I almost spit out my coffee this morning reading the Journal. Banks to Companies: No More Deposits, Please. What a fucking title.
If you follow my twitter feed I have been clowning the Federal Reserve all year saying they have no grasp of monetary policy. Given the cost of money over the last twelve months, this was an obvious outcome. Meanwhile, you have Jerome Powell, a lawyer by trade, and many others of the Fed saying they see no signs of inflation. IMAGINE A BANK HAVING TOO MUCH CASH. That would be like Hunter Biden having too much Coke, almost impossible.
Do not get me started on that old bag Janet Yellen. Inflation will be transitory? Inflation is not transitory unless rates get jacked up more than Bill Gates after a trip to Epstein Island. Unless we burn half the cash thrown into circulation in the past year, we are going to see big time inflation. I was not a math major, but that is simply math.
What many thought would be a good year for the banks given a steepening yield curve has not come to fruition. Companies have no incentive to borrow from banks as they have turned to fundraising through equity and debt offerings.
The article highlighted Verizon, a company that is incapable of making a profit-generating investment. At the end of Q1, the company reported $10.2 billion in cash on its balance sheet. This amounted to a 45% YoY increase from Q1 2020. The article also mentions a quote from AT&T’s CFO stating that the company did not plan to look to use excess cash for investment purposes to find yield.
Just like that, I now own a room full of solid gold bricks. The second half might be very ugly in the market. A little inflation with low rates is great for the stock market. A lot of inflation and rising rates will make you sweat more than a priest at a Little League game.
Stay Poor People, Inflation will do that to you
Standardly Poor 