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• The Senate is Senat-ing as I write this and plans to vote on a budgetary stopgap bill to avert a government shutdown. (again, happy Friday)
• CZ, the founder of Binance, is somehow chilling about the mild freakout occurring on his digital currency exchange, the largest in the world
• Maybe power does corrupt as Elon Musk appears to be going full dictator mode on his new toy, Twitter
• Speaking of Elon, the man has dumped another $3.6bn recently. I can’t imagine why, though. It’s not like he’s made any big purchases lately, right?

Central Bank Sheep

Among global central banks, the Federal Reserve is like Michael Scott—they may be in charge, but deep down, everyone questions if they really should be.

But nevertheless, central banks across the globe followed in the Fed’s footsteps yesterday. The Bank of England (BOE) and the European Central Bank (ECB) joined hands with JPow and raised their own base rates by a convenient 50 bps yesterday. Sound familiar?

It should because the Fed just did that yesterday. It was almost as if markets straight up just didn’t believe Powell’s +5.1% interest rate dreams until all the homies at the other central bank’s confirmed his narrative.

For reference, the ECB raised from 1.5% to 2%. At the same time, they also announced a $15bn/month balance sheet reduction plan beginning in March 2023, keeping with the down bad tone haunting the macro environment of late.

According to recent data on the ECB’s balance sheet size, that’s about 0.18% per month.

Meanwhile, the BOE raised from 3.0% to 3.5% as active fiscal policy seeks to make policy decisions even harder. While there was no such announcement around increased balance sheet reduction, BOE Governor Bailey did express in a letter to Jeremy Hunt, Britain’s Finance Minister, that he believed inflation in the island has peaked.

Whether that’s true or not, it’s clear the U.S. isn’t alone in being on shaky economic territory here. Both Great Britain and the Euro area have experienced double-digit inflation this year, so it makes sense that they’d be on edge as well.

And all three major economies essentially face the same, C-19-induced issues around (maybe a little too) rapid wage increases, distorted supply chains, and growth in the money supply.

So, if it wasn’t clear yesterday, it should be now. Central bankers are largely forecasting economic pain not too far into next year. Whether they’re correct, which we know economists rarely are, or overreacting due to trauma from the 1970s, we’ll just have to wait and see.

Source

Lennar Corp ($LEN) ↑ 3.82% ↑

• One of the nation’s largest homebuilders raised the roof to avoid the rest of the market chaos that went down on Thursday, gaining nearly 4% on the dreary day.
• Lennar Corp reported earnings late on Wednesday, delivering a pleasant surprise to investors. Net EPS grew 16% YoY to $4.55 while revenues grew quicker at a rate of over 20% for the same period.
• It wasn’t all fine and dandy, however. New orders are down 15% annually amid JPow-induced demand destruction through masochistic rate hikes.

Verizon ($VZ) ↑ 0.85% ↑

• I know, it’s a less than 1% move, but hey, I don’t make the rules; Mr. Market does.
• Unlike fellow communications giant AT&T (-2.28%), Verizon defied the gravity of market bearishness yesterday as Morgan Stanley analyst Simon Flannery basically called a long/short on $VZ and $ATT, respectively.
• It’s a real switcharoo, as Flannery raised Verizon from an equal to an overweight rating while doing just the opposite with AT&T. Imagine just all of a sudden ditching the Red Sox and becoming a Yankees fan. Basically the same, right?
• Anyway, he cites valuation trends tipping in Verizon’s favor as the primary driver of the rating switch. Like every referee knows, can’t make everyone happy.