Author: Steve Tee
The push to CBDC and destroying cash and coin is speeding up. US interest rate announcement around the corner and its highly anticipated. Usually, we can roughly know what will possibly play out based on several Fed President’s speeches. For example, Philadelphia Fed President Harker wants interest rate to get above 5% and stay there, as reported by Reuters. Fed Board of Governer Bowman says Fed is focused on lowering inflation, reported by Yahoo Finance. Atlanta Fed President Bostic states inflation too high, must get it down to 2%, reported by FXStreet. Cleveland Fed President Mester suggest higher interest rates ahead, Investopedia reports. Richmond Fed President Barkin pushes for lower inflation rate to 2%, reported by Anadolu Agency. Every key person in the Fed is pointing towards a 25-basis point hike. This will place further pressure on banking and credit in US economy.
We see Moody’s downgraded 11 regional banks, which is a very bad sign and usually signal an upcoming downturn. First Republic Bank (FRC) got destroyed as more deposit outflow (approximately US$100B in March 2023) takes place. Shares tumbled about 30% this week and now trading at a mere $8, reported by Financial Times. More banks will follow FRC’s footsteps when Jerome Powell continues to raise rates.
Layoffs kicked in at 5th gear as 3M plans 6,000 job cuts, reported by MarketWatch. Disney joins the layoff rally with potential 4,000 headcount to be delayered, reported by Forbes. Reported by CNBC states that Amazon is cutting staff again and this time in HR and Cloud units. The tidal wave of layoffs is gruesome and certainly a sign that a potential implosion is coming soon. Borrowing will be more costly and difficult, rendering businesses unable to cope with falling demand and spending from public, which will lead to an eventual bankruptcy.
Speaking about bankruptcy, Globe Newswire reported that bankruptcy filings increase across all chapters in March 2023; commercial filings up by 79% year on year. Epiq Bankruptcy the leading provider of US bankruptcy filing data. In the same article by Globe Newswire, a total of 42,368 new bankruptcies were filed in March 2023, up 17 percents from the 36,068 filed in March 2022 and marking the highest number of bankruptcy filings since April 2021 of 40,931. Conditions now are worse than Covid-19 pandemic times.