Uncle Sean's Update - 12/15/23

Happy Friday!!!
 
It’s beginning to look a lot like Christmas 🎅🏻🎄❄️ with nine more days before men everywhere begin shopping for gifts 🎁!!!   Here is the Uncle Sean Update for 12/15/23:
 

• It’s Fed Week!!!  As expected, the FOMC voted to keep rates steady at the existing 5.25% - 5.50% where it has been since July (pretty sure that marks an official “pause” now – LOL).  Here is the rest of the detail if you want to get your “Fed Freak” on like Uncle Sean 😊:
  • The Fed will continue quantitative tightening (QT – a/k/a “shrinking the Fed Balance Sheet”) related to reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at the current rate of $60B in Treasuries and $35B in MBS per month.
    • Note that the Fed balance sheet has reduced by more than $1T in the last year (source - www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm).
  • Here is the Transcript of Chair Powell's press conference (22 pages) and here is the press conference video (45 minutes).
  • The FOMC Summary of Economic Projections (i.e. Dot Plot for us old timers) shows up to 3 rate cuts next year….  HOWEVER – I always feel it is necessary to remind folks that the Summary of Economic Projections (SEP) is not policy; but rather a median of current assumptions based on current economic data as it stands today.  And if you look back at recent history, you will see how much this can clearly change.
    • Side note - I always find it amusing how much the media wants to point out how wrong prior FOMC economic projections were, but they (media) are banging the drum right now expecting 3 rate cuts in 1Q2024 based on SEP data – LOL!!!!  🤠 

 

• Meanwhile…  the BLS November CPI Report came in at 3.1% YoY versus 3.2% in October showing that inflation is continuing to gradually moderate led by lower gasoline and offset by shelter and car insurance (Holy Moly – I feel that car insurance pain with 5 drivers in my clan – WHOOF 😬).  CNBC has a good summary as always.

 

• Also worth noting in the midst of CPI and FOMC, the U.S. 10 YR Treasury Yield has dropped over 100 bps from a high of 4.988% on 10/18/23 to 3.93% on 12/14/23…. WOW!!! 😮

 

• The Financial Stability Oversight Council (FSOC) released the 2023 Annual Report (here is the actual 145 page report with some really good data points and graphs).  Some key points:
  • Of course cybersecurity and digital assets are high on the list of potential financial system vulnerabilities.  However, for the first time ever, the FSOC has identified the use of AI in financial services as a vulnerability in the financial system.
  • Complex Fintech Partnerships (section 3.3.4 Third-Party Service Providers) – Specifically related to fintechs acting as a distribution channel in the provisioning of financial products and services directly to an end customer…  “Many fintech service providers are not subject to the same compliance requirements as financial institutions, such as requirements related to consumer protection and anti-money laundering.” Bold emphasis added by Uncle Sean.  Also referenced is heightened liquidity risk of the BaaS Sponsor Bank in the event of “an unexpected decision by the fintech to transfer deposits to another institution.”  Seems to me like this could be solved with adequate contract language though.
    • 👀 I sure hope all my BaaS, embedded finance, and fintech friends are paying attention as I am seeing more and more evidence of regulators leaning into third-party risk with AML as a leading supervisory point of emphasis.  One only has to look at recent BaaS Bank enforcement actions (including one that was made public this week) to come up with the same conclusion; and is particularly evident in the use of middleware / connectors.
      • While I’m on the topic of AML, check out The BaaS Association’s free webinar with AML Expert Sarah Beth Felix (sign up here - https://lnkd.in/gB8E-CU7) titled AML and The BaaS Ultimatum coming January 10, 2024.

 

• Hmmm – check out the heightened merger activity this week:
  • Ncontracts announced they have acquired Quantivate.
  • Webster Bank, N.A. to acquire Ametros Financial Corp.
  • GBank (fka Bank of George) acquire BankCard Services.
  • And some rumor-mill per Bloomberg - Envestnet is allegedly exploring a potential sale of Yodlee.

 

• Google Pay links up with Affirm and Zip for BNPL installment payment options to be offered early in 2024 for online checkout in the U.S.

 

• Highnote launches instant issuance, virtual card program with Fluz.

 

• MY CREDIT UNION (charter 60125) selects Allied Payment Network as its payments partner and will integrate with the credit union’s Ultracs digital banking platform.

 

• This is pretty cool as Uncle Sean is increasingly impressed with the digital innovation in cars…  Rocket Homes (part of Rocket Companies – NYSE:RKT) announced its AI-driven Rocket Homes App is now available on Apple CarPlay.  “Homes listed for sale can be seen in the ‘Nearby’ tab of the Rocket Homes app on CarPlay. With a tap of the vehicle's screen, drivers can easily get directions to the home, call an agent or save the listing to their ‘Favorites’.”

 

• REPAY (integrated payment processing) partners with Green Dot to enable REPAY business clients to accept cash bill payments (eCash) at more than 45,000 retail locations that are members of the Green Dot Network.

 

• U.S. Eagle FCU (charter 808) selects Lumin Digital to power the $1.4B credit union’s digital banking platform.

 

• Melio launches real-time payments via partner JPMorgan supporting “both The Clearing House's real-time payments network as well as the FedNow network.”

 

• Locality Bank (FDIC 59278) has partnered with Praxent to build out a data warehousing and business intelligence system to unify and streamline customer data for more informed and data-driven action items.

 

• The Federal Reserve announced that the FedNow® Service ends 2023 on a strong note with 331 institutions, headquartered in 45 states and ranging in size from under $500 million to over $3 trillion in assets, now sending or receiving on the network – after launching this past July with only 35 participating institutions.  🚀

 

• Interesting Personnel moves:
  • Discover Financial Services (NYSE: DFS) names Michael G. Rhodes as Chief Executive Officer and President.
  • The Clearing House hires Sal Karakaplan as Chief Strategy Officer
  • Truist appoints Scott Stengel as Chief Legal Officer to replace the retiring Ellen M. Fitzsimmons.  Stengel previously served as general counsel of Ally Financial since 2016.
  • Marqeta announced Alan Carlisle as Chief Compliance Officer.

 

• Notable FinTech Funding for the week:
  • Comun (Latino-immigrant focused neobank) raised $4.5M in Capital bringing their total raise to $9M since February of this year.
  • Stairs Financial (mortgage marketplace connecting first-time buyers with local lenders as well as down payment assistance) launched today with a $3.5M in Seed funding.

 
 
Random Uncle Sean stuff:

• I made a quick trip to Purcell, Oklahoma (also known as the Heart of Oklahoma) this week visiting some extended family members that I haven’t seen in far too long.  I was fortunate to go see the old train depot where my Grandpa retired, took a loop around the City Lake enjoying the wonderful Holiday decorations, and a stop off at Red Hill overlooking the old football field and the South Canadian River valley between Purcell and Lexington (I haven’t seen the new bridge which is now 4 lanes wide!).  Of course the trip would not be complete without going to Jo's Famous Pizza at 1438 S Green Ave in Purcell, OK 73080 - which is always amazing (for so many decades now).  If you find yourself in Purcell, Oklahoma – Eat at Jo’s!!! 😊🍕
• 🏈 LSU QB Jayden Daniels wins the 2023 Heisman Trophy.
• Is this the final hoorah for the 3-10 New England Patriots head coach, Bill Belichick???  Hard to fathom, but times have certainly changed for New England in the post Tom Brady era.
• And some Uncle Sean inspired Bad / Dad jokes to kick off the weekend:
  • Nothing refreshes my memory of what I need at the grocery store like arriving home from the grocery store….  😲
  • Ahh – the Grinch does not like knock-knock jokes….  Because he knows there’s a who there…  😆🎄
  • Archeologists are currently excavating the largest known dinosaur tibia to date.  Apparently it’s a real shindig…  🦖😂

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at [email protected] | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | [email protected] #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.