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

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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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