Pointing the Finger 

Bank of England governor Andrew Bailey loves to play the blame game. One minute he’s accusing greedy workers of demanding too much pay; now it’s the fault of early retirees for pushing up inflation. When will he ever admit that maybe the Bank was far too slow to rein in ultra-loose monetary policy as the pandemic ended? The Bank of England was not alone, of course, but he should still take it on the chin. Less the unreliable boyfriend and more the lying husband who got caught with lipstick on his collar but won’t admit it.  

BoE Later Still Likely to be Too Soft on Inflation? 

Two years ago. I wrote: “The fact is the BoE is, like the rest of them, asleep at the wheel. Now it’s one thing to fall asleep, get woken by a jolt and correct the course...it’s another to drowsily allow yourself 40 more winks. They have been watching this inflation take hold like a slow-motion car crash – we spotted months and months ago but still they sat on their hands because they didn’t know what the labour market would look like post furlough, and then Omicron, and now it’s Ukraine...always an excuse to avoid making that big call. The BoE should be acting swifter to tackle inflation – the labour market is tight enough to warrant more aggressive tightening. The response by the Bank is rather soft and inflation expectations may continue to rise as a result of this.”  

Bailey will speak on the SVB UK case later. He does get financial stability – the Bank’s response after the mini-Budget underline it. But he never got the sense of urgency on inflation. He’s not the only one, but that’s not an excuse. 

Bank Panic Seems to Calm 

European indices rose early Tuesday, with banks generally higher with a second day of calm restored after Friday’s selling as the market rounded on Deutsche Bank for whatever reason. Banco Sabadell, Commerzbank and Societe Generale were among the biggest gainers with all the risers on the Stoxx Banks index up for the day. The mild gains for the banks signal more calm but it’s far from a recovery; the Stoxx Banks index is down 15% for the month. Now everyone is talking about a commercial real estate crisis.  

US banks gained broadly yesterday, helping to push the S&P 500 into positive territory, whilst tech took a knock and the Nasdaq fell as Treasury yields rose. The KRE regional banks ETF rose almost 1%, down from +3% at one point, whilst embattled First Republic rose almost 12%. Meanwhile the positive mood helped lift yields, with the US 10yr up around 3.55% from 3.30% on Friday.  

UK Stocks Boosted by Retail 

The FTSE 100 added about half a percent at the open on Tuesday morning, taking it above the Friday intraday high clear of 7,500. Ocado rose 2% as it left guidance unchanged and posted a 3.4% rise in revenues at its UK retail business. Marks and Spencer’s shares also rose around 2%. Average basket value was flat, with a -7.5% fall in basket size offset by an 8.3% increase in price.  

But should Ocado be charging more? UK grocery inflation is accelerating fast – rising to 17.5% in the four weeks to March 19th. Its market share remains at 1.8%, according to Kantar, whilst Waitrose saw the fastest pace of growth. Tesco and Sainsbury’s were steady; shares in both rose 1%.   

Crypto Confidence Shaken 

Bitcoin fell sharply yesterday and has held losses as major crypto exchange Binance faces a potential ban in the US. The idea of a crypto exchange falling foul of US securities law is hardly a surprise; it’s surprising it’s taken so long. "The Commodity Futures Trading Commission today announced it has filed a civil enforcement action in the US District Court for the Northern District of Illinois charging Changpeng Zhao and three entities that operate the Binance platform with numerous violations of the Commodity Exchange Act and CFTC regulations,” the CFTC said in a statement. CEO CZ is accused of encouraging Americans to “evade compliance controls” and breaking US law. Hahaha, like you are surprised.