Uncle Sean's Update - 8/2/24

​Happy Friday!!!
 
FinTech | Banking | Data – it’s what we do!!!  Here is the Uncle Sean Update for 8/2/24:
 
Whew – there is a lot happening in macroeconomic news (and you know how Uncle Sean likes to geek out on that 🤓) – so let’s take a look at what transpired this week:
 

• It’s Fed Week!!!  Again no surprises as the FOMC held rates steady to maintain their restrictive policy at 5.25% - 5.5% (since July 2023); and continue to reduce securities holdings (QT) at $60B per month balance sheet reduction (versus $95B prior to June – aka QT Taper) in Treasury securities rolling off as they mature.  CNBC has a good summary as always.
  • Certainly worth noting the tone was definitely looking forward towards easing; and an interest rate cut could come “as soon as the next meeting” in September.  Uncle Sean is paraphrasing, but a couple of key takeaways from Chairman Jerome Powell’s press conference:
    • Normalization of the labor market continues (unemployment, wages, participation, etc.); and inflationary data continues to come in favorable. 
    • We are getting closer to the point at which we will need to dial back restriction, but we need to see more data…
    • FOMC is well positioned to respond to weakness with policy rates at 5.3%, but the data at this point is not signaling a significantly weakening economy (look at PDFP at 2.6%).
  • More details if you want it… Here is the Press Conference Transcript (24 pages), and here is the Press Conference video (47 minutes 36 seconds).
    • Okay – one last item 😊…  At about 31 minutes into the press conference video (and page 16 of the transcript), Chairman Powell states that post-pandemic learning era has been one where so many economic rules have been flouted like the inverted yield curve for starters…  This is something my colleague Rick Boals and I have been discussing pretty much on a weekly basis for a couple of years now.  Queue up the Jobs report… 😊

 

• A few days later…  The BLS dropped the July Jobs Report showing the economy added 114,000 jobs last month (estimate was 185K) with unemployment inching up to 4.3% from 4.1% (while still historically low, unemployment is up 0.6% since the beginning of the year).  Reuters is reporting that Hurricane Beryl (which knocked out power in Texas and Louisiana during the payrolls survey week) likely contributed to the below-expectations payrolls gain – although the BLS report specifically states that “Hurricane Beryl had no discernible effect” on the data for July. 🤷‍♂️
  • 👨‍🎓 Nonetheless, downward revisions continue to be the norm (source - https://www.bls.gov/web/empsit/cesnaicsrev.htm#2023; after all, this is survey data with three standard revisions after original announcement) as:
    • June was revised down to 179K from 206K as reported (a 13% miss)
    • May was revised down to 216K from 272K as reported (a 21% miss)
    • April was revised down to 108K from 175K as reported (a 38% miss)
    • March was actually revised up to 310K from 303K as reported (up 2%)
    • February was revised down to 236K from 275K as reported (a 14% miss)
    • And January was revised down to 256K from 353K as reported (a 27% miss)
      • Remember the June FOMC press conference…  You know…  The one where Chairman Powell stated (in reference to jobs created), “there’s an argument that they may be a bit overstated…”  I’ll help you – it’s on page 9 of the June transcript. 😊  Emphasis here is not to place too much weight on any one survey report (also referenced on page 9).  But the undeniable trend is to downwardly revise, so this July jobs report could actually get worse.
  • Bond and equity markets literally threw up 🤮 after the July report with some of the greatest movements coming from treasury yields plummeting:
    • 2 yr intraday was at 3.87% versus 4.38% only a week ago – a HUGE 12% downward movement in one week (source: https://www.cnbc.com/quotes/US2Y)
    • 10 yr intraday was at 3.81% versus 4.19% a week ago – down 9% in a matter of days…  (source: https://www.cnbc.com/quotes/US10Y)
    • 💥👀 2yr/10yr spread is now at its narrowest at -0.09% since it inverted in July 2022 (source: https://www.cnbc.com/quotes/10Y2YS) – WOW!!!!!
  • 🤔 My opinion (not that anyone asked - LOL) is that this is still a positive jobs report in that we added jobs, but the window for a soft landing is beginning to narrow.  Couple this with election uncertainty, deficit spending / fiscal policy, and continued / escalating geopolitical concerns continue to add fuel to jittery financial markets.  We will just have to wait and see how this plays out the rest of the year.  Fingers crossed 🤞!!!  Guessing that bad news actually means bad news now (sarcastic humor attempt)… 🤠

 
Okay – back to the rest of the headlines!!!!
 

• CSI launches their expanded Developer Portal making it easier for community bank partnerships and fintech integrations.  “In addition to a growing list of integrated fintechs and integrators, CSI community banks and developers now have access to new documentation methods, resources and standardizations that simplify the implementation process and accelerate time to value.” 

 

• Vantage Bank Texas (FDIC 3405; Total Assets $4.4B) partners with Cable for regulatory compliance, risk management, and scalable growth in the banks embedded banking / fintech program.  Nice!!! 😊
  • Check out Cable here - https://cable.tech/

 

• TransPecos Banks (FDIC 11178; Total Assets $837M) selects Oscilar’s AI-Powered AML Risk Platform to capitalize on growth opportunities in TransPecos Banks’ fintech programs while ensuring robust regulatory compliance for BaaS.  Per the press release, the implementation of Oscilar’s platform is expected to deliver $3M in annual cost savings (WHOA!!!) to the bank by reducing the cost of AML Operations, reducing Alert Review & Case Investigation, and reducing SAR Management.
  • Check out Oscilar here - https://oscilar.com/

 

• 👀 Well, well, well….  Fifth Third Bank (FDIC 6672; Total Assets $212B) announced that Newline™ by Fifth Third, a leading embedded payments provider, will  power Stripe's embedded financial services for Stripe’s platform users and their customers.
  • Not 100% sure if this is a move completely away from Evolve Bank & Trust or a simple matter of vendor diversification strategy of having two sponsor banks.  Time will tell…
    • Anyone else recall last year when Fifth Third acquired the BaaS platform Rize, an embedded payments platform – wink, wink 😉???

 

• It’s been a minute since 1033 has grabbed headlines…  Plaid announced 1033 and open banking solution to help data providers and recipients prepare for new compliance obligations related to open banking via their Open Finance Solution that includes:
  • Core Exchange - Enables FI’s to build open banking API’s themselves
  • Permissions Manager - Provides a permissions manager to allow FI’s to see where customer accounts are connected
  • App Directory - Dashboard with insights about the thousands of apps on Plaid’s network

 

• BankBound announces partnership with Narmi to accelerate deposit growth for FI’s via online account opening.

 

• Northeast Bank (FDIC 16659; Total Assets $743M) partners with Corserv to launch a comprehensive credit card program for their business and commercial customers.

 

• Educators CU (Charter 66448; Total Assets $3.37B) adds BNPL to its suite of digital banking services by partnering with equipifi.
  • Check out equipifi’s blog this week where they highlight their equipifi BNPL 2.0 integrated with the FI’s existing online app enabling pre-purchase BNPL loan as well as post purchase ability to split into installments with funds deposited back into the end user account.

 

• Addition Financial CU (Charter 78773; Total Assets $2.94B) partnered with Lumin Digital to launch a new cloud-based digital banking platform for its members; as well as a dedicated experience for business members.

 

• Highland Bank (FDIC 16111, Total Assets $760M) partnered with MANTL to overhaul its account opening process and deposit onboarding experience for their business and consumer customers.  Includes automation of “over 90% of application decisions, including KYC, AML, BSA, product service ordering, funding, and core booking, to create efficiencies and keep manual processes to a minimum.”

 

• Monzo launches interest on Savings Jars in the US (via Sutton Bank as Sponsor Bank) with rates up to 4.25% with qualifying direct deposit and no fees.

 

• Personnel moves:
  • LoanPro announced Chris Trujillo has joined their executive team as General Counsel.
  • Melio named Nicholas Passarelli as Chief Compliance Officer.

 

• Notable FinTech funding for the week:
  • Monto (AI connector designed for any ERP, enabling B2B AR teams to seamlessly receive payments from any AP portal) raised $9M in Seed round funding.
  • Bilt Rewards (loyalty and rewards platform) raised $150M in capital citing a 50% increase in platform spend since their last funding round in January.

 
 
Random Uncle Sean stuff:

• Prisoner swap…  Welcome home 🙏 Evan Gershkovich (32 year old Wall Street Journal reporter), Paul Whelan (54 year old former US Marine), and Alsu Kurmasheva (47 year old Russian-American journalist).  AP coverage here.
• 🏈 Big changes to NFL rules this season for kickoffs to encourage more returns and make them safer.  Oh yeah, in case you missed it – the NFL kicked off the 2024 preseason (see what I did there) with a look at the new kickoff formation in action - it’s going to take a little getting used to.
• Apologies for not crediting the source here (I simply forgot where I saw this), but the point is sound and funny…  Before we celebrate Artificial Intelligence too much, perhaps we should focus on improving actual human intelligence first. 😏
• Okay – let’s get to the good stuff…  The Dad / Bad Jokes:
  • Spies wear sneakers… 🙄👟
  • When using the self-checkout, do I get the employee discount???
  • Listen pal – I’ve got to see the taco’s first, then I’ll get in the van…  I’m not stupid!!! 🤪🌮
  • PSA…  If you see a toilet in your dream, DO NOT USE IT!!!! 😲😬
  • Aunt Patty said she doesn’t really like math all that much…  Also Aunt Patty - If I cut my shower to 3 minutes and breakfast to 5, I can hit the 9-minute snooze 3 more times and only be 5 minutes late without breaking the speed limit providing at least 1 of the 3 traffic lights are green…. 😂🤣❤️

 
 
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.