Morning Report: Big deal in the credit card space

Posted on February 20, 2024 by Brent Nyitray

Vital Statistics:

Stocks are lower this morning after we return from a long weekend. Bonds and MBS are up small.

Capital One is buying Discover Financial Services in a $35 billion deal. With the interest rate environment less hospitable than before, we might see more merger activity in the financial sector. This deal seems to be mainly about attracting deposits: “Discover has done a better job of bringing in a lot of deposits and [has] access to a lot of institutions to run the debit card network and provide service. So it gives them a lot of deposit gathering ability, which particularly in the current market is enormously important,” said David Schiff, West Monroe’s head of consumer retail and banking.

The upcoming week won’t have much in the way of market-moving data, however we will get the FOMC minutes on Wednesday. This should give us more insight into when the Fed is going to start cutting rates. The CPI report last week caused traders to pare back their bets on rate cuts this year, although shelter inflation was the big driver.

Shelter accounted for about 2/3 of the increase in the CPI last month, and in my latest Substack, I take a deeper dive into the shelter component and look at how the worst might be over here.

Consumer sentiment in February is mostly unchanged from January, according to the University of Michigan Consumer Sentiment Survey. Consumers are generally getting more constructive about the economy, although there remains a partisan gap.

Year-ahead inflationary expectations ticked up from 2.9% to 3.0% which is still within the pre-pandemic 2.3% – 3.0% range. Longer-term inflationary expectations remained at 2.9%, which is still above the pre-pandemic range of 2.2% – 2.6%.

Some encouraging data for the Spring Selling Season, which is more or less underway. New listings were up 9.5% compared to a year ago, while median prices were more or less flat. Active inventory was up 13.9%.

I am wondering if people are accepting the fact that we aren’t going back to 3% mortgage rates and just dealing with it.

Filed under: Economy |

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15 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on February 20, 2024 at 11:06 am said:

    Kind of fascinated by this.

    https://x.com/profmjcleveland/status/1759941406666223622?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    however, judge is facing reelection so I don’t think he forces her out.

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  2. jnc4p's avatar
    jnc4p, on February 20, 2024 at 1:18 pm said:

    Amusing how much Tucker Carlson still drives the public conversation.

    https://www.nytimes.com/2024/02/20/opinion/economy-putin-tucker-carlson.html

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  4. jnc4p's avatar
    jnc4p, on February 20, 2024 at 3:00 pm said:

    “U.S. Prepares ‘Major Sanctions’ Against Russia Over Navalny’s Death

    President Biden has said there is “no doubt” that Vladimir V. Putin’s government was behind the death of the Russian opposition leader.”

    https://www.nytimes.com/2024/02/20/us/politics/us-sanctions-russia-navalny.html

    Apparently they’ve only been subject to minor sanctions up until now.

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  6. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on February 20, 2024 at 8:49 pm said:

    Good assessment of the problems and contradictions in the New York Trump ruling.

    https://acecomments.mu.nu/?post=408438

    Republicans should encourage this type of prosecution is cities like Chicago, Los Angeles, Seattle, Denver, etc.

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  7. Brent Nyitray's avatar
    Brent Nyitray, on February 21, 2024 at 2:29 pm said:

    I love how the left thinks Christian Nationalism is really a thing

    https://www.politico.com/news/2024/02/20/donald-trump-allies-christian-nationalism-00142086

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    • jnc4p's avatar
      jnc4p, on February 21, 2024 at 3:06 pm said:

      Trump should run on Teddy Roosevelt’s view of assimilation:

      In the first place, we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin.

      But this is predicated upon the person’s becoming in every facet an American, and nothing but an American. If he tries to separate from the rest of America, then he isn’t doing his part as an American. There can be no divided allegiance here. Any man who says he is an American, but something else also, isn’t an American at all. We have room for but one flag, the American flag, and this excludes the red flag, which symbolizes all
      wars against liberty and civilization just as much as it excludes any foreign flag of a nation to which we are hostile. We have room for but one language here, and that is the English language, for we intend to see that the crucible turns out people out as Americans, of American nationality, and not as dwellers in a polygot boarding house; and we have room for but one soul loyalty and that is a loyalty to the American people.”

      — from a January 3, 1919, letter to the President of the American Defense Society, in Theodore Roosevelt and His Time Shown in His Own Letters, Vol. II (edited by Joseph Bucklin Bishop; published by Charles Scribner’s Sons, 1920)

      Ilhan Omar got into a mini-scandal recently over a translation of her remarks to the Somali community in Minnesota. Even using the version that she claims as accurate, she still refers to the president of Somalia as “our president”, not Joe Biden.

      https://minnesotareformer.com/2024/02/01/republicans-smeared-ilhan-omar-over-a-faulty-translation-heres-what-she-really-said/

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  8. jnc4p's avatar
    jnc4p, on February 21, 2024 at 3:10 pm said:

    Interesting piece from Vox on the drivers of car insurance rate increases:

    https://www.vox.com/2024/2/21/24078362/inflation-car-insurance-distracted-driving-costs

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  10. jnc4p's avatar
    jnc4p, on February 22, 2024 at 8:00 pm said:

    Regarding the Google AI commentary recently, it would make an interesting hook to remake Fahrenheit 451 where the reason the firemen burn the books is to prevent anyone from having a basis to challenge the current search results.

    It seems especially appropriate given the revelations about how social media is pressured by the government to suppress “disinformation”, etc and how MSM news sites do stealth edits with out stating that online.

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