussion on oil markets and OPEC
16:48 US 10-year yields and mortgage rates
19:46 Outlook for upcoming bank earnings
22:19 Basel Accord and banking regulation issues
26:25 Market risks and bank solvency concerns
28:16 Implications of rising 10-year Treasury yields
30:36 2024 US election outlook and key issues
33:00 Closing thoughts and upcoming book releases
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