This week we got remarks and a decision by the Federal Reserve. They are still raising rates, by 0.25%. That adds to the losses on the banks bond portfolios, but not right at first (because bond prices actually rose on that news).
Powell preached about economic and financial uncertainty, which begs the question why did they unanimously raise the Federal Funds rate?
The Federal Reserve is dead set on not making another mistake - not raising fast enough; and then raising to fast - and further damaging it’s reputation.
Under no circumstances will Powell ease financial conditions before inflation is 2%, significantly increasing the risk of a recession.
The pace of US bank failures is completely insane, 5 banks failed over 10 days. The fastest bank run in US history, all because you can open another account and wire your cash from your mobile phone in a single day.
Janet Yellen stated on Wednesday that she doesn’t see the need to raise the FDIC insured limit, right as Powell was stating that the banks are liquid and solvent. In each case they are trying to word their way into calming markets, same thing that Greg Becker, Ex-CEO of SVB, tried to do.
At the end of the day regional and community banks drive small town USA, and the real estate sector.
The Fed has a rich history of 180 degree pivots away from their forecasts and I feel like that may be coming soon, leading to the end of a cycle.
Anyways that’s my rant on the Fed, here’s everything I read and wrote this week.
Running the Tape - Freeing Up Restricted Capital
Yes, This Is a Bailout of Credit Suisse - The Reformed Broker
Volatility is Nothing New (awealthofcommonsense.com)
Credit Suisse AT1 bondholders consider possible legal action -law firm | Reuters
Credit Suisse Bond-Wipeout Threatens $250 Billion Market - WSJ
A sea change in international markets (rbadvisors.com)
Communication: The Other Side of the Banking Crisis (substack.com)
Bond market swings are the most volatile since '08 — just look at the ICE BofA MOVE Index (axios.com)
U.S. Bank Failures, 2001 - Present - The Big Picture (ritholtz.com)
Small banks hold nearly 70% of commercial real estate loans (axios.com)
Short Seller Hindenburg Says Jack Dorsey’s Payments Company Inflates User Numbers - WSJ
The Importance of Small & Medium-Sized Banks - by Eric Soda (substack.com)
Coinbase warned by SEC of potential securities charges (cnbc.com)
Google Launches Bard AI Chatbot to Counter ChatGPT - WSJ
Yes, of course we should ban TikTok - by Noah Smith (substack.com)
JPMorgan CEO Jamie Dimon Leading Efforts to Craft New First Republic Bank Rescue Plan - WSJ
Amazon layoffs: Company to cut 9,000 more workers (cnbc.com)
SVB Financial Files for Chapter 11 Bankruptcy Protection - WSJ
Tiger Global Writes Down Venture Funds’ Bets by 33% in 2022 - WSJ
Running the Tape - The Federal Reserve's Decision
Energy Is on the Ropes - All Star Charts
Fed, other central banks set joint liquidity operation (cnbc.com)
Remote work is starting to hit office rents (axios.com)
The Happiness Paradox (awealthofcommonsense.com)
Should I Buy a House Now? (ofdollarsanddata.com)
More Money Doesn’t Make You Better at Managing Your Finances (awealthofcommonsense.com)
Is My Money Safe? (awealthofcommonsense.com)