Uncle Sean's Update - 4/11/24

Happy Fri….  err - I mean Thursday!!!!
 
This week comes out a day early as I am traveling for a family wedding tomorrow (congrats to Laurel and Brandon 🍾🎉❤️); and I can’t wait to see everyone!!!!  Here is the Uncle Sean Update for 4/11/24:
 

• Right off the bat, Uncle Sean goes off the rails….. 😊
  • Is “rate watch 2024” starting to get boring? 💤🥱  Okay, maybe “boring” is not the correct terminology – but “rate watch fatigue” is certainly becoming a thing for me anyway.
    • Yes, we saw March CPI come in hot again at 3.5% over last year (expectation was already considered hot at 3.4%).  This marks the third straight month where headline inflation is running hotter than expected.
    • Yes, we saw the 10 Year Treasury Yield (widely viewed as a base barometer for mortgage rates) close at 4.531% on 4/10 – the highest close since the spike last year in Oct – Nov (which was the highest since 2007). 
    • And yes, the 10-2 Treasury Yield Spread has been consistently inverted for almost 2 years now.
    • My thoughts (not that anyone is actually asking – LOL) are that it appears we are simply splitting hairs at this point and paying way too much attention to market expectations and short-term movements.  Facts are that monetary policy is still restrictive; and we are still in QT mode.  Chairman Powell’s consistent message of exercising patience, being data dependent, and that the road to inflation / rate normalization may very well be “bumpy” is now more relevant than ever.  The items I am more focused on are the actual unemployment rate, GDP, and asset quality (credit issues from both the consumer as well as commercial).  Keep an eye on credit reserves from the big banks that report this week and next as they can be a pretty good indicator of macro asset quality shifts; and keep in mind that the “Commercial Office Space Boogeyman” (LOL) that the media continues to hype on will be bank specific in large part to geographic market specifics, and most likely play out over the next couple of years.
      • Final punchline – we are still learning about pandemic induced economics on a global scale.  And considering what we went through, I think we are doing pretty good so far! 😎  Of course, large deficit spending will be inflationary in the long run, but that’s another discussion for another day (and for people that are far smarter than me to solve 🤠).

 

• 👀 Santander (yes, the Spain-based global banking conglomerate) to introduce Openbank in the US in the second half of 2024.  Openbank is a 100% digital bank and is currently Europe’s largest 100% digital bank by deposits.
  • Per the PR, the Openbank launch in the US will be used to generate deposits (liquidity) to fund its auto franchise of Santander US.
  • I am assuming that the deposits will be FDIC insured through its US banking subsidiary, Santander Bank, N.A. (FDIC 29950) which is a $100B bank.

 

• Busey Bank (FDIC 16450; Total Assets $12.3B) partners with CorServ to launch a credit card program for their commercial customers.
  • Uncle Sean has been seeing a lot of activity out of CorServ this year in helping banks launch modern commercial card issuing. 🚀

 

• FinGoal announced a strategic partnership with Quiltt to utilize Quiltt’s single unified API platform for open banking with an aggregator-agnostic developer solution (that was a mouthful – I hope I said that right! LOL).
  • David Nohe, CEO of FinGoal stated, “Our friends at Quiltt have made this really beautiful API layer that allows the developer to link and connect to just one single unified API and then orchestrate the way that the data moves through. So no matter which users are linking through which aggregator, all of that transaction data can then be funneled through FinGoal to clean it up, normalize it, determine what the customer needs next – without having to build any extra integrations. That’s the real magic of Quiltt.”

 

• Empower announced a definitive agreement to acquire Petal (consumer CC platform); and also announced the completion of Cashalo acquisition.

 

• Tradeweb Markets (Nasdaq: TW) to acquire International Cash Distributors (ICD), a Denver-based investment platform for corporate treasury professionals, for $785M.

 

• DataVisor has partnered with Mitek (NASDAQ: MTK) to enhance check fraud protection.  “By integrating Mitek’s Check Fraud Defender, a consortium based check fraud detection solution with DataVisor’s advanced machine learning and real-time data analysis, financial institutions (FIs) can now benefit from industry-leading check fraud protection within a single platform.”  NICE!!!! 😊

 

• ICYMI, Jamie Dimon released his annual Chairman & CEO Letter to Shareholders this week.  Some key observations (with the perspective that Mr. Dimon is supposed to pessimistically seeking out risks that may or may not have yet manifested):
  • AI certainly has Mr. Dimon’s attention and is “completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.”
  • Persistent inflationary pressures such as “ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future…”
    • Specifically noted that fiscal deficits today are in a boom time economy – not as a result of a recession; and further supported by QE which was never done before the great financial crisis.
  • Geopolitical tensions and the unknown effects of quantitative tightening (QT).
  • Interest rate risk and the impact to commercial office real estate collateral valuations (most notedly if long-end rates go above 6% and then followed by a recession).
  • And of course, regulatory pressures that might create undesired consequences.

 

• Notable FinTech funding for the week:
  • Adro (neo immigrant bank) $1.5M in pre-seed funding to help U.S. newcomers gain access to banking and financial services.
  • Summer (workplace student loan solution) raised $9M in capital in an undisclosed round.
  • Zinclusive (consumer lending) raised $10M in funding in an undisclosed round.
  • Parafin (embedded finance infrastructure for small business growth capital) raised $125M warehouse credit facility to expand capital to merchants on platforms such as DoorDash and Amazon.

 
 
Random Uncle Sean stuff:

• Yessir – Uncle Sean was fortunate enough to drive about an hour North to the Mount Pleasant, TX area to experience the eclipse in the path of totality with just minimal cloud cover.  The total eclipse lasted a little more than 3 minutes and 50 seconds.  The temperature dropped, it got pretty dark, and the stars came out.  Definitely did not expect that! 
  • Credit my old friend Dean Robinson with his FB post regarding one reporters coverage of the eclipse:
    • “All across the United States there are people standing side-by-side, looking up at the sky with a smile on their face in various stages of celebration.  Everyone is filled with joy and wonder and for the first time in a long time, there’s no division, and folks are standing together unified.  We need a lot more of that.” ❤️
• Russ Cook (dubbed the “Hardest Geezer”) finished running the entire length of Africa – over 10,000 miles through 16 countries in 352 days. 🏃  Holy smokes!!!
  • And here I am impressed with the fact that I got the yard mowed! 🙄

• Let’s wrap it up with some Dad / Bad jokes for the win!!!
  • You ever have those days at work where you just keep hitting the esc button, but you are still there???  🫥😅
  • Don’t fall into an infinity pool – it’ll take forever to get out!!!
  • Microbiologists are a lot taller than I thought….
  • Technically speaking, if you take up meditation you are no longer just sitting around “doing nothing.”  Follow me for more time management tips! 🤠

 
 
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.