Sorry Campers, The Fed Is Not Riding To The Rescue

seekingalpha04-12

Wednesday might have marked a significant turning point for the market and investors.Expectations for cuts to the Fed Funds rates continued to be pushed back as inflation continues to be stubbornly "...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSorry Campers, The Fed Is Not Riding To The Rescue\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-12 03:08 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4683342-sorry-campers-the-fed-is-not-riding-to-the-rescue><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wednesday might have marked a significant turning point for the market and investors.Expectations for cuts to the Fed Funds rates continued to be pushed back as inflation continues to be stubbornly \"...</p>\n\n<a href=\"https://seekingalpha.com/article/4683342-sorry-campers-the-fed-is-not-riding-to-the-rescue\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NYCB","symbol_name":"纽约社区银行","start_time":0,"source_url":"https://seekingalpha.com/article/4683342-sorry-campers-the-fed-is-not-riding-to-the-rescue","article_id":"2426887294","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2012733604/image_2012733604.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2426887294","pubTimestamp":1712862493,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Wednesday might have marked a significant turning point for the market and investors.Expectations for cuts to the Fed Funds rates continued to be pushed back as inflation continues to be stubbornly \"s","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NYCB":"纽约社区银行","BK4585":"ETF&股票定投概念","LU2023250843.SGD":"Allianz Thematica Cl AT Acc H2-SGD","LU2023250504.SGD":"Allianz Thematica Cl AMg DIS H2-SGD","BK4211":"区域性银行","LU1721428933.USD":"法巴全球经典环境基金RH MD Dis","BK4535":"淡马锡持仓","BK4516":"特朗普概念","BK4195":"互助储蓄与抵押信贷金融服务","BK4588":"碎股","BLDR":"Builders FirstSource","LU1814569148.SGD":"WELLINGTON GLOBAL QUALITY GROWTH \"D\" (SGDHDG) ACC","URI":"联合租赁","LU0868494617.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) ACC","BK4086":"建筑产品","LU1917777945.USD":"安联专题基金Cl AT Acc","BK4104":"贸易公司与经销商","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","KRE":"区域银行指数ETF-SPDR KBW","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC"},"translate_title":"抱歉，营员们，美联储不是来救援的","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"US2Y.BOND":1,"US12M.BOND":1,"US10Y.BOND":1,"URI":1,"NYCB":1,"US30Y.BOND":1,"US3Y.BOND":1,"BLDR":1,"KRE":1,"US5Y.BOND":1,"US6M.BOND":1,"US7Y.BOND":1,"US912797FH58.BOND":0.6,"US912796CX52.BOND":0.6,"US912797HH31.BOND":0.6,"US912797FS14.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"US912797HG57.BOND":0.6},"content_text":"Wednesday might have marked a significant turning point for the market and investors.Expectations for cuts to the Fed Funds rates continued to be pushed back as inflation continues to be stubbornly \"sticky.\"Combined with deteriorating credit conditions, the market seems very vulnerable to a significant pullback.In the paragraphs below, we highlight some of the dangers in the market investors are overlooking as potential help from the Federal Reserve continues to be pushed out on the horizon.   mikkelwilliam/E+ via Getty Images Wednesday was a true inflection point for the market and investors, or it should have been, at least. In a series of recent disappointing readings on the inflation front, the March CPI report came in slightly hotter than expected on Wednesday. This triggered a selloff in treasury bonds and the yield on the 10-Year Treasury (US10Y), which ended the day at 4.55%. Investors did breathe a slight sigh of relief Thursday morning when the March PPI reading came in slightly better than expectations. All the major indices ended down around one percent on Wednesday, but that does not give a good summary of the damage that was inflicted on the more interest sensitive areas of the market. Real Estate was the worst performing of the 11 sectors in the S&P on the day and ended Wednesday, down just over four percent. Small caps were also pummeled, with a decline of north of 2.6%. Seeking Alpha Especially troubling was the action in the regional banks. The SPDR® S&P Regional Banking ETF (KRE) got clobbered and fell nearly five percent on the day. The 2024 poster child for the problems in the regional banking system, New York Community Bancorp, Inc. (NYCB) was off eight percent on the day and closed Wednesday under the $3 level. All the good vibes from the bank's $1 billion equity infusion a month ago have almost entirely dissipated. The bank is also paying the highest online rate in the country for deposits, which could be interpreted as a sign of desperation. Higher rates will only make the deteriorating conditions through most of the credit markets more dire. According to a just-released report from the Federal Reserve Bank of Philadelphia, credit card delinquency rates reached their highest level in this cycle in the fourth quarter of 2023. Almost 3.5% of credit card balances were at least 30 days past due as of the quarter's end. With credit card balances at over $1.1 trillion and interest rates on credit cards at record highs, this situation is bound to get worse before it gets better. Credit card delinquencies peaked in the second quarter of 2009 at 6.7%, as a point of reference. The low for this cycle was just under 1.6% in the third quarter of 2021. Auto loan default rates are at their highest rate in this century as well. The backdrop for Commercial Real Estate, or CRE, debt also continues to get demonstratively worse. This is a topic I hit upon once again in this article. Real estate data compiler CRED iQ, which was established in 2020, is reporting their CRE loan distress rate for all commercial property types rose 28bps in March on a month-over-month basis to 7.61%. This was an all-time high since this report started to be produced. Leading the way was a 108bps jump in retail, while the distress rate in the hotel segment jumped 80bps to 7.7%. Office remains the sector with the highest distress rate. Some 37% of this distress loan pool are past their debt maturity dates and have stopped making monthly payments. The latest bump up in yields to north of 4.5% is likely going to freeze the housing market further and be a tailwind for overall spending on construction. At the start of the week, the average 30-Year fixed mortgage rate was a bit over 7.4%, compared with just over three percent at the start of 2022. I recently penned an article on United Rentals (URI) and a piece on Builders FirstSource, Inc. (BLDR). Both companies' customers are in the single family, multifamily and commercial construction space and both stocks have projected free cash flow yields in FY2024 significantly under the \"risk-free\" yield on short-term treasuries. The stock of United Rentals fell over two percent in trading Wednesday, and Builders FirstSource declined over six percent. These stocks as well as most shares connected to the construction space probably have more downside in the months ahead given the \"higher for longer\" interest rate scenario. Seeking Alpha At the beginning of the year, the expectations based on futures was for six cuts to the Fed Funds Rate, with the first cut happening at the March FOMC meeting. Before the start of April, the new expectation was for three interest rate cuts in 2024 with the first action to take place at the June FOMC meeting. After Wednesday's CPI report, the chances of a rate cut in June plummeted to just under 20%. The \"new\" expectation is for two rate cuts in 2024, with the market somewhat divided on whether the first action will take place in July or September.   10-Year Treasury Yield (MarketWatch) One of the primary backdrops behind the impressive rally for the overall market since the lows of late October was that interest rates would drop significantly in 2024 as inflation continued to drop. Neither of these optimistic scenarios has panned out to date. The yield on the 10-Year Treasury has moved from just under four percent at the start of this year to over 4.5%. Despite this and the continued deterioration in several core credit markets, stocks have still staged an impressive rally in 2024, with the S&P opening the year with its best quarterly performance since 2019.  Given this, it feels like a \"reality check\" for investors is on the near-term horizon as it becomes clearer that the Federal Reserve is not going to ride to the rescue as expected at the start of this year and credit conditions deteriorate further. With three-month Treasuries (US3M) yielding right at 5.4%, discretion feels like the better part of valor here. Investors should act accordingly, as the chances of lower entry points on the horizon seem elevated.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2426887294"}