ODEON CAPITAL CONVERSATIONS: Recent Episodes
Odeon Conversations
Deep dive into all things money and markets with leading industry veterans. This program of well-informed conversations and debate features the famed bank analyst and media personality Dick Bove, chief financial strategist at Odeon Capital Group, and Mathew Van Alstyne, Odeon managing partner and co-founder. Odeon is a full-service independent broker/dealer and investment bank. This podcast is hosted by John Aidan Byrne, an award-winning business journalist.
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Bank earnings season is well underway with DICK BOVE, the dean of bank analysts, concluding the sector’s outlook is bleak. Four of Wall Street’s premier league banks — JP Morgan, Chase, Citigroup and Bank of America — reported on Friday. A multitude of write offs and some $2.9 billion in charges linked to the rescue of regional banks weighed heavily on results. Citigroup reported a quarterly loss of $1.8 billion and announced it would eliminate 20,000 jobs worldwide, or 10 percent of its workforce. BOVE, chief financial strategist at ODEON CAPITAL GROUP, says a fundamental shift is underway in US banking as new rules and regulations are forcing banks to offload assets and become more risk averse. “The US government does not want the banks to grow,” says BOVE. In this changed environment, there will be winners and losers, he says.
Why has the US economy defied Wall Street expectations and skirted recession? By some measures, the economy should already have been in sharp contraction as rising interest rates, borrowing costs and inflation pinch consumers. BOVE traces the surprising resiliency of the US economy to the massive stimulus spending during the Covid lockdowns. That spending saw consumer net worth grow by $41 trillion from the start to the official end of the Covid lockdowns from early 2020 to the middle of 2023, according to BOVE.
Still, MAT VAN ALSTYNE, says polling shows American consumers are feeling downbeat on the economy in sharp contrast to the upbeat message of the official data. “People don’t feel good,” adds VAN ALSTYNE, ODEON co-founder and managing partner. “We have rents rising, high rates, the world seems to be chaotic and things are falling apart.” Elsewhere, the CONVERSATION examines the SEC voting to expand investors' ability to buy cryptocurrency in the form of ETS and mutual funds. And there’s more. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE
Questions & Comments: podcast@odeoncap.com
Lies, damn lies and statistics? DICK BOVE, once again, challenges the US Bureau of Labor Statistics (BLS), this time attacking its announcement that the US economy generated 216,000 jobs in December as the unemployment rate held steady at 3.7 percent. Using government data on hirings, layoffs, people quitting jobs and hourly wages, BOVE concludes December’s BLS report is widely off the mark. “We lost 150,000 jobs last month,” says BOVE, chief financial strategist at ODEON CAPITAL GROUP. “It’s an outrageous misstatement of these numbers by the press that creates major losses in the hands of investors,” he adds.
In fact, BOVE sees weaker signs in the labor markets than is acknowledged by other analysts. Are we therefore, inching ever closer to that long anticipated recession? The CONVERSATION examines the US money supply which BOVE has been tracking for months. The latest data shows the M2 money supply continues to shrink with the first significant drop in M2 since the Great Depression. Some analyst see that as a harbinger of recession. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says BOVE’S analysis of the US Money Supply is on target.
Meanwhile, bank earnings season is upon us. BOVE, a veteran bank analyst, expects dismal results and explains why. Will we see a sharp decline in 2024 in management fund fees for ETF mutual funds and other funds? One report hints at fee reductions. The CONVERSATION also looks at the lessons of history – how many nations supposedly neutral, reportedly profiteered by quietly working with the Third Reich. What might this suggest about the stance of “non-aligned” nations today as the brutal war in Ukraine grinds on, asks our host JOHN AIDAN BYRNE.
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All eyes are on the US Fed and Central bankers worldwide at the start of 2024. Investors are increasingly convinced this year will see a pivot to lower interest rates, and the end of money tightening. This same money tightening saw the Fed's benchmark overnight interest rate reach the current 5.25% to 5.50% range. Federal Reserve posts suggest a possibility the Fed could cut interest rates as much as six times in 2024, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. BOVE believes the Fed’s approach will be measured and rate cuts may not begin until the middle of 2024. However, the real question is whether companies will benefit more from interest rate cuts than from a diminution of inflation.
Thus opens a lively exchange on conflicting reports on company pricing policies at the peak of our recent inflation. BOVE cites various studies and reports, and identifies the term ‘greedflation,’ coined by former Labor Secretary, ROBERT REICH. The claim is that many companies were able to significantly expand profit margins with no consumer push back as prices escalated. JOHN AIDAN BYRNE presents a study showing how companies grew margins by a median of 49 percent. BOVE concludes that if indeed companies were engaged in ‘greedflation’ then the path to profitability in 2024 will be through expanded unit sales.
The CONVERSATION looks at some upsides of falling interest rates. BOVE notes that the Federal government debt could plunge to a level below 2022 fiscal total with a fall in interest rates. Declining rates should be a boost for consumers. Still, BOVE believes the US economy is really slowing down despite increased holiday spending.
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In our final episode of 2023, DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, explains his rationale for his upgrade of five bank stocks, from Hold to Buy: Bank of America Corp (NYSE:BAC), Wells Fargo & Company (NYSE:WFC), U.S. Bancorp (NYSE:USB), PNC Financial Services (NYSE:PNC), and Truist Financial Corp. (NYSE:TFC).
It could arguably be the handiwork of the Federal Reserve, which has sent clear signals that the war against inflation is over. After a massive series of rate hikes, the next step is the other direction, rate cuts, a move which factors into BOVE'S latest outlook for bank stocks.
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Is America now in recession, or within striking distance? DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, thinks so. As the US stock market skyrockets in anticipation of a series of interest rate cuts in 2024, BOVE sees huge trouble in sections of the US economy. Forget about the standard textbook definition of recession—two consecutive quarters of declining GDP—the cracks are already appearing. Negative equity on automobiles in America, for instance, is at the highest level in three years. (Two consecutive quarters of declines are not always applied in the designation of recessions today, according to MAT VAN ALSTYNE, recalling the most recent bouts of recession.)
While investors anticipate rate cuts, BOVE says the Fed has muddied the waters with conflicting communications from Fed Chair Jerome Powell, and separate comments by Fed governors. "Investors don't care, they see inflation has come down and they see rates coming down," he added.
BOVE is out with a new report. Who Owns the US Federal Debt? Who Will Pay For It? With the US National Debt at over $33 trillion and rising, deficit spending could hit some $2.2 trillion in fiscal 2023. Now foreign buyers of US Treasuries are scaling back, raising questions on who will step in. Meanwhile, the brutual war in Ukraine continues to grind on. "My view is that Russia is winning, " says BOVE, "not so much as in Ukraine but in the global financial system." Joining the CONVERSATION, our host, JOHN AIDAN BYRNE, outlines Putin's strategy for leveraging the exit of foreign companies from Russia to his advantange, a tax that has contributed to his nation's coffers.
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The Annual Senate hearing on US banking was different this year, turning most of the attention to a single topic—the proposed new banking regulations that would radically reshape the industry. In years past, the committee grilled the assembled CEOs of America’s top banks on a wide range of topics, from assisting underserved communities to community development. Not this year as the leaders of eight banks, among them Jamie Dimon, CEO of JP Morgan and Bryan Moynihan of Bank of America, gathered in DC.
As DICK BOVE recalls, there was widespread criticism of the new rules on both sides of the aisles and among the bankers. BOVE, chief financial strategist at ODEON CAPITAL GROUP, said the industry view is that the rules would reduce bank lending as well as hurt the US economy. “This raises the question as to why are these regulations being discussed when everyone is against them,” according to BOVE. “The reason is that the government cannot meet its obligations.” In an interesting twist, as banks' capital requirements increase, and as they scale back in a range of money making activities, US banks may become larger buyers of US Treasuries. The CONVERSATION assesses one strategy— stock buybacks — many US banks and other public companies have used to shore up their stock price. “I believe in the free markets but this is disgusting,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner.
Meanwhile, BOVE is out with his latest measure of the US Money Supply. He explains the methodology and why this is substantially larger than the Fed's official count of the US Money Supply. The CONVERSATION also parses the latest data on inflation and labor as the Fed deliberates this week on the trajectory of US interest rates. While inflation continues to cool, there may be some evidence of “a little bit more heat” in the inflation numbers than is immediately evident, according to VAN ALSTYNE. BOVE reports on wage data based on college and non-college educated workers. JOHN AIDAN BYRNE, our host, quotes the opinion of one commentator: US universities are pursuing political agendas instead of excellence. Elsewhere, we look at significant global events.
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With the US economy still perked up with trillions of dollars created during the Covid-19 pandemic to stimulate the financial system, with inflation easing, and expectations of interest rate cuts in 2024, the markets are responding in kind. The S&P 500 is hot, rising 8.9% in November, investment banking is booming, and there's a feel-good nationwide ripple effect. Homeowners too, are enjoying a surge in home equity values, an average of $95,900 in the past three years. That's on top of earlier gains fuelled in part by stimulus payments, and outlays during the Covid-19 pandemic
Still, it is a tale of two economies. "The rich are really getting richer now, and the poor are up against significant issues," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. "Are the consumers with the most money going to continue to drive the game? Or, is it now the consumers who are unable to pay their loans? Will they drive this game?"
Meanwhile, interest rates cuts are the buzz of Wall Street. Many investors see a series of rate cuts by the US Fed in 2024. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says it may not be that straightforward. "The Idea that the Fed commences an easing cycle voluntarily," he says, "by preemptively cutting rates because they think they have gone far enough [and] now want to engineer a soft landing - that is phenomenal news." But Van Alstyne warns it may not be that simple.
Elsewhere, BOVE doubles down on his research on US housing trends, repeating his expectations for a housing bust based on demographic and census trends. BOVE is highly critical of new research on housing by the Harvard University Joint Center for Housing. "The university should be ashamed of itself for producing this dribble," he says. JOHN AIDAN BYRNE, our host, questions BOVE on his basic assumptions from regional trends to evidence of vast tracks of ghost towns across America.
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US banks are staring at rising loan losses among clients in the private equity markets. These customers, operating conglomerates and other businesses, are struggling on debt repayments as higher interest rates take a toll, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, in a new report. “You’d be amazed if you subtracted the net increase in debt from the cash flow statements of American companies, at how many are not generating enough cash,” he says. BOVE is forecasting multiple billions of dollars in bank loan losses in this sector in the coming months. “These losses are going to bankrupt a lot of companies,” he adds.
Meanwhile, BOVE says it’s premature to suggest the Fed is ready to call it done in its so far successful campaign to tamp down inflation. In good part, that’s because of the Fed’s tight monetary policy, a policy which has a direct influence on interest rates. Total assets at the Fed have been in steady decline for months. BOVE says the Fed may also raise the Fed Funds rate at least one more time, meaning a hike of 25-basis-points. Higher rates have inflicted financial pain all around, including in debt financing costs of the US government. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the government has, nonetheless, taken its eye off the financial ball, as political dysfunction rages in Congress.
Elsewhere, we look what it takes to be regarded as “rich and affluent” in America today as the ranks of millionaires swell to record levels. JOHN AIDAN BYRNE presents historical data of how being a millionaire about a century ago in America had a different financial meaning than today. We also look at global events.
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In an in-depth new report, DICK BOVE sees the makings of a US housing bust. The latest data from the National Association of Realtors shows the pace of home sales plunged to its lowest level in more than 13 years in October, with an uptick in the median home prices. High mortgage rates are cited for the tightening conditions, falling home sales and reduced inventory.
BOVE looks beyond the latest malaise. Housing unit growth now exceeds the growth in the US population, he says. Moreover, the money supply that funded growth is now declining. "I think we're headed for a peak in housing activity," according to BOVE, chief financial strategist at ODEON CAPITAL GROUP. "You'll see a decline in housing activity; you'll see a decline in production, housing prices are going to come down. There's going to be loan losses."
Meanwhile, the pace of inflation is slowing with a range of commodity prices in sharp decline. Some retailers see a period of deflation. US government data shows, nonetheless, steady if not strong consumer purchasing activity. Consumers are enjoying the "wealth effect" of a rising stock market, with growing home equity fuelling a feel good spending climate, according to MAT VAN ALSTYNE, ODEON co-founder and managing partner. BOVE also discusses developments in the bank sector, from layoffs at Citi to the constraints of new banking regulations. Joining the CONVERSATIONS is our host, JOHN AIDAN BYRNE.
Questions & Comments: Podcast@odeoncap.com
Inflation eased in October with consumer prices up 3.2% from a year ago, the Labor Department reported on Tuesday November 14. That's a smaller annual increase in the consumer price index (CPI) than the month before when inflation came in at 3.7%. Inflation was flat on a monthly basis. "The markets have taken off like a rocket today under the assumption that inflation has been beaten," said DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. The Fed, which embarked on an aggressive interest rate hike campaign, is credited for the sharp fall in inflation from its peak of 9.1 percent in June 2022. "The Fed is now in a very strong place," says MAT VAN ALSTYNE, ODEON co-founder and managing partner.
Meanwhile, BOVE is out with a comprehensive new report on the unprecedented rise in the net worth of American households and non-profit institutions. "Americans are filthy rich. Thousands are becoming millionaires every year," he says. Still, VAN ALSTYNE says as many as 40 percent of Americans are living paycheck to paycheck. Our host, JOHN AIDAN BYRNE, reminds us of the Gini index, or Gini co-efficient of income inequality, frequently referenced by BOVE and VAN ALSTYNE, which paints a dark picture of America's income distribution. Meanwhile, there's inflation and then deflation. Inflation is finally emerging in Japan after years of falling prices. China, on the other hand, is battling deflationary pressures. China has many challenges to overcome in its economy, according to BOVE.
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US job growth cooled in October as the Labor Department's closely watched employment report showed the unemployment rate rising to 3.9%, the highest since January 2022, up from 3.8% in September. Employers added 150,000 jobs, half the September gains, and the smallest increase in jobs since June, according to the Bureau's establishment numbers. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, calls the Bureau's reporting 'specious.'
Still, BOVE says the evidence points to a deterioration in the labor markets. The economy on the jobs front is 'slowing meaningfully,' he adds. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the Bureau's report shows a massive number of the jobs created were in part time employment. Many Americans are now holding multiple, part-time jobs to make ends meet, VAN ALSTYNE says. "This report is a disaster," he adds. Meanwhile, another sign of stress in the US economy comes from the latest data on auto loan sales and delinquencies.
Elsewhere, the CONVERSATION looks at the explosion in assets under management (AUM) in the wealth management industry. Some of the largest asset managers have seen a surge in money inflows. BOVE cites Bank of America which estimates industry AUM has soared $40 trillion in the past decade to a staggering $65 trillion. Where is this money coming from, BOVE asks. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE.
With wars and uncertainty across the globe—and the US mired in political polarization and economic fear—the CONVERSATION casts a wide net from the US to China. China, the world's second largest economy, is showing fresh signs of weakening. The CONVERSATION asks pointed questions on the latest US economic growth numbers. US gross domestic product, surged at a 4.9% annualized pace in the third quarter, eclipsing the 4.7% estimate. Was it too good to be true? DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, explains why the headline number is a misreading of the true state of growth this past summer. Growth was milder than blockbuster. In part, that's because GDP for the third quarter is padded with inventory building.
Meanwhile, as American consumers pile on more debt, Capital One reports a rise in its customer delinquency rates. The CONVERSATION plays an electronic program that provides self-directed scenarios for hypothetically reducing America's balooning deficits, and national debt. "You have a revenue problem, where the US is going to run out of money. You have a spending problem where the US is going to run out of money," says MAT VAN ALSTYNE, co-founder and managing partner at ODEON, explaining the various options for bolstering America's fiscal health. "So, you can either cut spending, or increasing revenue, or do a combination of both." Our host, JOHN AIDAN BYRNE, urges restraint on reform of America's much cherished Social Security program. Elsewhere, BOVE offers more insight on his recent Open Letter to JP Morgan. BOVE also questions the official reason JP Morgan's CEO, JAMIE DIMON, is planning to sell one million shares of the company stock.
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The U.S. government posted a $1.7 trillion budget deficit in fiscal 2023, a significant 23% jump from the prior year. Revenues declined and outlays for Social Security, Medicare and record-high interest costs on the federal debt raced ahead. "Nobody in Washington is interested in controlling spending," warns DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. The Treasury Department said the deficit came in as the largest since a $2.78 trillion gap in 2021 padded by COVID spending. ODEON co-founder, MAT VAN ALSTYNE, expressed shock at the plunge in individual income tax collections in the current fiscal year.
Meanwhile, US car loan delinquencies are at a near three decade high, and consumers are defaulting on credit car loans at the highest pace in 10 years. Once again, some market experts are sounding the alarm for the long anticipated recession. Abroad, there is trouble in the Middle East, Ukraine and domestic tension in America. Still, the lessons of history may offer us some relief and positive hope for the future, says BOVE. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE
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It's bank earnings seasons with the four big US banks and one investment bank having so far reported. The picture is positive as measured by earnings. But the underlying picture shows challenges for the banks from pressure to increase their equity to proposed new rules condemned by the industry. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, brings us his analysis on bank earnings and the latest challenges.
Consumer spending exceeded expectation in September. Still, BOVE says the American consumer is showing signs of stress, laying out his case why spending is near a new tipping point. Meanwhile, the war between Israel and Hamas has shifted global dynamics, according to the Wall Street Journal. DICK and MAT VAN ALSTYNE, ODEON co-founder and managing partner share their views as investors wrestle with a changed and volatile environment. Elsewhere, there's the costly Green New Deal. Is it as clean as it may sound? We'll discuss. Joining the Conversation is our host, JOHN AIDAN BYRNE.
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The CONVERSATION shares some frank and timely commentary on the shocking tragedy in Israel as the world watched the deadly horror unfold. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP offers his thoughts. MAT VAN ALSTYNE, ODEON co-founder and managing partner, shares some personal history, and raises concerns about American leadership. "We need leaders who have a world vision, " he says. "What is America's role in Ukraine? Nobody could tell us! What is our goal in Israel? What is our goal in Taiwan?"
The CONVERSATION opens with a detailed examination of the latest US jobs numbers for September. With job gains wildly exceeding expectations, BOVE nevertheless explains why he is unimpressed. "I don't believe these jobs are creating any surge for the economy," he says. Our host, JOHN AIDAN BYRNE, presents some signs of green shoots in the manufacturing sector. Are these a positive start to a revival in the largely moribund US manufacturing sector? BOVE presents his outlook and analysis on US banks. "Bank stocks have been horrible performers," he says. What comes next for the unremarkable bank sector?
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DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, offers his case for what has driven the 10-year treasury yield to its highest level in 16 years. Borrowing costs are soaring. BOVE identifies the sharp reduction, over $1 trillion, in the US Money Supply for the rise in the 10-year yield. The US Treasury is feeling the ripple effects. “The Treasury is paying money to the Fed as it is losing money on its operations,” says BOVE. The CONVERSATION also discusses two opposite sides of the Fed’s latest challenges. Professor Jason Furman of Harvard says losses at the Fed Reserve don’t matter. Alex J Pollack, writing in The Hill, disagrees, describing the Fed’s accumulated operating losses “a landmark event.” BOVE explains why the losses impact the financial system in far-reaching and negative ways. “I feel the Fed is shrinking the money supply on purpose to drive up interest rates because they want the economy to slow,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner.
Meanwhile, our host, JOHN AIDAN BYRNE, opens up a CONVERSATION on the phenomena of celebrity TAYLOR SWIFT as sales for her concerts and appearances have sold out. BOVE shares some personal family stories on the SWIFT monetary bandwagon. US consumers have been splurging on experiences, travel and personal indulgences as housing prices soar, and as stark signs of consumer stress emerge. Elsewhere, we discuss the realities and concerns of the Green New Deal. BOVE presents his latest research on US banks amidst the continuing crisis in the sector.
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The US economy is at a pivotal moment as the Federal Reserve reduces its balance sheeting, shrinking it by 10.5 percent, of $940 billion in the past 18 months. Banks are losing deposits, money market funds are seeing outflows. This is a turning point, says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP as the economy faces heightened risks of recession. Many analysts were puzzled as to why the US economy has dodged a recession thus far. BOVE says one explanation is that the government propped up the economy with trillions of dollars in stimulus spending. But the game has now changed. The money supply is shrinking.
“There are bright spots in the economy,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner. “That is the present reality. But where are we going? That is the real question. The subjective realities are extraordinary negative on feelings about the US economy.” The CONVERSATION looks at the impact of higher interest rates on consumers struggling on repayments and debt servicing, and shifting more of their consumption to necessities. The manufacturing sector is weak. Is Made in America the way forward?
Meanwhile, there is world disorder. Is it spreading fast? Our host, JOHN AIDAN BYRNE, poses the question, citing one analyst who paints a grim view of the so-called rules based international order. The politics and implications of a US government shutdown is examined. DICK BOVE has the latest on US banks. “The banks are in trouble in the US,” he says, reprising his analysis of government plans to effective shrink the banking sector. Elsewhere, volatile China is in the spotlight once again.
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How do we understand the latest media tour by Treasury Secretary, Janet Yellen, as she touts reasons to be sanguine on the state of the US economy, in particular the US consumer? Consumers are feeling better about their personal finances though negative, nonetheless, on the overall state of the US economy, she asserted in an interview. Jobs are being created more evenly across the nation, and in areas once starved for middle class employment, she says, crediting recent legislation out of Washington. What’s the reality? On this episode, DICK BOVE,chief financial strategist at ODEON CAPITAL GROUP, asks has YELLEN embarked on the Democratic push for the Presidency, “by assuring the voter that all is well?” MAT VAN ALSTYNE, ODEON co-founder and managing partner, says there are a multitude of negative indicators of an imminent downturn. “There are a lot of tailwinds in this economy,” he says, “and it is unbelievable to me that the Fed is even considering raising interest rates.”
The CONVERSATION examines the recent comments in a firesidechat by JP MORGAN Chairman & CEO, JAMIE DIMON, on the state of global affairs. DIMON notes a major shift in our present realities, from global financial stability to war and peace and China. The mounting global debt crisis is a great cause of concern, he says, as is America’s over-the-top fiscal spending habits. Dimon is hugely disappointed too by the proposed new banking regulations. “Jamie Dimon is describing the very same issues we have been discussing here on our podcast,” says BOVE. Still, BOVE believes bank regulations are moving in theright direction, by striking a new tone on the need for more risk. Elsewhere, we look at China’s latest housing crisis and at the latest on inflation. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE.
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On August 29, 2023, the three major bank regulatory agencies issued a whopping 1,087-page set of new rules and regulations for the banking industry. The rules emerged following the recent failures of three regional banks which exposed financial vulnerabilities in the sector in this era of rising interest rates. After a comment period, the rules are expected to take effect in January 2024.
What are the long-term implications of these new rules? Bank analyst, DICK BOVE, says the rules certainly mean reduced risk for banks. But the rules also transfer huge risks to the non-bank sector which will impact the economy negatively, he says. Meanwhile, the US government is facing fresh challenges in containing run away spending as the deficit soars, says MAT VAN ALSTYNE, Odeon co-founder and managing partner.
Elsewhere, the CONVERSATION examines the Odeon Capital Group Money Supply, which shows the Fed did not capture the actual decline early enough in the US Money Supply as measured by its own data. On the global scene, we discuss trouble in Africa's hotspots and ask why did the leaders of China and Russia skips the recent G-20 Summit in India. Joining the CONVERSATION is out host, JOHN AIDAN BYRNE.
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Many economists had widely anticipated a US and global recession for the past 12 months, a recession that never materialized. With the US Fed aggressively hiking interest rates to tamp down sky-high inflation, the view was that it would result in a sharp rise in unemployment, as well as a steady decline in economic activity. Instead, the US economy has remained resilient, inflation has declined while employers have added 3.1 million jobs in the past 12 months.
But this much anticipated recession may just have been delayed a little bit longer. And when it erupts, it could be sharp and brutual. In a new report, DICK BOVE, forecasts a debt fuelled recession within the next 18 months. BOVE, chief financial strategist at ODEON CAPITAL GROUP, traces much of the origins of this next downturn to the overwhelming surge in the US money in the early 2020s in response to the Covid 19 pandemic. A new set of dominoes, he says, are likely in 2024:
*Consumer debt rising too rapidly
*Cost of that debt rising even faster
*Continued increases in wages, debt defaults starting to mount
*Money massively stimulating consumption rather than the vital production side of the economy.
"I believe that by the middle to the end of 2024, we're going to be dealing with debt servicing problems, and that's going to crash the economy," says BOVE.
Joining the CONVERSATION is MAT VAN ALSTYNE, ODEON co-founder and managing partner, as well as our host, JOHN AIDAN BYRNE.
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The CONVERSATION conducts a post mortem on comments by Fed Reserve Chairman, JEROME POWELL, in his speech last week in Jackson Hole, Wyoming. “There is this belief that he [Powell] doesn’t believe in what he says,” says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. But he warns: “The market should not ignore him. Inflation is not beaten.” POWELL also seemed to telegraph that the course of interest rates would be “data dependent,” according to MAT VAN ALSTYNE, ODEON co-founder and managing partner. (Case in point: US job openings dropped in July by morethan analysts had expected to a more than two-year low, providing new evidence for rate-setters that demand for workers is cooling.)
Either way, rising interest rates have negatively impacted US housing on several fronts. With the average 30-year fixed mortgage reaching its highest rate since 2001, home affordability and cost of ownership are pinching many buyers’ finances. DICK BOVE, once again, sounds the alarm for the real possibility of a housing crisis. Still, there’s a solution for the impaired financial mechanism setting up the housing market for potential collapse, according to BOVE. Private capital would be unleashed, and more affordable homeownership would be within buyers reach if housing agencies, Fannie Mae and Freddie Mac, are taken out of conservatorship, he says.
Elsewhere, the CONVERSATION looks at the latest stresses on banks from capital to the retention of customer deposits. On the global scene, China’s economy remains deeply challenged while Germany’s is shrinking. “[Global] debt got us to where we are now, and debt won’t be able to take us out,” says BOVE. Joining the CONVERSATION is JOHN AIDAN BYRNE.
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With markets about to parse the forthcoming speech this week of US Fed Chairman, JEROME POWELL at Jackson Hole, Wyoming, all eyes were suddently on mortgages rates, which have hit a 23-year high on 30-year fixed loans. Home affordability in America is becoming more expensive, demand is far outpacing supply, and the funding mechanisms for home mortgages are creaking. "We're seeing a breakdown in the housing financing system, " says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. "I think the possibility of a housing crash is very real." MAT VAN ALSTYNE, ODEON co-founder and managing partner, says in the event of a housing crash, it is conceivable the Fed would intervene to control the financial debacle with a series of familiar measures to stimulate liquidity.
Banks continued to be squeezed with S&P following Moody's and Fitch in downgrading banks. The CONVERSATION examines the growing risk now facing the US bank system as regulators step up their capital requirements for lenders. On the positive side, after a sustained slowdown, investment banking is showing signs of renewal as deal making and stock offerings slowly return. Meanwhile, BOVE lays out his case for why Goldman Sachs CEO, DAVID SOLOMON, has positively contributed to the financial strength and future of the fabled investment bank. Elsewhere, we look at China and thedisturbing signs of economic decline. Joining the CONVERSATION is JOHN AIDAN BYRNE.
Questions & Comments: Podcast@OdeonCap.com
Investing in US bank stocks the past five years has disappointed many investors. "The result was not a random event," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, outlining three reasons why he believes the industry performed so badly relative to the market overall. The reasons include the steady climb in US interest rates as the Fed embarked on its campaign to tame runaway inflation.
Many banks are now scaling bank as lending is curbed, and as rating agencies signal warnings, downgrade a roster of banks and put others on a watch list. "My bigger issue is this," says MAT VAN ALSTYNE, ODEON co-founder and managing partner, referring to the regulatory environment. "The United States government is telling the world: We don't want regional banks; we don't want smaller banks because we have different rules for big banks - so the goal is to become a big bank, or get out of the way."
Elsewhere, the CONVERSATION looks at developments, political and economic, in China, Russia and compares their performance and stability with the US. As China grapples with multiple economic challenges, BOVE says China's banks in the nation's troubled real estate sector would have declared bankruptcy if they had been operating under US rules. Host JOHN AIDAN BYRNE notes how global investment flows have been shifting since COVID-19 altered dynamics. The US, he adds, has seen a pick up in foreign direct investment, for example.
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Wall Street is paying close attention to the latest data on labor markets and inflation, as well as on wage growth and more, as the Fed weighs up its next move. For DICK BOVE, the Fed seems increasingly likely to extend its interest rate hike campaign to finally tamp down inflation closer to its target rate of 2.00 percent. BOVE, chief financial strategist at ODEON CAPITAL GROUP, continues to see evidence of a pick up in the pace of inflation. That would factor heavily into the Fed's decision on US interest rates, which many analysts nevertheless expect to see headed back down in the next 12 months. MAT VAN ALSTYNE, ODEON co-founder and managing partner, sees that latter course unfolding. In his view, that's because of the perilous state of US government debt. "What we're looking at is the complete collapse of the fiscal ability of the US government to function—and there's only one way out," says VAN ALSTYNE.
BOVE reports on the fast moving events in the US bank sector, including Moody's decision to cut the ratings of a roster of banks. Banks are also feeling more pressure from regulators, who BOVE says are taking extreme measures damaging the industry. "Banks are shrinking, or as I put it, they have gone on strike," he says. Elsewhere, the CONVERSATION strikes up a debate on falling levels of trust in US government and on US Supreme Court decisions which have roiled the nation. Joining the CONVERSATION, JOHN AIDAN BYRNE points out that the highest court in the land may be a scapegoat at large for a society in disarray.
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The white-hot stock market in the first half of this year, wage gains, a tight labor market, rising home prices— as well as falling inflation data—have contributed to a widespread view among many analysts that the US economy has avoided a major recession. A soft landing, if any, is now a popular narrative. But DICK BOVE is filled with conviction that our latest gains on the economy and inflation could soon be reversed. With wages rising faster than inflation, more people entering the workforce and the wealth effect of sharply higher asset prices from stocks to housing, the Fed may soon be back at the drawing board, he says. That's because of a return of a higher pace of inflation from inflation's recent low of 3 percent. In this scenario, the Fed would extend its interest rate campaign far longer than many have anticipated. "We're looking at an inflationary spiral, " says BOVE, chief financial strategist at ODEON CAPITAL GROUP. "I think the Fed will continue to raise interest rates. I don't think the conventional view is correct."
Meanwhile, regulators' efforts to supervise the troubled US banking sector could backfire. An acceleration in bank consolidations and hightened risks for the sector is predicted by BOVE. On the global front, the Conversation will look at the prospects for expanding investment opportunities in the African continuent bouyed by favorable demographics. China, meanwhile, is facing a plunging population more severe than officially reported, according to one analyst. Joining the Conversation is JOHN AIDAN BYRNE who poses the question: Is the current blistering streak for the stock market a symptom of an asset bubble that will burst?
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Stocks surged as Wall Street scaled back its recession fears, the S&P 500 trading at its highest level since April 2022, by the close of trading on Tuesday July 25. "Investors have changed their outlook on the economy," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. "They have made the decision that inflation is dead or dying, that there's one more final US rate hike. Jobs are continuing to grown." Still, there's a batch of negative indicators, including the bond market, which flies in the face of this stock market rally, according to MAT VAN ALSTYNE, ODEON co-founder and managing partner. Numerator's latest Consumer Sentiment Study also shows consumers' strong level of concerns about the US economy, says JOHN AIDAN BYRNE. Despite the high levels of public and personal debt, BOVE says it is still consistent with a growing US economy even as consumers run out of credit-fueled steam.
Meanwhile, BOVE explains why the FDIC has issued a warning to US banks on their uninsured deposits, the key element in the recent collapse of Silicon Valley Bank. BOVE also took aim at the FDIC, the US government agency which facilitates insurance for bank depositors. "The FDIC didn't recognizxe that the increase in interest rates could reduce the value of bank assts." Elsewhere, the CONVERSATION takes a closer look at the latest UN forecast on national populations. The EU countries are forecast to see a drop in populations. The US, meanwhile, is grappling with its own demographic crisis with repeared calls for a steady stream of immigrants.
Join ODEON CAPITAL CONVERSATIONS for a Live Webinar, Unmasking the Economy, hosted by Geeks, Geezers & Googlization, Thursday July 27 @ 11:00 AM ET on LinkedIn and YouTube.
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Stocks continued their recent upswing as investors absorbed a stream of quarterly earnings. The rally in part reflected a positive response to earnings reports from big banks like Bank of America (BAC) and Morgan Stanley (MS). A certain “euphoria” also gripped the markets as fears of recession and inflation eased. Is this positive momentum overblown? “You have to wonder if this euphoria is enough to carry the markets when the earnings are no longer there,” says veteran bank analyst, DICK BOVE. “Because the biggest problem for the banks is the fixed loans they own.” BOVE adds that pundits and some investors are missing the bigger picture on the economy and the banks. This includes the underlying reality of JP Morgan’s reported record profit and its earnings per share (EPS) buoyed by its recent acquisition of First Republic Bank’s assets in a government-sponsored deal. “We’re not out of the banking crisis,” says BOVE, chief financial strategist at ODEON CAPITAL GROUP. “The big banks have lost profits.”
Despite Treasury Secretary, JANET YELLEN, tamping down worries of an imminent recession—and economists dialing back the risks of a slowdown—the US and global economy may have entered its most uncertain phase in months. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says many are ignoring an important indicator. That’s the government bond market, which is signaling recession, he says. Moreover, US tax receipts are down, 20 percent year-on-year, another negative recessionary indicator. Piling on the debt burden, JOHN AIDAN BYRNE, notes the US national debt has soared by $1 trillion since the debt ceiling was lifted, much of that reflecting a catch up on stalled payments during the debt ceiling standoff. Still, total outstanding public debt has now reached $32.5 trillion.
Elsewhere, the CONVERSATION examines the rise of “non-bank” lenders, a sector competing with traditional banks that includes some pension funds, insurers, mutual funds, hedge funds and other institutions. According to the Financial Stability Board, these “non-banks” had $239 trillion on their books in 2021. “The risk of loan losses in this sector if staggering,” according to BOVE. Meanwhile, a surge in home equity lending is coming, says BOVE, as US homeowners tapped into the rising equity in their homes.
Watch the ODEON CAPITAL CONVERSATIONS Live Webinar Thursday, July 27, 11:00AM ET, hosted by Geeks Geezers & Googlization on LinkedIn and YouTube.
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US consumers are borrowing like gangbusters and spending heavily in a post-Covid world of destination travel, luxury purchases and more personal freedom. Yet there are signs consumers are also becoming tapped out as Covid savings evaporate and US household debt rises, a sum now hovering around $17 trillion. That could be a disaster for US banks, according to analyst DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. Many of the thousands of small to medium-sized US banks specializing in consumer lending, could be in the eye of a financial storm in our rising interest rate environment, BOVE says. "We'll see more failures," he adds, referring to a a group of approximately 3,500 lenders.
In one telltale sign of consumer stress: A surge in negative equity in the auto loan sector. This rise in bad auto loans is being watched closely for the impact on several banks active in the sector. Meanwhile, Federal regulators have issued reports on a key rump of US banks following annual audits known as 'stress tests.' BOVE repeats an earlier warning that the tests do not properly sum up the latest financial health of the banks. "I am repeating my warning because the banks are in trouble," he says.
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The latest quarterly GDP, January through March, shows the US economy grew at a 2 percent annual rate driven by consumers spending at the fastest pace in nearly two years. Real personal income rose 2.4 percent quarter-over-quarter on an annual basis. Exports grew 3.5 times faster than imports. These are some highlights of a report by DICK BOVE comparing and contrasting the upsides and downsides of the government's latest GDP numbers.
On the downside, he notes that growth in personal income is substantially offset by a surge in government transfer payments during the quarter. A massive proportion of spending is also directed at debt service payments. The bull case depends on continued momentum from consumers; the bear case argues this can't continue, according to BOVE, chief financial strategist at ODEON CAPITAL GROUP. US consumers are spending generously despite rising borrowing costs, a potential sign of lingering post-Covid feel-good optimism, according to MAT VAN ALSTYNE, ODEON co-founder and managing partner.
Meanwhile, BOVE is out with a scathing critique of the Federal Reserve, "The Last Straw. Is the Federal Reserve Deliberately Publishing Questionable Data?" BOVE notes, for example, that despite the latest bank stress test indicating US banks are in sound condition, the likelihood of more interest rate rises, "will intensify the problems that causes the recent bank failures." Joining the CONVERSATION is out host, JOHN AIDAN BYRNE.
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The past week has seen a series of sweeping global developments — from the military mutiny in Russia that was suddenly averted, to the historic US visit by India’s Prime Minister Narendra Modi. At the same time US Secretary of State, Anthony Blinken, met with Chinese President Xi Jinping in Bejing with trade and mutual cooperation on the table. These major events, amidst unfolding regional drama and changes, could portend opportunities for the US and free markets, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. “China took a major hit last week,” says BOVE. “But the biggest coup of all was India, they can’t be anti-US anymore.” The CONVERSATION looks in more detail at this seeming pivot in global commerce and trade. “China is an export dependent economy, if it does not export, it does not have an economy,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner, underlining one of China's main priorities and the benefits of peaceful co-existence with neighbors. What could go wrong? JOHN AIDAN BYRNE raises questions about the internal stability of the Chinese economy from high youth unemployment to a weak consumer sector.
New data from BOVE shows the US money supply as a share of the world’s money supply, has been steadily declining — from a high of nearly 90 percent in the 1950s to some 20 percent in recent years. We examine what that means for the greenback. The dollar is still the globe’s major currency. Despite a push by many countries to destabilize it, the US dollar is the main currency held by central banks worldwide. Elsewhere, the demographic crisis in Western nations continues with the sharp drop in US fertility rates offset by sustained levels of immigration. Finally, we look at the decline and fall of once mighty empires from the Roman to the British Empires.
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By one popular measure, the so-called M2, the US Money Supply is declining. However, by a broader count of the money in the financial system in America, known as the Odeon Cap Revised M3, the US money supply is expanding at a rapid pace, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. That is why he now sees the Fed coming back with two further interest rate rises in 2023, underscoring the Fed's own outlook. At its most recent meeting, the Fed kept interest rates unchanged at a range of 5.0% to 5.25% but signalled the possibility of ratcheting up rates twice later this year. BOVE says once he examined the data more closely, he was convinced these rates are on the cards. "What Fed Chairman [Jerome] Powell says, is what he means, " says BOVE. "We will have two more rate rises in the Fed Funds rate."
Rising interest rates raise the stakes for "breakage" in the US economy. The higher costs for capital and debt servicing is raising concern in many corners. A Federal Reserve report shows total US household debt of some $1`7.5 trillion. Credit card debt is escalating, hovering around $1 trillion. Business debt is at a record high. "We are overwhelmed with debt," says BOVE. "It is affecting the economy and the Fed." MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the Fed is in a tough corner. "It seems to be waiting for something to break and nothing is breaking," he adds. The financial services side of the economy is "stressed," according to BOVE. Meanwhile, the US dollar's future as a reserve currency is debated following recent remarks on the greenback by Treasury Secretary, Janet Yellen. BOVE suggests the dollar ultimately faces an inexorable decline given the weight of history. JOHN AIDAN BYRNE, our host, disagrees. He says a decline is not a foregone conclusion and points out recent setbacks in efforts by China and others to undermine the greenback. VAN ALSTYNE says there is no viable alternative today to the dollar as the anchor, or globe's reserve currency.
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The Federal Reserve’s campaign to tame inflation is making steady progress. US data from May showed a deceleration in price rises. The closely-watched Consumer Price Index rose 4% in May compared with a year ago, down from April’s 4.9% increase — the smallest monthly increase in more than two years, according to the US Bureau of Labor Statistics. Last June, inflation peaked at 9.1%. To be sure, it doesn’t mean the Fed is done with further rate rises — underlying price pressures remain. But the latest CPI set the markets abuzz with positive speculation as inflation moves closer to the Fed's 2.0% target. “It is our belief that inflation has been beaten,” says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. BOVE offers evidence that US inflation could drop more sharply as the money supply contracts and consumers run through excess cash. Housing was one of the standouts in the latest CPI, up 8.0% year-over-year. “It’s a lagging indicator,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner, noting how the latest CPI would likely have come in lower if housing was a more concurrent indicator. (On Wednesday, June 14, the Fed kept interest rates unchanged at a range of 5.00% to 5.25%. In a surprise to many watchers, however, the Central Banker issued projections of two additional quarter point rate hikes in 2023.)
Meanwhile, the pattern is repeating itself with inflation coming down across the globe. Still, there are notable and glaring exceptions from an eye-watering 155.8 % in Venezuela to 108.8% in Argentina. And there are no guarantees inflation has been finally throttled. A proposed currency board for Argentina, with the US greenback tied to the peso, would help stabilize the Argentine economy, says VAN ALSTYNE. Elsewhere, BOVE brings listeners up to date on the banking crisis and on the latest challenges. US banks are losing market share to rival lenders who face less regulation, and seemingly less stringent oversight. At the same time, US banks are not seeing enough deposit in-flows to maintain optimum levels of lending. Joining the CONVERSATION is JOHN AIDAN BYRNE who shares his thoughts on the plight of the American middle class, as we look more closely at the reality of the American Dream. Is it still alive and well?
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The CONVERSATION strikes a note of incredulity with the publication of the latest Bureau of Labor Statistics’ monthly labor market data. The data are “total bologna,” says DICK BOVE, both erratic and hard to swallow. The establishment survey shows 339,000 jobs were “created” by the US economy, seasonally adjusted. The adjusted numbers shows a whopping 930,000 jobs created. The Bureau’s household survey, meanwhile, shows 310,000 jobs lost on a seasonally adjusted basis; 73,000 jobs lost, unadjusted. BOVE, chief financial strategist at ODEON CAPITAL GROUP, examines the data more closely, and compares it with state unemployment claims for evidence of the real health of the labor markets.
The Fed’s most aggressive rate-hiking campaign in 40 years is clearly impacting sectors of the economy to varying degrees, from the labor markets and unemployment to bank balance sheets and duration risk. “The Fed is getting the job done,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner. In our current environment, BOVE says US bank’s balance sheets are “totally misleading.” And he addresses the regulatory pressure for banks to raise more equity. VAN ALSTYNE says high US interest rates are the reason for many of the present troubles at banks and in other corners of the market. (The federal funds rate is currently 5.00% to 5.25%.) Joining the CONVERSATION is JOHN AIDAN BYRNE who opens a discussion on Artificial Intelligence and the banking industry. He notes how JP Morgan is reported to be developing a ChatGPT-style software for customers.
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The Federal Reserve is shrinking its balance sheet. Bank assets are flat. The money supply is plunging. These are some of the negative indicators of the US financial system, according to DICK BOVE, chief financialstrategist at ODEON CAPITAL GROUP. Some positives: A rising stock market and the latest readings from the Personal Consumption Expenditure (PCE) and the Purchasing Managers Indices (PMI), he adds. “One of the two indicators, either the negative or positive, has to give way,” says BOVE. “My belief is that the financial system, if it doesn’t reverse itself, is going to cause the economy to slow down.” MAT VAN ALSYTNE, ODEON co-founder and managing partner, weighing up many of the prevailing financial headwinds, says that the “goldilocks”American economy is on course to eventually make a sharp reversal. “When it happens,” he says, “it is going to be scary.”
The latest PCE numbers opens the CONVERSATION. The core PCE rose in April by 0.4 percent, and by 4.7 percent year over year, raising new questions about the Fed’s thinking on interest rates. “If the PCE keeps going up, it can’t stop raising rates,” says BOVE. While inflation still remains elevated, there’s an interesting twist right at the grocery store. The CONVERSATION discusses new ODEON research on a potential price war among retail chains. Elsewhere, the CONVERSATION looks at Morgan Stanley’s announcement of 3,000 job cuts with China expected to see some of the biggest reductions. Meanwhile, Bank of Hawaii, a community bank serving home owners and local businesses is now at high risk, according to BOVE. Joining the CONVERSATION is JOHN AIDAN BYRNE who cites a new study which explains the nature of some of the money flows propping up the US stock market.
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After 13 years at the helm of Morgan Stanley, JAMES GORMAN plans to step down as CEO within 12 months. He will remain as executive chairman. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, says GORMAN'S departure is a major "blow" to Morgan Stanley. "To lose someone with his capabilities would be like JAMIE DIMON walking out of JP Morgan," says BOVE, referring to JP Morgan's highly-regarded CEO. While Morgan Stanley has not yet named a successor, three division heads have been identified as contendors. BOVE though has a warning. "If they actually let this succession fight last for a year," he says, "I think they will destroy big parts of Morgan Staney." BOVE looks back on an earlier succession battle, a brutual two-year affair at Citibank for insights on what could happen at Morgan Stanley. "Morgan Stanley's history suggests that it could easily go in this direction," according to BOVE.
BOVE also looks at regional bank, KeyCorp, comparing its near and long-term outlook, noting how it is in positioned in the Midwest to benefit from the "inevitable reindustrialization" of America. It is also a source of funding for domestic energy resources. Also on his radar is PacWest, a Beverly Hills, CA-based bank that BOVE says is fighting for its very survival. Elsewhere, the CONVERSATION studies the latest Fed survey on US bank money flows, which shows the industry continues to see a decline in loans and deposits. Meanwhile, a link between the debt ceiling crisis and the rising stock market is suggested. MAT VAN ALSTYNE, ODEON co-founder and managing partner, explains how the crisis could actually be fuelling a rise in equities. And we'll have an update on how US banks with operations in China are scaling back and firing staff. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE.
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The CONVERSATION examines the latest Empire Manufacturing Index, a measure of business activity in New York State, which is now 42 points below where it stood 12 months ago. The widely-followed index is at its lowest level since 2009, showing decreases in orders, shipments and payrolls at factories. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, in a recent note, points to the Empire Manufacturing Index along with other indicators, such as labor markets conditions, as signs of a long-anticipated recession taking hold. "The Empire study shows not just a slowdown, but a huge drop," BOVE says on this episode, referring to this US economic contraction. BOVE discusses his other research, such as the tighter lending standards at banks, as well as his fresh data on the housing market. While the US has not technically entered recession yet, BOVE says consumer behaviour suggests a recession may have started. "The economy is slowing," he says.
Elsewhere, in an unconfirmed report out of China, an insider tells BOVE that a large number of major US banks with operations in China, are firing local staff en masse. "I am told that there is a huge wave of firings by American companies who do business in China," BOVE explains, noting how one insider feels the layoffs are poliitically motivated. BOVE believes the layoffs, if confirmed, are linked instead to the currency markets, and China's desire to undermine the US dollar. Joining the CONVERSATION, JOHN AIDAN BYRNE, says China's ambitions, and economic rise, should be kept in context given its history of oppression as well as the full reality of its economic progress.
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The US Federal Reserve raised interest rates again this month by 25 basis points, bringing it to a range between 5% and 5.25%. The widely-anticipated hike marked the tenth time the Fed has moved rates upward since March 2022, as part of its aggressive campaign to tame inflation. And while the Fed appears to be succeeding, the ripple effects have brought pain to the banking sector. Rising rates crippled the portfolios of Silicon Valley, Signature and other banks holding long term securities. Still, regulators and lawmakers have said the worst is over in this banking crisis. DICK BOVE, chief financial officer at ODEON CAPITAL CONVERSATIONS, nevertheless, repeats his warning, now with more urgency, that more bank failures are coming. "This was a systemic problem which has not been corrected and, therefore, the crisis continues," BOVE sas. "There will be more bank failures. And it will be significant." Joining the CONVERSATION, our host, JOHN AIDAN BYRNE, citing a new poll, says nearly 50 percent of Americans now worry that their bank deposits are not safe.
Elsewhere, the CONVERSATIONS takes a closer look at the latest jobs and unemployment data. Despite a dip in the US unemployment rate to 3.4 percent, mass layoffs continue, job openings have contracted significantly across multiple sectors, productivity is declining and wages have flattened out. "The trend line is saying the job market will weaken, and unemployment is going to increase," BOVE says. "We're going to have an economic problem." The CONVERSATION will also look at the latest challenges for the US dollar as a global reserve currency.
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The CONVERSATION examines the sale of troubled California-based First Republic bank to JP Morgan. The deal comes after a stormy period in the banking sector with the failures of Silicon Valley and Signature banks, a dark cloud hanging over First Republic and an S&L-style crisis facing many banks. "The Federal Reserve and the FDIC just screwed smaller banks in America big time," says DICK BOVE, chief financial strategest at ODEON CAPITAL GROUP, referring to the First Republic sale brokered by regulators. "JP Morgan now effectively becomes the Central Bank of the US," he adds, referring to the sheer scale and size of JP Morgan post the sale. Additionally, regulators will assess a special premium on other banks for the cost of the deal.
JP Morgan, already America's largest banks by assets, picks up First Republic, which has 84 branches catering to mostly wealthy clients, for $10.6 billion. JP Morgan has some 4,800 branches, and now a larger national footprint with the acquistion. Indeed, JP Morgan is likely to see its profitability grow by $1 billion on an annual basis, according to BOVE, a sum that far exceeds official estimates. In light of the bank crisis, BOVE says the evidence points to a new game in time, short sellers punishing vulnerable banks.
Elsewhere, the CONVERSATION looks at the trajectory of inflation, interest rates and jobs. Then there is the high-stakes drama of the debt ceiling talks in Washington. Our host, JOHN AIDAN BYRNE, notes how the number of high-wage earners filing for unemployment benefits has hit a new record, raising concerns about the overall state of the labor markets.
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The CONVERSATION opens with DICK BOVE's review of the latest data from the Fed's Beige Book on economic conditions in America. BOVE concludes that all the data points to a peak in activity across many sectors. "Everything that came back was indicative of a significant slowing in the economy," says BOVE, chief financial strategist at ODEON CAPITAL GROUP. Alongside a separate report of financial indicators, including a decline in bank deposits, BOVE says economic activity is shrinking. "Every metric in the economic looks looks so negative," adds MAT VAN ALSTYNE, ODEON co-founder and managing partner.
The Fed's campaign to tame US inflation appears to be succeeding. But the succession of interest rate rises unleashed to reduce the pace of price rises in the economy, came trouble for smaller banks. The CONVERSATION examines the health of the US bank sector weeks after the collapse of SVB and other banks. "Banks are in a pickle and the only answer to their dilemma is if the Fed dramatically lowers interest rates," says VAN ALSTYNE. BOVE says that course of action is unlikely. "The Fed is beating inflation," says BOVE.
Taking a deeper dive, BOVE sees the risk of a major Savings & Loan (S&L)-style crisis for smaller US banks in the current era of high interest rates and declining assets in bank portolios. The S&L Crisis resulted in the collapse of about a third of the 3,234 savings and loan associations in America in the period 1986 and 1995. Joining the CONVERSATION, JOHN AIDAN BYRNE raises the prospects of a far deeper recession than many are anticipating as he reprises the recent analysis of market statesman and billionaire investor, RAY DALIO.
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The US Fed is firing on all cylinders as its campaign to tame inflation appears to be succeeding. Inflation, as measured by the Consumer Price Index, came in at five percent in March on an annual basis, down from six percent in February after peaking at nine percent. It's the smallest 12-month increase since May 2021, and comes as the Fed has raised interest rates at the most aggressive pace in decades. "I think inflation will be dead a year from now," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. "I think inflation is going to come down rapidly." BOVE offers an analysis on the latest CPI data and explains some of the signs he sees of cooling inflation.
Still, there could be pain ahead. BOVE sees evidence of rising joblessness and unemployment ahead and does not discount the possibility of a hard landing for the US economy. Meanwhile, the specter of inflation has punished the purchasing power of American consumers. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the Fed has one good shot to stamp out this same inflation. For that reason he expects the central bank to keep raising rates unless and until "something truly breaks" in the US economy. The CONVERSATION also looks at the so-called 'blowout' earnings numbers reported by US banks with BOVE, a veteran bank analyst, digging deep to offer us the reality behind the latest numbers. Elsewhere, we look at geopolitical tensions with the war in Ukraine and nations acting acting out of step with the US. Our host, JOHN AIDAN BYRNE, strikes up a CONVERSATION on the Group of 7 nations pushing to diminish their economic dependence on China.
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A new study of US banks by DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, identified some ten percent as "challenged" among the selected group of banks, each with assets of over $10 billion. "The rapid shift from a recessionary environment to one heavily influenced by inflation has created serious challenges for many banks, " according to BOVE. "Banks are attempting to adjust to these changes but, in some cases, structural issues at some of these institutitons inhibit their ability to do so." The CONVERSATION also takes another look at the events that triggered the collapse of Silicon Valley and two other banks. BOVE lashes out at bank managers for the latest crisis from their "greed to maximise profits" to their risk management. MAT VAN ALSTYNE, ODEON co-founder and managing partner, points the blame in part at the Dodd-Frank Act enacted after the global financial crisis to (ironically) curb risk. "These are tense times in the financial markets," BOVE says.
Elsewhere, the CONVERSATION looks at the latest dip in the US unemployment rate. While this decline is clearly a positive, a gathering storm may finally be imminent. VAN ALSTYNE says the inverted yield curve is signalling a recession of dramatic scale which could impact Fed decision making. Still, there is some good news in the US manufacturing sector, will signs of green shoots. Joining the CONVERSATION is our host, JOHN AIDAN BYRNE.
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The US Fed’s purchase of trillions of dollars in long duration securities at what is regarded as relatively low rates has had a more far-reachingimpact on its book value than many may have realized, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. If the Fed’s net worth is adjusted by "marking" these securities to "market," its holdings translate into a negative net worth of $1 trillion, he says. Here’s the thing: The Fed can no longer print money as it did in the past because printing money today has an unwelcome inflationary effect, he explains. On the one hand, the Fed is withdrawing money out of the US banking system and on the other, it is putting money back into the economy, he says. How it can reconcile both activities is questionable, he adds. Still, MAT VAN ALSTYNE, ODEON co-founder and managing partner, questions whether the Fed’s unprecedented financial affairs ultimately matters given the fractional nature of the banking system. This is built on an edifice of confidence and in the health of US banks, he says.
The CONVERSATION also looks at the soaring US Federal debt, citing new statistics. “The government continues to believe it can borrow as much money as it wants and it continues to act, in fact, as if it is going to do so,” BOVE says. Turning attention to America on the world stage and China’s muscular industrial policies, host JOHN AIDAN BYRNE presents a proposal to lure manufacturing production back to the US. Where is America in the midst of a flurry of international initiatives among China, Russia and nations in other hotspots who've taken decisive leads lately, ask BOVE and VAN ALSTYNE.
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On Tuesday, March 28, the US Senate held hearings on the swift collapse of Silicon Valley Bank (SVB), the 16th largest bank in the US. By late last year, it had assets of about $209 billion. SVB's collapse, the second largest bank failure in US history, sent shock waves through the financial system worldwide. Fears and doubt were compounded by the failures of Silvergate and Signature Banks in the US, and the acquisition of Switzerland's troubled Credit Suisse by cross-town rival UBS. Another challenged US bank, First Republic, raised the stakes. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, followed the Senate hearings closely, and sees banking changes ahead. He has sympathy for the lawmakers who said Federal regulators dropped the ball.
"This [SVB collapse] is something the Federal Reserve is going to have to answer for," he says. BOVE also has his own questions about what happened at SVB from ignoring regulators' warnings to the propriety of bonuses paid at SVB. Regulations will now be tightened in multiple areas of the banking sector, according to BOVE. Meanwhile, MAT VAN ALSTYNE, ODEON co-founder and managing partner, warns that the US may be in a so-called Minksy Moment, the end stages of an extended phase of economic prosperity that propels investors and consumers to take on excessive risk, leading eventually to a financial and economic disaster. Host JOHN AIDAN BYRNE raises the spectre of moral hazard, the slippery slope of endless rounds of bailouts and the consequent and dire threats to the foundations of the free enterprise system in America.
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More than a week after the sudden collapse of SILICON VALLEY BANK, and the failures at SIGNATURE and SILVERGATE banks, the CONVERSATION picks up where we left off on our last Special Episode. We look at the financial wreckage of these disasters as well as the trouble at FIRST REPUBLIC BANK, and at UBS's agreement to purchase a troubled crosstown rival CREDIT SUISSE for over $3 billion. Veteran bank analyst DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, offers his accounting of today's state of the banking industry. Is the sector still in trouble, a state of rot? Are other banks still vulnerable? BOVE takes a close look at the financial and capital strength of the industry across multiple lines, to offer his informed opinion.
"The risk managers were deficient at all of these banks when they didn't hedge [their risk] against 30-year Treasuries," says BOVE, responding to MAT VAN ALSTYNE, ODEON co-founder and managing partner, adding that the same "deficiency" is evident across multiple financial institutions, including the US Fed in an era of rising interest rates. On the rescue of the US banking industry, BOVE singles out the banking industry itself for stepping up with capital for a sector in a crunch. "The salvation of the banking industry last week was not the Fed, " he says. The CONVERSATION also looks at the role of the media in the latest crisis. Finally, host JOHN AIDAN BYRNE raises questions about the dynamics of bank runs in an age of digital commerce.
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This Special Episode of ODEON CAPITAL CONVERSATIONS examines the series of events that led to the sudden collapse of SILICON VALLEY BANK, ranked America's 16th largest bank, as well as the demise of SILVERGATE and SIGNATURE banks. This episode will evaluate the impact on the industry, the financial system and on the broader economy. DICK BOVE, chief financial strategist at ODEON CAPITAL CONVERSATIONS, a Wall Street veteran who has covered the banking sector for decades, offers his expert analysis on these latest banking events to rock the financial markets.
MAT VAN ALSTYNE, ODEON co-founder and managing partner, will present his own well-informed take and raises many of the most important questions. "This was a digital bank run, the likes of which we have never seen, which is why I think the [regulators] had to rescue the banks,' says VAN ALSTYNE. According to BOVE, "Small depositors may not be the only ones questioning the banks." He adds: "Investors are clearly questioning the earnins numbers and returns being posted by the banks. For example, bankers have been using stock buy backs to bolster earnings per share results at a faster rate than the grown in actual net income." Joining the CONVERSATION, our host JOHN AIDAN BYRNE reprises some of the key developments.
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The Fed has entered a new phase after fifteen years of Quantitative Easy (QE), or easy money. The "experiment" says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, has gone very badly wrong. In this episode, he presents the quandary for the Fed in this period of rising interest rates with short term rates now rising faster than long rates. "This is the most threatening issue in the financial markets today," he says. In short, BOVE believes the Fed is now facing a unique Savings & Loans (S&L) type crisis. The S&L crisis from 1986 to 1996 was the failure of a large number of US savings and loan associations, a disaster fuelled by rising interest rates. "I'm sticking with my prediction," says MAT VAN ALSTYNE, ODEON co-founder and managing partner, speaking generally about the Fed's challenges. "They're going to have to cut interest rates and commence QE before they want to because the economy is going to hit a lot more trouble."
The CONVERSATION opens with an eye on the market's dependence on data rather than on investing concepts. BOVE dismisses this popular approach to tackling the latest course of the market, saying investors should look more closely at the fundamentals and create investment concepts. "It bothers me a lot," says BOVE. "It tells me these people have no idea what they are talking about, " he adds of market professionals who depend on data. The CONVERSATION also looks at the clearer signs and signals of the much debated recession anticipated by analysts. "It has been a running joke on Wall Street, this calling for a recession, " says host JOHN AIDAN BYRNE, as we examine the signs of a coming recession and BOVE parases the comments of two prominent bank CEOs.
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DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, takes a close look at the full extent of the US Government's off-balance sheet debt. In doing so, he describes an immense financial burden, a sum as much as three to six times that of America's national debt now at $31.4 trillion. BOVE has studied the work of JAMES HAMILTON at the University of California and looked closely at other research to present a damning account of America's off-balance sheet liabilities. This debt burden, "the massive negative net worth of the US government," BOVE explains, arises from government guarantees for the financial obligations of multiple agencies in sectors from student lending to Social Security.
Meanwhile, the CONVERSATION looks at the trajectory of interest rates on the heels of January's Personal Consumption Expenditures (PCE) report. The overall PCE rose 5.4 percent in January from a year ago, and was up 0.4 percent monthly. Investors were shocked at the January reading, which came in higher than expected, an outcome that has since challenged the market, BOVE says. He warns of the urgent need to control money printing and to tame inflation. MAT VAN ALSTYNE, ODEON co-founder and managing partner, presents a scenario where the US Fed could, once again, resume a destructive course of massive money printing to shore up the economy. Joining the CONVERSATION is JOHN AIDAN BYRNE.
The CONVERSATION begins with the markets negative reponse to reports by Walmart and other US retailers showing increased belt-tightening by cash-strapped consumers. The episode also examines whether America is in a financial crisis worse than is reported by the US government. While retail giant Walmart has reported strong sales in recent years, more of the spending is being diverted to the basic necessities like food, with more affluent and price-conscious consumers rushing to Walmart to pick up deals. That is also the view of DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, who notes the rising number of upper income shoppers buying groceries at Walmart, a retail giant traditionally the turf of lower-income households. "Consumers are stretching their dollars at Walmart, looking for more ways to save," said MAT VAN ALSTYNE, ODEON co-founder and managing partner.
BOVE presents his analysis on the US trade deficit, which hit a record $1 trillion in 2022. How to pick investments in these volatile markets and in a global economy overshadowed by the rise of autocracies and the war in Ukraine, as well as fears of a pending recession? Start with a concept that has a long-term positivie outlook, according to BOVE. He also presents the case for bank preferred securities. On the first anniversary of Russia's invasion of Ukraine, the CONVERSATION asks how it could end peacefully for humanity. "Putin is a mass murderer," says BOVE. He is a vicious and crazed mad man, adds JOHN AIDAN BYRNE, noting the need for fearless and strong leaders to stand up to Putin.
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From the latest Consumer Price Index (CPI) report to DICK BOVE's comprehensive new report on the US economy, this episode of ODEON CAPITAL CONVERSATIONS is a timely analysis on some of the key happenings and events on Wall Street. "Disappointing" is how MAT VAN ALSYTNE describes the latest CPI report published this week, showing a slight overall decline in January in the yearly inflation rate to 6.4 percent, and an uptick on a monthly basis. "I thought that this would be the one," said VAN ALSTYNE, co-founder and managing partner at ODEON CAPITAL GROUP, referring to his disappointment that the latest inflation numbers do not definitively show the Fed has taken control of inflation. "The Fed has never killed inflation until interest rates are above the CPI," he added later.
What are the signs of recession? BOVE, chief financial strategist at ODEON, presents his in-depth findings including a battery of announced layoffs nationwide. VAN ALSTYNE points to the inverted yield curve. There are also signs of financial trouble in how the Fed navigates its campaign to tame inflation. One financial foot wrong could potentially torpedo the US economy as rising interest rates, debt servicing and the specter of inflation wreak havoc. Elsewhere the CONVERSATION picks up on a recent ODEON talk by Peter Zeihan, author of The End of the World Is Just Beginning. Joining the CONVERSATION is JOHN AIDAN BYRNE who pulls out a significant quote by Leo Tolstoy to calm nerves.
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DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, says calculating the number of people working in America every month is a mammoth task – and it’s a task that cannot be properly done. That’s why this veteran industry analyst is skeptical of the latest jobs report for January, and of the labor numbers from the Bureau of Labor Statistics and the Census Bureau. The surprising report shows a white hot jobs market in America far exceeding market expectations. With some 11 million job openings, almost twice as many jobs as available workers, BOVE describes the governmental reporting as, ‘the greatest farce known to mankind’ and he attacks the methodology. MAT VAN ALSTYNE, ODEON co-founder and managing partner, disagrees. What is important, he points out, is the quality of the trend line in the labor statistics which he sees as holding up.
Also on this episode, the Conversation examines how US banks may face pressure from the ranks of government to raise interest rates on deposit and savings accounts for customers. BOVE offers historical context, noting how a former House Banking Chair, HENRY GONZALEZ, was outraged when banks did not pass along price increases to customer as loan rates were rising. Joining the wide-ranging Conversation is JOHN AIDAN BYRNE.
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DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, provides an in-depth analysis of US GDP and the Real GDP, as he examines variables such as inventory, from durable goods and non-durables and services, and takes a closer look at the GDP deflator. His study provides direction on the course of inflation in the US economy as well as on Real GDP. As the Fed meets this week on interest rates, MAT VAN ALSTYNE, ODEON co-founder and managing partner, issues a stark warning on the cost of servicing the balooning US debt. "We're getting to the point of no return if [the Fed] keeps raising rates," says VAN ALSTYNE, referring to the astonishing $400 billion interest payments on the Federal debt. "Reality is going to hit us when the Fed is still printing money, or has to print money just to afford all the interest on the debt." Japan may also have its own rude awakening one day as its monetary math won't work for it in the long term, VAN ALSTYNE says. (On Wednesday, Feb 1, the Federal Reserve raised its benchmark rate by a quarter percentage point – to a range of 4.5% to 4.75% – at the conclusion of its two-day policy meeting.)
Elsewhere, BOVE says customers of many US banks have "had it" and are transferring their deposits and funds from these banks to other institutions and rivals. Bove says billions of dollars have been withdrawn by customers for higher rates and superior yields elsewhere on their money. "Banks are too greedy and did not pass along rate increases," says BOVE. The CONVERSATION also looks at what it means for the top 100 US corporate pension funds which have seen the upside of higher interest rates. Joining the CONVERSATION is JOHN AIDAN BYRNE.
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Talks on raising the US debt ceiling are heating up in Washington. On this episode, DICK BOVE explains why the Social Security system is inching closer to insolvency unless reforms are introduced to shore up the trust funds supporting the program. Society Security and other programs are at the heart of the debate on the debt ceiling and talks on avoiding a government default. "There is an acceptance of the view that some negotiation is necessary to control the US budget," according to BOVE, chief financial strategist at ODEON CAPITAL GROUP. "Debt is out of control; it must be reined in." On a different note, MAT VAN ALSTYNE, ODEON co-founder and managing partner, explains that coming adjustments in the calculation of the Consumer Price Index (CPI) could produce a more positive outcome in the trajectory of the CPI because of significant changes in how some variables that comprise the index are measured.
BOVE steps up his case for reshoring American manufacturing jobs, saying while free trade is positive in theory, in practice it has been a disaster for America. "Economists argue that stimulus to rebuild America's manufacturing sector harms South East Asia, raises the price of goods for consumers and hurts free trade," he says. "Nonetheless it must, and is being done." VAN ALSTYNE defends the merits of free trade. JOHN AIDAN BYRNE notes how decades of outsourcing has destablised some American communities, helped fuel social chaos and a drug epidemic, as middle-class jobs were shipped overseas. Elsewhere, BOVE explains how the US Fed is now damaging the US banking system by competing with banks for large customer deposits.
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The United States will hits its mammoth $31.4 trillion limit on gross federal debt this Thursday, January 19, admidst political mudwrestling and theatrics in Washington. At issue is the prospect of a government default if the debt limit is not raised. A default would spell a catastrophe for the US and global economy, throwing us into a decade-long depression, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. By most accounts, the government has enough money to carry it through to June.
On this episode, BOVE will discuss the implications of the debt limit and explain what is starkly different today, compared with an earlier generation when US debt first started to climb from a much lower base. Despite the various distressing scenarios, MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the debt ceiling"crisis" is a "joke" manufactured by the media to stir up political tension. VAN ALSTYNE says the government could deploy plenty of financial tricks to ride out this "crisis" including the minting of a trillion dollar token, or multiple tokens of this size! JOHN AIDAN BYRNE notes that the true debt of the US exceeds the debt ceiling number by a staggering sum.
Also on this episode, BOVE will present an in-depth analysis of US banks in light of recent bank earnings reports. Areas of strength and weakness are examined, from the expanding debt on the consumer side to strong growth in commerical lending. BOVE, in particular, explains why a roster of midwestern banks are looking "very attractive."
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The fundamental shift in the US and global economies is expected to continue for an extended period with the traditional banks in the US likely to benefit, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. The changes underway are expected to firmly reorient the US economy towards solid business operations rather than than on the consumer. "If true, this shift will adjust fund flows; labor structure; and investment opportunities," notes BOVE in his latest report on the long-term outlook for banks. "Banks will be one of the beneficiaries." BOVE has concluded that the kind of business model constructed in the early 1990s that guided the US economy, "has been harmful in multiple fashions."
The CONVERSATION opens with a closer look at the latest numbers from the US Bureau of Labor Statistics. MAT VAN ALSTYNE, ODEON co-founder and managing partner, sees telling signs of a decline in the quality of the labor markets. The unemployment rate in December dropped to 3.5 percent from 3.7 percent. Job growth in December slowed to 223,000 jobs, a two-year low. Joining the CONVERSATION is JOHN AIDAN BYRNE who raises questions about the future of the EU as a political and economic bloc.
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In the first episode of the New Year, the CONVERSATION first looks back at 2022 and then to the future. There is an accounting from DICK BOVE of the massive wealth that evaporated in the stock and crypto markets last year. In equities alone, some $30 in market value was erased, posing risks for the future course of the American economy, he says. "You can't have a strong economy and a strong market if money is evaporating, " says BOVE, chief financial strategist at ODEON CAPITAL GROUP. The CONVERSATION looks more closely at this wealth destruction and the easy money policies that led to this and record inflation. Inflation is widely slammed by analysts and economists as a bad outcome. But MAT VAN ALSTYNE. ODEON co-founder and managing partner, posits that inflation may actually be one way for a nation to regain control of its economy. Japan is then examined by VAN ALSTYNE as an economy that has defied, "all logic and expectations" despite decades of underlying structural problems and a mountain of debt
Meanwhile, there is major global cyclical change underway, according to BOVE. Yet, he says, many investors and many in the media are missing the point, failing to recognize that a major adjustment has begun. "I strongly believe that the new cycle developing in the United States economy will be dramatically different than the old one that is dying at present," according to BOVE. In this new cycle, investment determinations are based on risk adjusted return on capital, or RAROC. Joining the CONVERSATION is JOHN AIDAN BYRNE.
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In this Special Episode of ODEON CAPITAL CONVERSATIONS, we prepare for 2023. So it's in with the New Cycle of monetary restraint and more investment in production and key areas of the American economy, manufacturing, energy and more, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. Out goes the Old Cycle of Easy Money and Debt, he explains in an interview with BNN Bloomberg replayed here for our listeners. BOVE spells it out in the context of a wider question about the reported layoffs, numbering thousands, at Goldman Sachs. Happy & Prosperous New Year!
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The global population hit a record 8 billion in November. By one official estimate, this is projected to rise in the coming decades before finally peaking in 2080 at 10.4 billion people. But in large swathes of the globe today, national populations are already in decline, peaking or barely keeping pace with replacement levels to maintain their existing population sizes. Indeed, the statistics show a major, even distressing, challenge for policy planners and governments as populations age and decline.
DICK BOVE, chief financial strategist at Odeon Capital Group, sees a pending disaster for investments and economies unless the trend is reversed, or appropriate policies, such as sensible immigration laws, are introduced. With a fertility rate at 1.8 per woman in the US, for example, "this country will reach a point whereby it cannot replace its population," according to Bove. The finances of the US government are simply incapable of handing these demographic changes if they persist, he adds. BOVE spells out the stark details in this episode. MAT VAN ALSTYNE, Odeon co-founder and managing partner, says the US has a strong suit among the nations of the world, "it is still the land of opportunity" for many prospective immigrants who see America as a shining beacon. Joining the Conversation is JOHN AIDAN BYRNE.
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It was all eyes on the US Federal Reserve as markets cheered the Labor Department's report that its consumer price index (CPI) climbed 7.1 percent in November from a year ago, sharply down from 7.7 percent in October. "The numbers were phenomenal," said DICK BOVE, chief financial strategist at Odeon Capital Group. "The markets loved it." On this episode BOVE will address how he sees the Fed responding with a view to further interest rate increases. MAT VAN ALSTYNE, Odeon co-founder and managing partner, describes the slowing pace of price rises as amazing, breaking down the numbers.
Elsewhere, the Conversation picks up on research by BOVE about the threat to American economic and political dominance on the world stage from China, Russia and its allies. VAN ALSTYNE disagrees with BOVE's thesis that America's "hegemony" has been blunted. JOHN AIDAN BYRNE argues that ultimately economic strength and productive independence is the key in large measure to a nation's world standing. The Conversation examines plunging fertility rates in the West and what that augurs for national economies and future prosperity. In a wide-ranging discussion on immigration. BOVE shares his story of a Cuban refugee who fled to Florida from Cuba after a brutal experience in his homeland and a nightmare journey to freedom. Finally, there's Sam Bankman-Fried.
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The CONVERSATION breaks down the most recent jobs numbers from the US Labor Department which showed employers added 263,000 jobs in November. That's close to the strong gains of the previous three months which averaged 282,000 jobs. The jobless rate, meanwhile, stayed at 3.7 percent in November. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, argues that the headline numbers do not tell the complete story. For example, the household employment numbers tabulated in one survey points to a decline in jobs. Overall, there are other negative indicators. MAT VAN ALSTYNE, Odeon co-founder and managing partner describes a massive divergence in the job numbers calculated by the household and the separate established surveys, a gap that has been described as recessionary. The CONVERSATION also examines the relationship between US business openings (births) and closings (deaths) for a fuller understanding.
In this topic-packed CONVERSATION, there's more on the trouble for bank stocks and the impact of rising interest rates; how the Fed has impaired the home mortgage market. China comes in for scrutiny as does the new owner of Twitter, Elon Musk. In a spirited debate, BOVE says Twitter is rapidly becoming "a purveyor of lies, hate and filth." VAN ALSTYNE, an avid Twitter user, disagrees, says Twitter in the past month has improved significantly under MUSK. JOHN AIDAN BYRNE says some form of careful content moderation may be desirable as is the campaign to preserve freedom of speech at the same time.
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The CONVERSATION opens with the latest civil unrest in China as protesters take to the streets in response to the Communist Party's zero Covid policies. Market indexes dropped as investors weighed the impact on trade and investments, and also in reaction to the latest response of the Fed in its battle to tame inflation. At stake in the case of China, is world trade and geopolitics with the future of global supply chains and manufacturing at play. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, argues that the US must take an isolationist stand in the coming years if it is to restore its once proud domestic manufacturing base. JOHN AIDAN BYRNE says communities across America have been devastated by the loss of jobs for decades because of outsourcing, a problem that has resulted in deep-seated social problems as well as economic. Meanwhile, the US financial systems appears headed more closely to insolvency. "It is mind-boggling, and frightening," says BOVE "It's a huge problem."
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With signs of the Fed winning the battle to tame inflation in America, and as the money supply shrinks sharply, the real issue now facing America is the risks of recession, according to DICK BOVE, chief financial strategist at Odeon Capital Group. Will it be a mild, moderate or deep recession? That is the crucial question, says BOVE. "The Fed is very nervous at the moment," he adds, given the market indicators. "Listening to some Fed governors, it sure seems some of them think we're getting closer to causing harm to the economy than they mean to," said MAT VAN ALSTYNE, Odeon co-founder and managing partner. "Listening to [Fed Chairman] Powell, it looks like he's full steam ahead, let's crash this economy."
Meanwhile, the demise of crypto platform FTX is shaking the foundations of the financial system. "It is having a [huge] multi-billion dollar impact," says BOVE. While FTX reportedly has liabilities of $8 billion following its collapse, the wider market losses for multiple industry crypto players is estimated at over $1 trillion. Elsewhere, the CONVERSATION turns to China and its competition with the US for superpower economic status. Also examined is global hot spot, Iran. Joining the CONVERSATION is JOHN AIDAN BYRNE.
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The US midterm elections didn’t result in the huge red wave of Republican victories predicted by polls and media pundits. The Conversation came closer than many of these same forecasts in calling it correctly in our last episode, seeing narrow gains in the House of Representatives and no big shake up in the Senate. As of this latest Conversation, it was a lackluster performance overall for Republican candidates nationwide. Democrats, though likely to lose the House, far outperformed many expectations. Republicans turned in the worst midterm performance for the opposition in 20 years, analysts say. In this latest Conversation, DICK BOVE, chief financial strategist at Odeon Capital Group, said that in his opinion the results were “very positive” since it would help return the nation back to “American core beliefs.”
Still, MAT VAN ALSTYNE, Odeon co-founder and managing partner, said the only consistent thread in this election and US elections every two and four years is how wrong the pollsters have been. JOHN AIDAN BYRNE noted that Republicans overall won the popular vote and notched up some significant gains in New York and other parts of the country. In the midst of vote counting came the collapse of the giant crypto platform, FTX. BOVE argues that the industry will ultimately emerge stronger from the implosion of this once revered crypto operator with losses estimated in the billions of dollars. MAT VAN ALSTYNE says the FTX destruction was bad for everybody. “It was the equivalent of the Fed failing,” says. “It looks like a classic Ponzi scheme.”
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As American voters went to the polls, in the closely-watch mid-term elections, the CONVERSATION sees signs of more gridlock with control of Congress at stake. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, says Fed Chairman, Jerome Powell, is the only major figure in Washington fighting inflation. MAT VAN ALSTYNE, ODEON co-founder and managing partner, agrees, presenting the case for bringing this white-hot inflation menace in America under control. The CONVERSATION takes a deep dive into the latest labor and productivity numbers for a clearer picture of employment and hiring trends. "I think we've crested in terms of jobs," says BOVE. In a recent note to investors, BOVE said the broader numbers published by the US Labor Department each month tend to be very confusing. "However, assessing the associated wage, hours worked, and productivity data suggests that the job market may have peaked," he writes.
The CONVERSATION also turns to Germany and its business and political ties to China and Russia. "Germany has kind of sold its soul to Russia on gas and to China on selling goods," says BOVE. German Chancellor, Olaf Sholz, recently visited China accompanied by business leaders from Germany who signed major deals with China for the purchase of German products. Elsewhere, BOVE provides startling background on what he calls the "illegal" seizure of housing agencies, Fannie Mae and Freddie Mac during the financial crisis. Fannie and Freddie were in court again recently in a battle for control of the agencies by plaintiffs.
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The Conversations takes a victory lap for the many predictions on this podcast that were validated by subsequent events. At the same time, this episode will look ahead to what may come next in the financial markets and for the global economy. "These predictions were made well before they became conventional wisdom," writes DICK BOVE, chief financial strategist at Odeon Capital Group. In this latest Conversation, BOVE takes us through his litany of forecasts, from soaring inflation to the Fed acting as a buyer of last resort in funding Federal deficits. MAT VAN ALSTYNE, Odeon co-founder and managing partner, warns that some 50 percent of US debt turns over every three years, raising the prospect for trouble in our current environment. With mortgage rates in the US having topped 7 percent, a 20-year high, JOHN AIDAN BYRNE examines how that translates for borrowing costs. The Conversation also examines the latest risks of the much anticipated recession in the US and worldwide, with BOVE looking at contributing factors that could shape its outcome. On Wednesday, November 2, the US Fed announced a fourth consecutive 75 basis points rate rise, which puts the benchmark federal funds rate at a range of 3.75% and 4.00%. The total of rate hikes for the year is now at 375 bps.
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The Conversation travels the globe examining the financial and political hotspots from China to the UK and the EU. "China may be on the cusp of busting," says DICK BOVE, chief financial strategist at ODEON CAPITAL CONVERSATION, in this latest episode. "Japan is off the charts in terms of being in trouble," he adds. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the outside world does not have access to what's really happening in China today. "What about Japan? " he asks. "Its Central Bank has been essentially bankrupt for multiple decades."
With debt levels worldwide and in the US at historic highs, VAN ALSTYNE believe it is not a question of if America will see a return of quantitative easing, but a question of when. JOHN AIDAN BYRNE says the financial drama in the UK and the resignation of Prime Minister Liz Truss, followed by the election of her successor, RISHI SUNAK, fascinated the markets and the globe because it could foreshadow the fate of other nations. Also in this Conversation, BOVE spells it out—what bank earnings are saying about the US economy.
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Many investors are missing the reality of the latest bank earnings reports, dressed up to seemingly appear a lot more positive than negative because of complex accounting standards and rules, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. Banks are overstating the value of their assets in a period of rising interest rates. As markets respond positively in one direction, BOVE says many investors do not realize banks are earning less than it appears. "All the [bank] companies I have looked at are down [in terms of] net worth," BOVE says. He adds that many investors are ignoring the fact that money flows out of banks have exceeded inward flows. Loan losses have soared, rising interest rates causing the value of bank assets to plunge, according to BOVE. Pre-tax earnings are down for the year while net worth, as noted, has declined.
Also in this CONVERSATION is the latest flare up in the British political establishment with a rub for the UK economy. UK Prime Minister LIZ TRUSS fires her finance minister, KWASI KWARTENG, replacing him with JEREMY HUNT. HUNT then immediately rips up her Conservative party's ambitious tax cut and spending plan. MAT VAN ALSTYNE, ODEON co-founder and managing partner, and JOHN AIDAN BYRNE look at what ails the UK and Europe generally.
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JAMIE DIMON, one of Wall Street's biggest bankers, pulled no punches, saying in an interview that "serious" headwinds are likely to propel the US and global economies into a recession within the next six to nine months. “These are very, very serious things which I think are likely to push the US and the world — I mean, Europe is already in recession — and they’re likely to put the US in some kind of recession six to nine months from now,” Dimon said in the interview Monday with CNBC. Dimon cited a number of indicators including inflation, rising interest rates and the war in Ukraine, that led to his outlook. The CONVERSATION picks up on Dimon's widely reported view with DICK BOVE taken aback. BOVE, Chief Financial Strategist at Odeon Capital Group, said the comments by DIMON, CEO of JP Morgan were, "very damaging to the market." The CONVERSATION elsewhere examines the labor markets with BOVE's forecast for the unemployment rate as the US seems likely to enter recession.
JOHN AIDAN BYRNE notes the sharp decline in the numbers of workers entering the labor force today compared with earlier generations as context for today's labor environment and the rise in robotics. With former Fed Chairman BEN BERNANKE honored with a Nobel Prize for his work in economics, MAT VAN ALSTYNE points elsewhere to BERNANKE'S career at the Fed. "I would argue we are living with the repercussions of his bad decisions 14 years ago," VAN ALSTYNE says.
In a new comprehensive report covering the roots of today's inflation and monetary policy, and tracing the period of early 2021 through today, BOVE offers a penetrating guide to the realities of today's US economy struggling with the impact of massive money printing. "I don't see the [mass US] consumerist economy continuing in the fashion I have seen," BOVE says. "I see a change."
After a sharp two day rally on Wall Street, the CONVERSATION ponders the outlook. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP offers historical perspective noting how markets have risen in the month of October as businesses engage in seasonal commercial activity. "I think the latest rally is [also] part of the bear market rally," he adds, as investors conclude the US Fed is under pressure to ease off on its campaign to fight inflation. BOVE, a resident of Tampa, Florida, escaped the worst effects of Hurricane Ian that pummeled his state. But he notes the huge toll, the loss of lives and extensive properties damages statewide. BOVE says the reality for banks and insurance brokerage companies is a separate story. "Banks make a fortune from hurricanes as do the insurance brokerage companies," he says.
Meanwhile, the UK government did a revamp of its original tax cut and spending plan with the sterling suffering its worst month since Brexit. JOHN AIDAN BYRNE points to the enormous gross debt to GDP ratios for major economies saying by this measure the UK is faring much better than the US. "The US is not the UK," responds MAT VAN ALSTYNE, ODEON co-founder and managing partner. A fundamental economic problem for the UK currency is that it is a net importer of energy which it purchases in a currency that is not its own, according to VAN ALSTYNE. The US does not have this dilemma, he says. The CONVERSATION looks at how the US dollar is exporting chaos around the globe in the view of BOVE, who renews his calls for a new Plaza Accord with other leading economies. Will the US economy sees a rise in "housing slums" under present government policy? BOVE thinks it is a distinct possibility.
In one of the most stark warnings yet of a pending recession, famed economist Nouriel Roubini, nicknamed Dr. Doom, says this next recession could start by the end of 2022, stretching into 2023. In a recent media interview, Roubini, the man who correctly predicted the 2008 financial crisis, said in a run of the mill recession, the S&P 500 could slump by 30 percent. In a real hard landing, which he expects, that drop could be as much as 40 percent. Roubini’s searing forecast is picked up in this CONVERSATION by DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP as he debates the escalating debt in the US economy and worldwide with MAT VAN ALSTYNE, ODEON co-founder and managing partner. BOVE believes the US is now at a turning point and will firmly grapple decades-long growth in ballooning debt as the US faces a recession. “We can’t go back to a system of printing money when we are in trouble,” he says. VAN ALSTYNE disputes his outlook. He sees a short term strategy of tamping down America’s red hot inflation. But in the long term, he expects the government to unfortunately resort to further money printing to fund the mounting cost of entitlement and other programs. Roubini says the next recession could be “severe, long and ugly.”
The CONVERSATION looks at signs of trouble in China’s troubled Belt and Road Initiative Program. JOHN AIDAN BYRNE notes how some of the loans by China to foreign borrowers have now gone sour, raising more problems for China which is also managing internal challenges such as a housing crisis. The CONVERSATION looks at current events in other economies in the news, including the UK and Italy and examines the impact of the soaring US dollar. BOVE repeats his call for some form of “Plaza Accord” to manage and contain the latest wave of currency volatility triggered in large by the rising dollar. VAN ALSTYNE says that while such an idea has merit, it is hard to imagine major nations of the world with disparate agendas, gathering to hammer out a practical deal. Bank CEOs are grilled on Capitol Hill. Meanwhile, the financial rape of Fannie Mae and Freddie Mac continues, according to BOVE.
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This CONVERSATION occurs as the US Fed makes its latest move on interest rates to tamp down the hottest US inflation in four decades. On Wednesday, September 21, the Fed increased its key short-term rate by three-quarters of a percentage point to a range of 3% to 3.25%. The move comes on the heels of four rate hikes earlier this year with the central bank now boosting the federal funds rate by 0.75% at each of its last three meetings. Today's inflation is a consequence of the massive growth in the US money supply and the Fed's easy money policies, DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, reminds us in this episode of the ODEON CAPITAL CONVERSATIONS podcast. There are no solutions, only-trade offs [in seeking to satisfy the problems of our ages], says MAT VAN ALSTYNE, quoting Thomas Sowell, the economist and political commentator. In today's context, VAN ALSTYNE explains, that has meant the excessive printing of money to solve one problem in our economy, has led to problems elsewhere. "The chickens have come home to roost," he adds.
In an in-depth new report, BOVE highlights two major Wall Street firms, Goldman Sachs and Morgan Stanley, to examine seismic changes in the US economy. "My belief is that the United States is being forced into a transformative change of every aspect of its economy and financial system," BOVE writes. "Business models that worked well in the old environment will not work well in the new environment. Therefore, investment must be adjusted to reflect the change that is now underway." How are Goldman and Morgan facing these challenges? BOVE answers by first taking a deep dive into the multiple financial and geopolitical forces buffeting the globe. BOVE notes the massive amount of personal financial wealth in America today, a staggering sum of $100 trillion.
With America’s fertility rate in steady decline, the population aging and worker shortages everywhere, the CONVERSATION agrees that America needs more immigrants to fill jobs. The CONVERSATION also looks at the massive flow of migrants crossing the US border in the south. Is it possible the US State Department is looking to offset labor shortages in the long term through large scale migrant flows across the border today, JOHN AIDAN BYRNE asks.
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This topic-packed CONVERSATION opens on a favorite theme, the peaking in US inflation with the latest Consumer Price Index (CPI) numbers in the spotlight. Consumer prices overall rose 0.1 percent in August compared with July when prices stayed flat. The 12-month inflation rate last month dropped to just 8.3 percent, down from 8.5 percent in July. That was higher than many economists had expected. Core CPI rose 0.6 percent in August, double the rise in July. According to Moody's Analytics, the average American household is spending $460 more per month compared with a year ago for the same basket of goods and services. Still, DICK BOVE, chief investment strategist at ODEON CAPITAL GROUP, says all the latest data confirms that inflation is peaking. "It went in the right direction, " he says. MAT VAN ALSTYNE, ODEON co-founder and managing partner, agreed, noting that the CPI is a lagging indicator. VAN ALSTYNE nevertheless lays out a scenario in which the Fed could reverse course on its present campaign to tame inflation with a succession of interest rate rises.
The CONVERSATION learns from BOVE about the sharply different strategies by Goldman Sachs and Morgan Stanley in the face of the recession anticipated by many on Wall Street. "It is going to be a tough period ahead for us," BOVE says, referring to the general population. "People are going to lose their jobs." When the CONVERSATION turns to the housing market, JOHN AIDAN BYRNE presents the bullish forecast of one realtor in New Jersey despite the rise in mortgage rates. BOVE picks it up.
This episode of the CONVERSATION is on the heels of the latest US unemployment numbers from the Bureau of Labor Statistics. In August, U.S. employers hired more workers than expected by economists. The unemployment rate edged up to 3.7 percent as record numbers, some 800,000, entered the workforce. The survey of establishments showed nonfarm payrolls rose by 315,000 jobs last month, after soaring by 526,000 in July. Employment is now 240,000 jobs above its pre-pandemic level. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, examining a host of indicators, including the Household Survey, sees signs of mounting layoffs on the back of declining productivity. "What I see in the [unemployment] numbers is very concerning," BOVE says.
Across the Atlantic, the British pound hit its lowest level against the US dollar since 1985 as the UK's new Prime Minister, Liz Truss, officially took office, laying out a plan to rein in household energy bills for consumers at a staggering cost to the British treasury. BOVE says the plan will be massively inflationary for the UK economy. MAT VAN ALSTYNE, ODEON co-founder and managing partner, argues that the the best approach to slashing the cost of energy across Europe this winter, is the elimination of red tape and bureaucracy, and with an increase in the natural supply of domestic energy supplies. Joining the weekly CONVERSATION is journalist, JOHN AIDAN BYRNE.
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Markets dropped in response to the speech by Fed Chairman, Jerome Powell, at Jackson Hole, Wyoming last week. In strong and unambiguous language, Powell pledged the Fed's efforts to crush inflation, saying the overarching goal was to bring inflation down to the agency's 2 percent goal. "Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy," the Fed chairman stated. Powell pointed to higher interest rates in the future as well as a "restrictive monetary policy." DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, praises Powell's speech in this latest episode. "I really loved the speech, it was short and sweet and to the point," he said. BOVE explains why investors were shocked. MAT VAN ALSTYNE, ODEON co-founder and managing partner, weighs in on what investors may really be thinking of Powell's posture.
The CONVERSATION also picks up on BOVE'S comprehensive new study on US inflation in the modern era. BOVE warns that many analysts have often overlooked the broader causes of the inflation that ravaged the US economy and led to stagflation in the 1970s. With lessons for today's soaring prices, BOVE says that to tamp down inflation, it was imperative to rein in the creation of credit. With student debt forgiveness in the headlines, the CONVERSATION has a lively debate on the US college system and student financing. The college system is broken, the CONVERSATION concludes. JOHN AIDAN BYRNE notes, for instance, the shortage of skilled vocational and professional workers in the labor markets as evidence of an education system that is underachieving.
The CONVERSATION presents a far-reaching study of the US economy from 1964 to 1991 by DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. The study covers a turbulent period of stagflation, oil embargoes, economic stress, street riots and political upheaval. It is a textbook case of the big “guns and butter” spending programs that fueled the inflationary spiral of the 1970s, from outlays on housing and the military to Medicare and Medicaid, according to BOVE. As BOVE reminds listeners, social unrest led to riots on the streets. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the study stands in contrast to the popular narrative of how the adoption of a fiat currency and oil embargoes were at the root of the economic stress during this period. At the same time, JOHN AIDAN BYRNE notes the complex reality of this era, pointing to the breakdown in the social order, a cultural revolution, de-industrialization and other factors.
The CONVERSATION returns to the persistent theme of inflation with an eye on this week’s Annual Economic Policy Symposium in Jackson Hole. “The Fed should take a strong cautionary stand that they are going to kill inflation,” BOVE said. Rising prices would cause the economy to collapse, he adds. VAN ALSTYNE wonders how credible and impactful the US Fed’s statement will be coming out of Friday’s meeting at Jackson Hole, since this time last year, the Fed thought among other things the then signs of inflation were “transitory.”
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The Conversation takes another close look behind this month's labor numbers released by the Bureau of Labor Statistics. DICK BOVE lays out the mammoth task undertaken by skilled government professionals in compiling and analyzing a complex data set for the US population. As noted in the last episode, the latest numbers offer a conflicting account of the labor force when compared with a separate survey of US households. BOVE notes an uptrend in jobless claims as well as a decline in the number of hours worked per week. The real key is a reliable and consistent set of data that does not have components that can be "fudged" by statisticians, says MAT VAN ALSTYNE, ODEON co-founder and managing partner. Based on his reading of labor market and other data, BOVE expects a recession "of some meaningful magnitude" in the coming months.
This is another topic-packed Conversation. From the prospects of the next interest rate increase as the Fed keeps the pedal to the mettle to tame inflation, to a potential funding disaster for the home mortgage sector, the Conversation offers some fresh perspective. BOVE says the US is headed for a real crisis in mortgage finance as the Fed steps back from supporting the mortgage sector with its past rounds of massive purchases of securities. At the same time, Wells Fargo and other banks are scaling back in home finance. The Conversation also turns philosophical on the existential problems of our time with JOHN AIDAN BYRNE arguing that our democracies and our autocracies are both battling their own internal crisis, and BOVE lamenting the lack of an ideology that could propel humanity to greater heights.
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The latest report from the US Labor Department says national job growth in July surged a whopping 528,000, a massive number that defied expectations, with the unemployment rate dipping to a 50 year low. The Conversation takes a look at the numbers. “There are conflicts here that are really deep and significant,” says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, referring to the stark differences between two government labor market surveys, one reporting massive job gains, the other massive job losses. “If you dive deep into the data, you will see lots of the jobs created are second and part time jobs,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner. “People are stretching to make ends meet.”
Joined by journalist, JOHN AIDAN BYRNE, the CONVERSATION offers a new perspective on the state of the labor markets. “More than half of the new jobs reported as created were in the low-wage sector,” says BYRNE. With analysis and research by BOVE, the CONVERSATION unpacks the data to see where growth is slowing and rising in the US economy, examining durable goods and other sectors. BOVE has a grim assessment on productivity and how this could impact the labor markets in the coming months. The CONVERSATION reports on changes at the top of Bank Supervision at the Federal Reserve. Also, BOVE reports that the Fed has finally started to taper, as he gives us some numbers and analysis on this as well as on inflation and global currency instability. Reshoring, bringing back jobs to America is a hot topic in boardrooms. Listen to the CONVERSATION and find out more on this and our other topics.
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The CONVERSATION examines the "fundamentals" driving the market. These fundamentals in the US have not been positive lately, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. BOVE cites the recent 75 basis points hike by the Federal Reserve, bringing its benchmark rate to a range of 1.5% to 1.75%; two consecutive quarters of declining GDP, tensions over Taiwan, and more. Still, the stock market rallied in July, the S&P 500 up 9.1%, its best month since November 2022. BOVE explains what is behind this bear market rally. MAT VAN ALSTYNE, ODEON co-founder and managing partner, said much of the market sentiment changed after last week's Fed Press Conference explaining the Fed's thinking in the wake of the rate increase.
With inflation ravaging US households and the Fed in hot pursuit, the CONVERSATION debates whether some companies are extracting higher margins and price gouging in the face of escalating prices for goods and services. Journalist JOHN AIDAN BYRNE notes how soaring prices for food have fueled higher spending on grocery and household products at discount dollar chains, at the expense of more traditional stores. Is this a recession? Listen to the Conversation.
The Conversation looks at the implications of a seemingly newly-emboldened BRICS group of nations—Brazil, Russia, India, China and South Africa—which last month convened and announced the launch of the New Development Bank, taking aim at American-leadership of the global economic order. "I do think it does represent a threat," said BOVE, noting how members have pledged to engage in more business and trade with each other.
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With all eyes on the US Federal Reserve and on the consequences of their action on interest rates this week, the Conversation is packed with timely topics—from the Fed's campaign to tame inflation to the new world of investing after a period of easy money. "The pressure now on the Fed to ease off is enormous," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, referring to the Fed's interest rate campaign to tamp down white-hot inflation. This pressure is coming from many sides. From Wall Street to Congress, the Fed is taking it on the chin, as a chorus of pundits and investors conclude the Fed may soon end its interest rate rise campaign—and then start trimming! "When the Fed will cut is now being speculated upon," says BOVE.
On Wednesday, June 27, the Fed raised its key short-term rate by three-quarters of a percentage point for a second month in row. That now puts the federal funds rate at a range of 2.25% to 2.5%, near the Fed’s 2.5% long-run, or so-called neutral rate.
On another front—this time, the shrinking of its enormous balance sheet—MAT VAN ALSTYNE, ODEON co-founder and managing partner, suggests the Fed might be "playing games" to give the appearance the financial system is in better shape that it is in reality. The CONVERSATION travels the globe, taking a look at Ukraine and the manifestations of war. Journalist, JOHN AIDAN BYRNE, notes the hammer blow inflicted on Europe with Russia expected to reduce the Nord Stream flow of gas to Europe to about 20 percent of the pipe's capacity. As the CONVERSATION picks up on the war in Ukraine, BYRNE says that war by nature is brutal, tragic, never exactly predictable in outcome nor comparable to a game of chess. BOVE makes his case for why he sees Russia in the vanguard today in Ukraine. Wrapping up the Conversation, the episode looks back at forecasts by BOVE in the past 48 months and for his outlook on his same announcements.
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With economic storm clouds gathering, many US banks are remarkably “ecstatic” about their prospects, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. These banks, on the traditional lending and deposit side, unlike peers tied to capital markets, are upbeat. “I have never heard so many banks so positive on the US economy as I have heard in the last couple of days,” BOVE say. But bank industry analysts are pushing back on signs of a coming recession. On the housing front, for example, funding and lending are trouble spots while independent mortgage brokers are scaling back originations and firing staff. This episode will also take a look at why Jamie Dimon of JP Morgan is hot under the collar at the US Fed because of its new capital regulations. Banks’ strategies for growth are also examined.
The CONVERSATION turns to the multiple woes in Europe, from the cluster of EU nations collectively referred to as the PIIGS at the height of the 2008 financial crisis, to the recent sharp decline in the euro. These same “peripheral” economies, Portugal, Ireland, Italy, Greece, and Spain, are today also racking up a huge debt mountain. Recent reports show euro zone bond yields plunging amidst economic fears. Peripheral bonds, in particular, have underperformed. The euro has gotten “crushed” since the invasion of Ukraine by Russia, says Mat Van Alstyne, ODEON co-founder and managing partner. European governments have been “punishing themselves” because of policies they’ve adopted to ostensibly “punish Russia.” What is the future for the euro and the EU. Journalist JOHN AIDAN BYRNE noted the view of the late Milton Friedman who said, in effect, the euro was ultimately a failed experiment. The CONVERSATION also examines the prospects for stability in Northern Ireland as politicians in London grapple with the fallout from Brexit.
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The CONVERSATION examines the immense historical significance of the Plaza Accord in 1985. DICK BOVE, chief financial strategist at Odeon Capital Group, draws upon the lessons of this international agreement signed on September 22, 1985 at New York City's Plaza Hotel as America faces, once again, an almighty and surging dollar in 2022. "The US dollar is simply too strong [today]," says BOVE, noting how the surging dollar—on parity with the euro as of publication—is siphoning huge flows of money out of overseas economies into the US. For that and other crucial reasons, such as the inflationary impact of a strong dollar overseas, a new Plaza Accord is required to lower the value of the dollar, he says. BOVE notes the social anarchy that can follow a soaring dollar in debt-ridden and weak economies overseas, citing Sri Lanka as a recent example.
With the invasion of Ukraine by Russia constantly in the headlines, BOVE rips Western media coverage as questionable and misleading, and missing the big picture: Russia reportedly builds hypersonic missiles, redefines how nuclear weapons can be used and utilizes its natural advantages in energy and agriculture. MAT VAN ALSTYNE, Odeon co-founder and managing partner, argues that Russia should not be underestimated as a small nation as measured by GDP, given Russia's decades of military experience and its productive capacity and as an economy which seemingly is functioning well despite sanctions. JOHN AIDAN BYRNE lays out the case for why Russia may not be on the right side of history in its latest bloody adventure in Ukraine. The CONVERSATION also looks at the markets, inflation, upcoming earnings season and much more.
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The US Federal Reserve, battling inflation, has finally started to "taper," trimming assets on its large balance sheet. DICK BOVE, chief financial strategist at Odeon Capital Group, analyzing the full extent of the reductions, concludes the Fed cuts are so far "unconvincing." MAT VAN ALSTYNE, Odeon co-founder and managing partner, argues the Fed has changed course from its original promise to trim the balance sheet in June by $47.5 billion, without telegraphing it to the markets. The Fed cut assets overall by $2.4 billion. BOVE also presents the extent of reductions of Fed deposits by US banks as well as cuts in deposits by the Treasury. "The reduction in bank deposits gave the Treasury an optimal opportunity to cut," BOVE points out in a recent note. "But the Fed did not take it."
On the inflation front, BOVE explains that commodity prices continue to drop, reinforcing his contention that inflation has peaked in the US. BOVE cites several crucial factors for this peak in inflation, from the plunge in the Federal deficit to the large scale purchase of treasuries by foreigners as well as the value of the US dollars.
Meanwhile, the core business of US banks is growing, and will grow at a faster rate once the US economy emerges from the recession anticipated by many analysts, according to BOVE. Net interest margins, he says, have jumped at banks based on higher rates overall. Net interest interest income has also risen. Still, parts of the banking industry are contracting.
The CONVERSATION also turns to the brutal war in Ukraine. "The West has to be resolute," in fending off the challenge of the Russia invasions, says BOVE, as he reflects upon the lessons of Russian history and empire building. "I don't think it is resolute." VAN ALSTYNE, agrees the war in Ukraine is likely to be long and protracted, but settling on a definition of what winning this war means, is another matter. "I don't see Russia giving up," says BOVE. Joining this lively CONVERSATION is journalist, JOHN AIDAN BYRNE, who challenges BOVE on some of his assumptions on the war with BOVE holding his ground.
In this topic-packed episode, the CONVERSATION opens with the markets and the recent rallies. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, posits that this market concludes it has heard and factored in all the negative news while at the same time absorbing the positives. BOVE says bank stocks are cheap in this market, addressing the concept of "buying the dips."
On the inflation front, BOVE lays out his scenario for why he says inflation in the US may be a smaller risk that he had originally thought. Today, “everything has changed,” BOVE has explained in a recent note. “The Federal deficits are plunging.” By 2024, the Federal deficit is forecast to dip to $1 trillion, down from a stunning $4.2 trillion in 2020. The CONVERSATION also takes a lively turn at the housing market, plus the recent uptick in adjustable rate mortgages with banks taking market share. MAT VAN ALYSTYNE, ODEON co-founder and managing partner, offers his own view and experience of adjustable rate mortgages.
And there's more on the from the war in Ukraine to the retreat from globalization, as the trend toward local manufacturing of products in the US gains momentum. BOVE explains some of the impetus behind this trend. Joining the CONVERSATION is journalist JOHN AIDAN BYRNE
The US Federal Reserve has been relentlessly jawboning the market with talk of monetary tightening to tame inflation. "We've had the Fed pound on us for a couple of months," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, in this episode, explaining the latest phase in this bear market (with occasional rallies). "We've had a general consensus in the marketplace that we could have a recession with the first big rise in interest rates." With inflation in the crosshairs of the Fed and US consumers, BOVE, addresses the present trajectory of inflation with the sharp decline in the money supply, price declines in some sectors, and a build up in inventories at retail giants.
The CONVERSATION turns to the tragedy of the war in Ukraine, and the rise of the military industrial complex. BOVE looks at the history books for a better understanding of the brutal invasion of the Ukraine by Russia, is skeptical of media coverage on the progress of the war and on who is "winning." MAT VAN ALSTYNE, co-founder and managing partner at ODEON, says if Russia were truly winning, it would not have retreated from Ukraine. "I think what is happening is that Russia is not losing," he says in this episode. Also, the BOVE presents his outlook on a roster of regional bank stocks. Joining the CONVERSATION is journalist, JOHN AIDAN BYRNE
This episode traces the start and origins of today's rising inflation, which clocked in at 8.6 percent in America last month. On February 18, 2021, DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, published a series of assertions on inflation. BOVE warned that inflation would be "out of control" by yearend, noting how the Fed was expanding its balance sheet to pay for Federal deficits. Now the Fed is embarked on a series of interest rate rises while at the same time shrinking its balance sheet to tame inflation. That raises borrowing costs and presents a host of monetary challenges.
"It appears that the Federal Reserve may have at least $2.79 trillion in securities worth less than what the Fed paid for them," BOVE said in a recent note, laying out one example. "If the Fed were to sell any of these securities, it would require posting a loss when the Fed reports its quarterly numbers."
BOVE and MAT VAN ALYSTYNE, Odeon co-founder and managing partner, in this episode, see in the recent plunges in the major indices, the hand of the Fed. "The markets recognize that change is coming," BOVE says. "Investors clearly recognize that the Fed is unlikely to walk away to kill inflation." Also in this episode, BOVE sees a bright future for US banks after the nation emerges from a coming recession. Banks will then see a surge in business lending activity, he says. He explains why. Joining the CONVERSATION is journalist, JOHN AIDAN BYRNE.
The US Federal Reserve is embarked on a campaign to shrink its nearly $9 balance sheet at the same time as it raises interest rates. The goal is to tame America’s white hot inflation. But the Fed’s dramatic action is fraught with serious challenges. As DICK BOVE explains in this episode, the Fed is unloading securities in this new era of rising interest rates, securities purchased earlier in an ultra-low rate environment that juiced the American economy. The Fed is now facing negative equity since it will sell securities at a loss. “The Fed has done a horrible job in the construction of its balance sheet,” says BOVE, chief financial strategist at Odeon Capital Group.
In this wide-ranging CONVERSATION, MAT VAN ALYSTNE, Odeon co-founder and managing partner, reminds the panel of what one former Federal chair is quoted as once saying, “98 percent of monetary policy is talk and 2 percent action.” VAN ALYSTYNE wonders aloud if Jay Powell, the current Fed chair, is “just talking a big game” in tackling America’s inflation and rising prices. BOVE presents Odeon's indexes of prices from currencies to energy and food.
Joined by host JOHN AIDAN BYRNE, this episode will look at the evidence of China in a weaker economic state with a tour de force also across a range of today’s newsmakers, from the sad and shocking war in Ukraine to hopes for a coming revival of American manufacturing and the culture wars at Disney.
On the same week that Federal Reserve Chairman Jerome Powell met with President Biden in the White House—and as the administration highlights its determined effort to tame raging inflation—both Wall Street and Main Street are on tenterhooks. "It's a battle between Main Street and Wall Street as to who controls the Federal Reserve," says DICK BOVE, in this episode.
BOVE, chief financial strategist at Odeon Capital Group, says fighting inflation, taming prices on the grocery shelves and at the gas pump, are Main Street's priority. Wall Street, on the other hand, is more concerned about rising interest rates and how that could sharply curb and prevent the market from "rising substantially higher," he adds. Whose side is the President on? BOVE has the answer. Wall Street, meanwhile, is already feeling the sharp blow of the market pullback. "Dead cat bounces in the middle of a declining market are nothing new," says MAT VAN ALYSTYNE, Odeon co-founder and managing partner, explaining the recent surge in the major indexes.
In the MAIN SEGMENT of this CONVERSATION, the US housing market is in the spotlight with weaker sales and prices anticipated by BOVE. "Housing will slow down, and it will slow down meaningfully," according to BOVE. Joining the deep dive is host JOHN AIDAN BYRNE who asks BOVE for his assessment of housing price trends in the US in light of recent forecasts by several major banks. Also under the spotlight is the emergence in the US of "housing slums", properties owned and operated by investors.
The biggest banks in America are racing to ramp up their digital platforms for consumers with cloud-based technology that allows them to expand and radically enhance their range of products and services, and overall customer experience. JP Morgan, for example, plans to spend $14.1 billion this year, much of it on new technology solutions. The tech investments by banks is driven in part by fear of competition from smaller innovative fintech upstarts, as well as a demand for superior digital and mobile services by customers.
The heavy spending is taking its toll though on the smaller banks in America unable to compete. Consequently, some 50 to 100 are closing every quarter. "The banks are operating on the theory that you have to get to the customer at the time the customer wants the loan—or even before," says DICK BOVE, chief financial strategist at Odeon Capital Group who shares his latest research in this episode. Meanwhile, the traditional brick and mortar branches are being reimagined for a new customer experience. In a surprising twist, Chase Bank announced the introduction of new travel agency services at physical branches amidst this tech overhaul.
The episode opens with a look at the markets, identifies a paradigm shift, and discusses the latest stock market plunges. How did this all start and what are some market commentators and pundits missing? "Money printing used to be the solution," according to BOVE. "Now it is the problem." Across the world. MAT VAN ALYSTYNE, sees bifurcation like in the days of the Cold War, as the conversation turns to international affairs. Joining BOVE and VAN ALYSTYNE is journalist JOHN AIDAN BYRNE
With bitcoin and other crypto assets having entered a so-called ‘crypto winter’, DICK BOVE, chief financial strategist at Odeon Capital Group, explains what's behind the sharp decline in crypto values. Although there was some slight recovery early this week, crypto losses so far have been cruel and brutal for investors. Bitcoin reached just over $25,000—its lowest point since July 2020—last Thursday, its lowest point since the summer of 2020. Last week, some $200 billion in crypto assets were erased following the collapse of "stablecoin" TerraUSD.
Also in this episode, BOVE discusses his latest in-depth research on the US financial system, examining three distinct periods in recent history and the major impact of the pandemic with massive money printing and the Treasury deficit. BOVE describes the risks of a recession and the major beneficiaries of an economic recovery, in particular, the Treasury, Federal Reserve and the US banks. MAT VAN ALYSTYNE, Odeon co-founder and managing partner, joins this Conversation along with journalist, JOHN AIDAN BYRNE.
Citigroup’s stock is selling at the same price it held when John Reed was CEO back in 1993, according to Bloomberg. That's what DICK BOVE, chief financial strategist at Odeon Capital Group, notes in his latest report. “It is at a 20 percent plus discount to book value. Clearly, investors have lost faith in the company,” he says. "So, what went wrong and why is this company still around?” BOVE asks. “I would argue that the core problem with this company goes back to [its former CEO] Walter Wriston’s belief in Spenserian management. By pitting one manager against another the bank became silo-ized. Everyone paid attention to his/her turf to the exclusion of the company. The enemy was not across the street, s/he was across the hall.” BOVE lays out his case for Citi in this episode and assesses the task ahead for and performance of Citi CEO JANE FRASER.
In this same episode, BOVE also discusses his new research on Fannie Mae, describing its huge balance sheet as a “lie.” Fannie Mae, the largest holder of home mortgages in the US, is at the heart of a deteriorating home buyers market in the nation, he says. BOVE contends that Fannie Mae is able to avoid common accounting standards and, in essence, "state whatever it so chooses." Fannie's style with language and disclosure, he says, is akin to what happens in George Orwell’s 1984, where an oppressive government develops a language called Newspeak. Fannie, BOVE says, is run on grim socialistic terms with staff exiting in droves.
This episode also looks at the impact of the latest interest rate rises by the Federal Reserve in the face of rising prices and inflation. Odeon's MAT VAN ALYSTYE notes that the era of easy money, and the legacy of quantitative easing, is still here despite the Fed's initial efforts at curbing inflation and scaling back its balance sheet. That's because interest rates have only risen 75 basis pounds since the latest round of increases while Fed tightening of its balance sheet has yet to earnestly occur, he says. BOVE and VAN ALYSTYNE are joined by journalist JOHN AIDAN BYRNE in this lively and informative show on all things money and markets
Episode 15 examines the banking industry close up with a nod to the Great Reset debate popularized by Klaus Schwab and Thierrry Malleret and the World Economic Forum in Davos, and inspired by the Covid-19 crisis. Central bankers worldwide responded to the crisis by massive market interventions and money printing when shutdowns and locksdowns threatened a global depression and social chaos. In the US, the Fed is navigating the latest stages in the economic recovery and the "new normal." All this occurs amidst the bear market and soaring inflation.
“The whole nature of the economy will change – a Great Reset will, in fact, occur,” according to DICK BOVE, chief financial strategist at Odeon Capital Group, in his latest research. “Banks will be significant beneficiaries of this change.” BOVE notes that while the financial system and the economy is in the process of adjusting, there is likely to be some turmoil in the unfolding drama.
Appropos, BOVE’S new research is titled, Bank Stock Positioning. Key Investment Points for the Great Reset.
This episode picks up on new research by Odeon Capital Group’s DICK BOVE to examine the future of cryptocurrencies, in particular the most popular digital currency of them all, Bitcoin. BOVE says Bitcoin has delivered for investors but the famed bank analyst is critical of this currency as a substitute for conventional money. “This leads to the question as to whether it can actually hold its investment value if it has lost its functional value,” according to BOVE, chief financial strategist at Odeon Capital. “I would think not but we shall see.” MAT VAN ALYSTYNE questions BOVE’s outlook, arguing, for example, that it has proven to be a store of value in some instances.
Also, with host JOHN AIDAN BYRNE, this episode will ask what’s ahead for Twitter following Elon Musk’s acquisition of the social media platform for $44 billion. BOVE reminds listeners that Musk is the Thomas Edison of our age, an enterprising genius with a proven track record. VAN ALSTYNE says that stellar record augurs well for Twitter. The episode opens with news on the latest activities of the US Federal Reserve.
The US Federal Reserve has still not tightened monetary despite a stream of words to the contrary. From the biggest banks such as JP Morgan and Citi to the smaller players in the sector, this Fed liquidity is playing into their outlook and performance, according to DICK BOVE, chief financial strategist at Odeon Capital Group. “Restructuring bank portfolios is going to be very important based on an understanding that the macro environment has changed dramatically,” he says.
BOVE, who has made numerous broadcast appearances during this earnings seasons, says banks and industry commentators have constantly stressed the benefit for their earnings of rising interest rates. However, this misses the complete reason, BOVE says. "Therefore, when bank stocks did not rise sharply in the recent period of interest rate increases, the question keeps coming back: Why aren't these stocks rising when interest rates are rising," he asks.
In this episode, the Conversation opens up with a look at the shocking war in Ukraine and the potential consequences for the West if there is no satisfactory end to the bloodbath and the loss of human life. Also, the episode examines the $43 billion bid by Elon Musk to buy the social media giant, Twitter. The panel all agree he’s undoubtedly an entrepreneurial genius, the Thomas Edison of our day. And we go deeper.
This week, the US Labor Department reported that consumer prices were 8.5 percent higher than 12 months ago, the biggest jump in prices since 1981. From rising prices for fuel, food, housing and rent, as well as a panoply of goods and services, this price surge has triggered anxiety for consumers, businesses and the Federal Reserve. ODEON CAPITAL CONVERSATIONS will take a deep dive and examine the Fed's dilemma. If the US hits a recession after interest rates are jacked up to tame inflation, will the government act in a "fiscally responsible" manner to manage spending as tax receipt decline, asks panelist MAT VAN ALYSTYNE? Alternatively, he further adds, will it take the easy money approach, printing more dollars to make up for shortfalls in spending programs?
Meanwhile, Fannie Mae is in the midst of a massive management crisis. According to DICK BOVE, chief financial strategist at Odeon Capital Group, it is larger than anything he has ever seen in a profitable company in more than his five decades of analyzing businesses. "The CEO and the Chairperson of the Board are bailing out," says BOVE. "This is more typical of what happens in a socialistic organization run by politically motivated leaders than a truly capitalistic company -- which this organization decidedly is not."
With lively arguments and contributions by BOVE, Odeon co-founder VAN ALSTYNE, and journalist JOHN AIDAN BYRNE, this episode will present a picture of the financial and structural choices now facing Fannie, the government sponsored housing behemoth.
DICK BOVE points out that Fannie:
• Is effectively 79.9% owned by the U.S. government.
• Its operations are totally controlled by the government.
• Quarterly, it provides more than 100% of its profit to the government. "I have repeatedly compared this organization to George Orwell’s well-known book 1984," says Bove.
• Its accounting policies are, in my personal view, as close to pure fraud as any I have ever seen.
• Its policy of Newspeak whereby management refuses to discuss any aspect of the business with investors or the public must make China’s Xi Jinping envious.
This episode of ODEON CAPITAL CONVERSATIONS unpacks a lot of topical material at the center of debate and analysis on Wall Street and the financial markets in today’s fast-changing markets. From the talk of recession and a major development at Fannie Mae and Freddie Mac, to the “multiple problems” for banks and the latest sanctions on the payment of Russian debts, the conversation will debate different sides of the analysis by DICK BOVE, chief financial strategist at Odeon Capital Group.
As the brutal war in Ukraine rages on BOVE, MAT VAN ALYSTYNE and JOHN AIDAN BYRNE, will look in particular at the fresh sanctions on the payments of Russian debt in the wake of the massacre of civilians in Bucha. “I have argued for years that weaponizing the dollar may not be advisable,” according to BOVE. In this light, the CONVERSATION then takes a look again at the US dollar as the dominant global reserve currency with VAN ALYSTYNE and BYRNE countering BOVE’s long standing thesis.
Back in 2008, the US government's takeover of troubled mortgage giants, Fannie Mae and Freddie Mac, two agencies established to reduce risk in the housing market, was hailed by many as a crucial step in helping to solve the pain of the subprime housing crisis roiling America. Fueled by the global financial crisis, the nation had a glut of vacant homes for sales, soaring foreclosures and rising unemployment. In these dire circumstances, the government's control of Fannie and Freddie moved forward, placing them in government conservatorship, and giving Washington 100 percent of their profits. It was a radical move. The government, in effect, had now become the nation's mortgage lender in a marketplace now estimated at $12 trillion.
Today, with the US Federal Reserve scrambling, at least in theory, to take control of a massive balance sheet and tighten monetary policy, the "nationalization" of Fannie Mae and Freddie Mac, still in place, raises disturbing questions for the viability of the US housing market, according to DICK BOVE, chief financial strategist at Odeon Capital Group. "This is the most outrageous and unbelievable situation I have ever seen in my 55 years in looking at companies," BOVE says in this episode, castigating the government for undermining free market values and damaging the future prospects for home ownership. BOVE contends that "dirty games" were played at the highest levels to help preserve Fannie and Freddie under government control.
BOVE is joined on this episode by MAT VAN ALYSTYNE, co-founder, Odeon Capital Group, and journalist JOHN AIDAN BYRNE. The trio will also examine broader issues in the housing market, in particular, whether it can continue to move forward with the same level of strong blockbuster sales and rising prices.• VAN ALYSTYNE AND BYRNE see a continuation in the overall housing activity citing data and anecdotal evidence. Bove disagrees. "The rapid rise in money costs," Bove writes in a research note, "combined with the exit of the Federal Reserve from the markets will make housing purchases un-affordable so that demand cannot be actualized."
DICK BOVE, chief financial strategist at Odeon Capital Group, has outlined how In its recent press conference, the Federal Reserve implied two adjustments in interest rates would be made in the coming months:
· The Federal Funds rate could be increased 7 times this year to what might be 2.00%
· The Federal Reserve balance sheet might be reduced in size by an unknown amount.
"Assuming this would happen," BOVE wrote to investors, "it is fair to speculate as to what this would mean to the United States financial statement and to financial statements of the Federal Reserve itself. The numbers are frightening. They imply that the Federal Reserve might not be able to pursue a course as rigorous as the one implied."
The numbers are indeed frightening, if not apocalyptic:
· Interest payments by the United States could conceivably reach the annual level of $620 billion by year end 2022, all of which would have to be borrowed in the open market.
· The real equity of the Federal Reserve, to the degree it exists, would be wiped out.
This episode will take a closer look at the implication of this soaring debt bill both for the US Federal government and the Federal Reserve with commentary and further analysis by Bove. The conversation with BOVE, MAT VAN ALSTYNE, Odeon Capital Group co-founder and managing partner, and journalist JOHN AIDAN BYRNE, will also turn to the brutal war and humanitarian crisis in Ukraine as well as to the markets and global affairs.
The recent positive move in the stock market indicates how significantly investors have insulated themselves from reality, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. In support of this argument, BOVE cites some tragic developments:
- Russia bombed a children’s hospital
- Their publicity suggests that they are about to use biological weapons
- They clearly do not believe that the western democracies will react to any of this.
- Therefore they intend to use any weapon that they have up to and including a nuclear disaster at a Ukrainian electric plant to capture Ukraine.
"Investors [yesterday] assumed that none of this means anything," BOVE recently told investors. "The only message to take from this war is that the Fed will not meaningfully tighten monetary policy. In essence game on. Let’s go buy stocks."
BOVE asks is it possible that investors were wrong? "It is possible that Russia has now crossed every line that can be drawn," he continued. "It is possible that the west will now respond in force. It is possible that Russia has all of Europe on its knees including the United States." BOVE presents a brilliant personal example from real life to illustrate his case.
BOVE presents the "possibly not" scenario as well, in his note to investors. "The French President has now demanded an immediate cease fire," BOVE outlines. "He has now crossed a line from which he cannot step back. The situation is going to get far worse before it gets better. Investors need to at least start thinking about this."
This episode with DICK BOVE, MAT VAN ALYSTYNE, co-founder and managing partner at ODEON CAPITAL GROUP, and journalist, JOHN AIDAN BYRNE, will also take a deep dive into the market and a closer look at how the latest global upheaval influences the course of the US dollar as the world's dominant reserve currency.
The big banks and most large regionals in the US have major technological advantages, according to DICK BOVE, chief financial strategist at Odeon Capital Group. Today, there is no non-bank financial company or Fintech—bank rivals seeking market share—that can match bank technology across the board, he says. Fintechs, however, can develop niche products that “banks should have developed.” Adds Bove: “Fintechs have a proven ability to rethink legacy businesses and redefine them.”
Still, the big banks are in the catbird’s seat by their sheer structure, scale and size. With the war in Ukraine causing the insufferable loss of human life, carnage and property damage, dividing the world into two camps, the bank sector is adjusting to the new reality. Major pools of cash that can propel them to new heights is a clear upside for big banks, Bove says. After earlier periods of modernization and major change, it's another revolution in banking in this era of robotics. This episode takes a closer look at BOVE’S research and at how the banking industry is being refashioned into tech-fueled hubs of financial and digital innovation for customers and bankers.
In this episode, ODEON CAPITAL CONVERSATIONS presents parallels in history to understand the future of the globe with the invasion of Ukraine by Russia. What does this shocking unfolding of events in Europe mean for global trade and the world economy as well as for investors and your money? This episode will ask these important questions and much more.
The invasion of the Ukraine provides clarity to the fact that there is a new Axis in place, according to Dick Bove, chief financial strategist at Odeon Capital Group. The new Axis is composed of Russia, China, Iran, North Korea, and Cuba not to mention the countries that have re-entered the Russian Federation’s orbit, he says.
Bove explains: “The words of Putin and the actions of China suggest that the goals of this new Axis are manifold:
· Create a multipolar world not dominated by the United States
· Build an economic monolith around the Belt and Road Initiative, which is now in 78 countries
· Create a new financial system more reliant on the yuan than the dollar
· Use military prowess when required. “
Bove says that the new system being posited changes the way business will be done. In the past two decades, the decision was made to pretty much open the world to global trade, he notes. “The country that could make serviceable products at low prices obtained the business. This no longer makes political sense,“ Bove says.
If the United States increases its reliance on sourcing critical goods from Axis nations, it could find itself at a terrible disadvantage in the event that Russia builds a new military machine in Western Europe or China uses the South China Sea as a national lake, according to Bove. "The United States must redevelop self-sufficiency again," he says.
With the tensions deepening in Ukraine and the invasion by Russia as the startling and grim backdrop, this episode will ask what does this all mean for investors and your money, and take a deep dive into our first four episodes that launched ODEON CAPITAL CONVERSATIONS.
Eps 1: In the eye of the financial storm, a heavily-indebted Fed, signaling interest rate rises, is 'in trouble', says Dick Bove. The conversation takes a closer look & asks the big questions
Eps 2: DEER IN THE HEADLIGHTS: FED in deep state of fear & paralysis, unable to count money supply, says Dick Bove. Fed must fight inflation, soaring debt & calm markets
Eps 3: SURGE IN AMERICAN HOUSING SLUMS: Why US landscape could soon be dotted with thousands of slum dwellings as big investors swoop up land and properties in a dysfunctional market
Eps 4: CHINA SUPERPOWER? How China, a totalitarian state, plays financial hardball in cahoots with Russia to subordinate US & become a big global player—with dominant reserve currency, according to DICK BOVE
Is China a rising financial superpower with a currency, the yuan, on course to become a dominant world reserve currency at the expense of the US dollar? This episode will examine the evidence on many sides, looking at the latest research by DICK BOVE of Odeon Capital Group, and at a mountain of other evidence and statistics. MAT VAN ALSTYNE, Odeon co-founder, will offer a fresh perspective on how this complex geo-political and economic game could change the course of history. Your host is journalist, JOHN AIDAN BYRNE
"There is no question as to what the Chinese want to accomplish," writes BOVE. "It has publicly stated its intentions and it has been supported in its efforts by the Russians and other countries in its political orbit. This raises the question as to what American financial companies can do for China."
China is seen as the most influential economic power in Southeast Asia, according to a new poll, although there’s caution over Beijing’s territorial positions over the South China Sea. A survey of 1,677 Southeast Asians by the ISEAS-Yusof Ishak Institute showed 76.7% regard China as the most influential economic power in the region, followed by the U.S. at a distant 9.8%. Washington trailing in second place comes after the Biden administration finally unveiled its strategy to engage with Asia last week. Half of those with a positive view of China however say that perception could be negatively impacted if Beijing continues to expand its influence in their country. Source: Bloomberg
Catalogue of modern developments in China's economic evolution & development, compiled by DICK BOVE:
· The country joined the World Trade Organization
· It obtained the IMF approval for the yuan to be considered a global reserve currency.
· It established the Asian Infrastructure Investment Bank as an IMF/World Bank alternative.
· China has developed its own cryptocurrency and forced other similar currencies out of the country.
· It has loaned an estimated $5.6 trillion to 165 countries
o An estimated 42 of these countries owe more than 10% of their GDP to China
o The total amount owed relative to global output is not known but has been guesstimated to be 6% of total world output.
o The United States owes China over $1.1 trillion.
· China has structured trade deals with multiple countries where the only currency used is the yuan
o Russia
o Iran
o North Korea
· The country’s banks are the largest in the world.
o They are funded with yuan
o They have developed investment banking skills learned from the Americans.
China has exerted increased political control over companies that are supposedly owned by public investors.
Dick Bove, chief financial strategist at Odeon Capital Group, in a recent report. The Great American Slum Building Project, laid out his case for why America needs Fannie Mae and Freddi Mac, two housing agencies in the mortgage lending market, free of government control. This government stranglehold has ultimately led to major challenges and problems in the proper functioning of these agencies in the housing market, according to Bove. (The US government took control of Fannie Mae and Freddi Mac and 100 percent of their profits in 2008, in the wake of the financial crisis. These agencies were set up to reduce risk to lenders in the housing market.)
This episode with Bove, Mat Van Alstyne and John Aidan Byrne will open with a look at the market and then have a lively debate on Bove's reports and studies on the challenges for US housing. It will also look across the globe from Ireland to Japan where housing is also a hot debate amidst shortages of affordable homes, rising rents and vulture funds swooping down on national economies.
As the US national debt hit a new milestone and surpassed $30 trillion for the first time on record, this episode of ODEON CAPITAL CONVERSATIONS examines the extraordinary challenges facing one of the world’s most powerful institutions, the US Federal Reserve. Dick Bove, chief financial strategist at Odeon Capital Group, identifies the US money supply as a source of what is going wrong. Bove says the Fed is missing the mark: It is not measuring and calculating the money supply. Meanwhile, the national debt keeps surging, fueled by massive social spending, partly in response to Covid-19 relief measures. The national debt has risen a jaw-dropping $7 trillion since the end of 2019. This episode takes a broad look at what is happening, starting with the money in our economy, from the greenback to bitcoin, as our Odeon Capital Conversations trio pursue the deadly forces driving inflation. Are we headed to the double-digit inflation of the 1970s or reminiscent of the Weimer Republic? This episode will take a look at the potential for this disaster and much more.
Episode 1 of Odeon Capital Conversations hits the airwaves during some of the most stomach-churning and significant events on Wall Street in recent months—from anticipated interest rate increases to market turmoil and volatility. This comes just as one of the strongest recoveries on record has turned bearish and spooks investors. Odeon’s Dick Bove and Mat Van Alstyne take their first deep dive in a wide-ranging conversation, starting with the Federal Reserve’s money printing machine, stimulus spending and how it could play out in the coming months. Is the economy facing a prolonged period of inflation, or will that abate as soon as the nation returns to business as usual in a post pandemic world? Could America face a future similar to Japan, an economy led by 20-plus years of near zero interest rates? Is the balance sheet of the Fed, heavily borrowed, a disaster and in trouble? These are some of the questions Dick and Mat answer and debate, each sometimes reaching sharply different conclusions. Host John Aidan Byrne moderates and joins the debate at key turning points in this rich conversation that will keep you informed and on top of the macro and not so macro pictures.