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Morning Commentary


By Charles Payne, CEO & Principal Analyst
3/24/2023 10:14 AM

For the second session in a row, stocks were gaining a head of steam only to be tripped up by comments from Janet Yellen. Ironically, the Treasury Secretary flip-flopped from the cold but honest message on Wednesday that depositors above $250,000 will not be covered. Now she is back to implicit support.

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“As I said last week, the US banking system is sound. The federal government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors; savings remain safe.”

“As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again.  The strong actions we have taken ensure that Americans’ deposits are safe.  Certainly, we would be prepared to take additional actions if warranted.”

Investors are still not buying any of this. Moreover, banks face other challenges that only lower interest rates can cure.


Banks must start offering higher saving rates or face more outflows of funds. 


In the last two weeks, $238 billion has poured into money market funds, lifting the assets to a record high of $5.13 trillion.


Banks Leaning on the Fed

Banks are still dashing to the discount window for cash. But it’s the new Bank Term Funding Program (BTFP) that gets the bum’s rush with more than $50 billion in demand in its second week of existence.


Fed’s Balance Sheeting Rebound

The Fed’s balance sheet has climbed $410 billion in two weeks, or 2/3 of all the Quantitative Tightening (QT) that was supposed to pull money out of the economy to slow inflation. But experts say this is not Quantitative Easing (QE).


Has the Fed Already Broken Too Much?

Now, the Street doesn’t see any additional rate hikes. However, starting in July, the series of rate cuts have increased to eight, with the last a 50-basis points (bps) cut taking Fed funds back to 250 – 275.  That screams economic catastrophe. 

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Lack of Faith

In the most recent Bank of America Global Fund Manager Survey, “Systemic credit event” bolted to the biggest tail risk surpassing inflation.

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Fewer Winners

Only two sectors out of eleven finished the session higher. They are powered by mega-cap names that have become the new safe havens. This is ugly and dangerous. We have come a long way from that breadth thrust that was supposed to propel the market to new highs.


I have no problem with the names in green being higher (many are in the model portfolio), although they could be slightly over their skis on a short-term basis. These are great companies.  I’m more concerned about the names in red.

S&P 500 Map

Portfolio Approach

There are no changes to our current buys in our Hotline Model Portfolio.

Today’s Session

Another major bank in Europe is on the rocks.  Deutsche Bank shares slumped more than 12% overnight, as their credit default swaps erupted to a four-year high.


Sadly, everyone needs to brush up on certain terminology.

Deutsche Bank redeem some bonds (below senior and above AT1) and ECB president Lagarde told EU leaders the central bank is fully prepared to provide liquidity to the Eurozone financial system.

These actions stemmed the fall, but it doesn’t feel secure.

US Bond Yields Plunging

US bond yields are plunging, as the ultimate flight to safety continues.  Investors need to hear from someone today and not platitudes and more flip-flopping.


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