The all-powerful FOMC meets tomorrow and will provide us with mostly conjecture as to their continued waffle of a monetary policy. It was just a few months ago the FOMC was calling for 4 rate hikes in 2019, my how things have changed, we will be lucky to get one. The combination of balance sheet reduction and lack of global real sustainable growth has led the FOMC to produce nothing short of one’s tail between the legs.
This week we received the FED minutes and here is what Jan Hatzius, Goldman’s chief economist had to say, “the minutes of the January FOMC meeting continued to emphasize patience in the policy outlook due to uncertainty around financial conditions, slower foreign growth, and softer inflation." In simple terms its #Qe4evR!
Let’s dig into some of the Q4 bank earnings that came out last week. First up Bank of America which posted its largest full year profit in history $28.15 billion. (WSJ) So how did they accomplish such a feat, well let’s just see what their interest rate differential was, i.e. what are they paying depositors compared to the risk-free rate they earn off those deposits.
What a ride the beginning of the year has been so far. As we warned in our year end and 2019 outlook, the equity markets were most likely set up for some bottom pickers to step in and show their support out of the gates.
Its kind of amazing how at certain points in time, things happen and they tend to be a wake up call – that is if we just open our ears and listen. We have talked at length about our disdain for the likes of the big investment houses and their pitching of zero fee fund management products.