Morning Report: Small Business Optimism declines

Vital Statistics:

Stocks are lower after Oracle disappointed the Street. Bonds and MBS are flat.

Small Business Optimism declined in August, according to the NFIB. This is the 20th consecutive month below the half-century average. We saw a decline in sales with the highest percentage of small business owners reporting declines since August 2020.

Labor remains the biggest problem (both quality and cost) followed by inflation.

Another potential issue for the banks: the increased use of brokered deposits, which can be considered fast money and will disappear in a flash when the economy hits a rough patch. Brokered deposits are a way for banks to shore up their balance sheets quickly, however they are more expensive. Regulators are wary about their use, as brokered deposits are up about 86% compared to last year.

The use of brokered deposits will be an interesting stat when Q3 earnings start coming out in a month.