Recently, the performance of the New York Community Bank in the United States has experienced a serious decline, and its **value**37.67%。This was due to the fact that the bank's loss in the fourth quarter reached 2$5.2 billion, or a loss of 36 cents per share, was well above the 30 cents per share earnings in the same period last year. To replenish the funds, the bank has cut its dividend to 5 cents per share, down from 17 cents last year.
The bank said the sharp rise in loan losses was the main reason, which may have been a sequelae of the acquisition of Qixing and Signature Bank at the end of 2022. There is a striking similarity between the New York Community Bank's operations and the Blackstone Group's experience.
Although many believe that the U.S. banking turmoil of 2023 is over and the industry has returned to stability, as the Federal Reserve maintains higher interest rates after a sharp rate cut, defaults on real estate loans held by major U.S. banks are starting to increase, coupled with significant floating losses on bond assets, the impairment of these two assets has become a "ticking time bomb" for the industry. Dr. Luo Rentong, a senior researcher at the Guangdong Innovation Strategy Research Association, believes that the Fed and investors are cautiously watching and waiting, hoping to find the best strategy to solve the current predicament.
New York Community Bank crashed 377%
The Nasdaq, S&P 500 and Dow Jones Industrial Average all posted their biggest one-day declines since last year during Wednesday's session. Among them, the Nasdaq index fell the most, reaching 223%。In addition, the U.S. regional bank index also posted its biggest drop since the collapse of Silicon Valley Bank in March last year, at 6%**.
Dr. Luo Rentong, a senior researcher at the Guangdong Provincial Innovation Strategy Research Association, said that such a large **, especially in technology stocks and regional bank stocks, may be due to factors such as investors' concerns about the US economic outlook and the performance of some large banks that have not performed as expected.
In its pre-market earnings report, New York Community Bank (NYCB) showed an unexpected loss of 2$600 million, well below analysts' expectations of earnings of 20.6 billion US dollars. Loss per share was 0$36, which is also the bank's most neutral decline since it went public in November 1993.
Moody's placed all long-term and short-term ratings and assessments of New York Community Bank and its subsidiary, Flagstar Bank, on watch for a possible downgrade, primarily due to unexpected losses in New York Community Bank's office and multifamily housing markets, weak earnings, a substantial decline in capitalization, and an increasing reliance on wholesale financing.
Floating losses in bond investment have laid a hidden mine
At present, the Fed's aggressive interest rate hike policy has begun to have an effect, and commercial banks are generally feeling the pressure brought by high interest rates. In the case of the New York Community Bank, although its bond assets are small, in a high-interest rate environment, its bond investment floating loss may not be too small. In addition, according to the Federal Deposit Insurance Corporation, the floating losses on bond investments of banking companies participating in deposit insurance have reached $683.9 billion, which undoubtedly poses a threat to the security and stability of the US financial system.
The Fed is currently faced with a dilemma. On the one hand, if interest rates are cut too soon, it could lead to inflation** and thus loss of public trust. On the other hand, if interest rates are cut too late, it could lead to a recession in the US economy and a rise in unemployment, which will also be criticized by the public. In the year of **, this contradiction may intensify.
As things stand, the timing of the rate cut may not be clear until after the March 20 meeting, and the inflation report will be the key factor. In addition, due to the chaos in the Middle East and the stalemate of the Russia-Ukraine conflict, the Fed's preferred core personal consumption cost index (PCE) may not change significantly.
However, the economic phenomenon in the United States is puzzling. Although many large companies have begun to lay off workers, the unemployment rate remains at historically low levels; Despite high inflation, household consumption and business investment have been affected, but economic growth momentum has remained good. The situation in the capital markets is also not optimistic, with financing in the United States far from normalizing, bond financing appearing, and the source of economic growth does not seem to be clear.
Fed Chair: Rate cuts are unlikely in March
The Fed statement indicated that the committee would not cut interest rates until it confirmed that inflation was close to 2%. Although inflation has eased over the past year, it remains elevated. Language that could lead to further policy tightening was removed from the statement.
Fed Chair Jerome Powell said that the federal interest rate may have reached the peak of this tightening cycle, and if the economy develops as expected, the Fed will begin to adjust its policy efforts. But he also noted that the FOMC is unlikely to decide to cut rates in March. Most Feds*** could cut interest rates three times in 2024 by 25 basis points each if inflation continues to fall and the economy grows steadily.
The Fed announced a larger policy change at its recent meeting, which could mean a correction in the Fed's policy stance, according to CITIC**. Powell's speech was generally hawkish, and he did not expect a rate cut in March.
The CICC research note noted that the Fed left its policy rate unchanged at its January meeting, in line with expectations. The Fed's main message at this meeting was that they were willing to lower interest rates, but did not want the market to anticipate them too soon. Their monetary policy statement implied that they were not confident enough that inflation had reached their 2% target, so they wanted to be able to retain more options rather than rushing to cut rates as soon as March. Recent strong economic data, coupled with the risk of ** chain due to the disruption of shipping in the Red Sea, has made the Fed more cautious. If the fundamentals of economic growth remain solid and the chain risks have not been completely eliminated, the risk of renewed inflationary pressures cannot be ignored.
Founder pointed out that the policy statement in January has undergone major changes compared to December last year: it has strengthened confidence in a soft landing of the economy, believing that employment and inflation targets are moving towards a better balance; The shift in policy was further confirmed, changing the description of the policy rate from "additional tightening" to "adjustment"; Due to the easing of restrictive policies, the statement also removed the description of the impact of tighter financial conditions on the real economy; The policy rhetoric for the future is neutral, not **, as they believe that rate cuts will not take place until there is greater confidence that inflation will fall steadily to 2%.
Correlation Analysis: Will the Silicon Valley Bank (SVB) Collapse Cause Many U.S. Banks to Face Bankruptcy and Evolve into a "Lehman Crisis"?In-depth detail.
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Luo Rentong, an expert in the application and practice of digital economy, gave a lecture
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