Dissension within the Fed on rates/Oracle/I heard the word 'choiceful' again/Overseas

So now we have three voting Fed presidents (Musalem, Collins and Schmid) that do not want to cut rates next month. I’d say Goolsbee is also leaning towards a pause. On the flip side, we know Miran is the uber dove while Waller and Bowman would be supportive of another 25 bps lower. I’d call the balance of Powell, Williams, Barr, Jefferson and Cook more around 50/50 which is where the rate cut odds currently stand, just about.

Either way, 150 bps of rate cuts so far have done almost nothing to lower longer term interest rates so the beneficiary of more cuts really depends where on the curve one borrows. Can you borrow SOFR+? Is your loan priced off the 5 yr? Or the 10 yr? Certainly the latter if one wants a fixed rate mortgage.

The 5 yr CDS of Oracle blew out above 100 bps yesterday (would thus cost about $100k per $10mm of bond insurance) and joins the growing worries about the massive spend and obligations being created for an uncertain business model.

Oracle 5 yr CDS

Geopolitics is back with oil prices as the 2.5% rise today is in response to a Ukrainian drone attack on the Russian Black Sea port of Novorossiysk which has stopped oil exports from this facility. Also, the Iranians diverted an oil tanker to Iran that was going from the UAE to Singapore and we wait to see if this was a hijacking. I’ll argue again, a barrel of oil is one of the cheapest assets in the world right now and we are long.