Some things of importance

I'll save my comments on the proposed tax proposals heard last night for when they might pass and with a split Congress currently, they have no chance. 

A day after NY Community Bank was saved, the FDIC released its Q4 Banking Profile. The banking industry saw a modest 2.3% y/o/y net income decline but it was more pronounced for community banks which saw a 9.9% y/o/y profit decline. The net interest margin fell a touch "as greater interest expense on deposits and non-deposit liabilities more than offset an increase in asset yields."

This was of note, "Asset quality metrics were favorable overall, although deterioration is evident in commercial real estate and credit card portfolios...Weak demand for office space is softening property values, and higher interest rates are affecting the credit quality and refinancing ability of office and other types of CRE loans." I talked about the 'other' yesterday in that it could be ANYONE with a loan coming due this year. "As a result, the noncurrent rate for non-owner occupied CRE loans is now at its highest level since 1st quarter 2014, driven by portfolios at the largest banks. Similarly, the noncurrent rate for credit card loans is at its highest level since 3rd quarter of 2011." My bold for emphasis. 

Maybe we are on the cusp of seeing some more housing supply? The Fannie Mae Home Purchase Sentiment index for February was slightly higher m/o/m as "Consumer attitudes toward home selling conditions increased markedly in February, with current homeowners, in particular, expressing greater optimism that it's a 'good time to sell', a development that may foreshadow an upcoming increase in existing home listings." Let's hope because we need lower prices in order to help the first time buyer as "The share of those who believe it's a good time to buy a home ticked up slightly this month but remains at an extremely pessimistic 19%." 

Ahead of next week's CPI and PPI, Manheim said its wholesale used car price index fell .1% m/o/m and down by 13.1% y/o/y. They said, "Though February activity was muted as we started the month, we saw more activity in the lanes at Manheim in the 2nd half of the month and finished the last week of February with some of the strongest weekly gains in wholesale prices for many years. Tax refunds have picked up over the last two weeks, with the average refund now 4% higher than 2023 levels at this time. This has put money into consumers' pockets, and retail purchase activity is increasing. In turn, dealers are coming to the lanes and buying units at Manheim right at the start of the spring selling season for wholesale markets." Goods price inflation is not dead, and the 2nd half of 2024 will see a sharp drop in the supply of used cars. 

On to some earnings calls.