The FOMC meeting is here and inflation is still out of control but now banks are taken hostage with rates, what do you do? – Investment Watch

by AugustusInBlood

Bulls, the last thing you should do in a bank run is raise short term interest rates to make money markets more attractive than deposits.

It’s no coincidence that SVB imploded when the Fed became more hawkish. pic.twitter.com/2llfZODa6O

— Mac10 (@SuburbanDrone) March 22, 2023

Capitol One credit default swaps surging pic.twitter.com/1UertUTbfB

— Don Johnson (@DonMiami3) March 22, 2023

Simple question for people claiming the worst is over.

Can you name a single bull market that began with bank failures? t.co/7SEJQl8IDb

— Financelot (@FinanceLancelot) March 22, 2023

Will SVB and its aftermath push the US into recession? Optimistic view: US bank credit isn’t big, so – even if there’s a credit crunch – it won’t do much. Pessimistic view: US credit in % GDP is same as Turkey, where the credit impulse has driven everything for many years… pic.twitter.com/iIxMwELJxi

— Robin Brooks (@RobinBrooksIIF) March 21, 2023

Biden Treasury Secretary Janet Yellen declares “the economy is doing well.”

She doesn’t mention inflation at 6% (1.4% when Biden took office), gas prices at $3.43/gal ($2.39/gal when Biden took office), or that real wages have fallen at the fastest pace in 40 years. pic.twitter.com/9QuCgh0yFm

— RNC Research (@RNCResearch) March 21, 2023

Jim Cramer:
“If You Short The Nasdaq, Invite Me To Your Funeral”t.co/jfU9Dyew7S

If trust Cramer your funeral will arrive a few decades sooner. pic.twitter.com/aKix9MzvNY

— Mac10 (@SuburbanDrone) March 22, 2023

Bank Crisis Survivors Remember How Fast Dominoes Can Fall

Steve Chiavarone doesn’t want to scare anyone, but what he remembers most from the last banking crisis was how sure most people were that it wouldn’t happen.

At his New York office in early 2008, Wall Street’s best and brightest — “strategist after strategist after strategist after strategist,” recalls Chiavarone, now senior portfolio manager at Federated Hermes — paraded through to say that even if a recession hit, it’d be shallow and short.

That’s not, of course, how things played out. A few months later, “you’d go to your office every day and something that you never thought would happen would happen,” he said.

All sorts of crises have been predicted by financial Cassandras in the aftermath of 2008. In reality, they’re exceedingly rare in markets. And yet, with three US banks down, a fourth teetering and the government-brokered acquisition of a fifth — and much larger — institution in Europe, the comparisons to that episode have become a little harder to ignore.

We Are In Uncharted Territory

Fear is in the air.  In recent days we have seen a level of panic that we have not witnessed since 2008, and in such an environment people just want to make sure that their money is safe.  But there are very few places in our financial system that are truly “safe” at this point.  The cryptocurrency industry has already experienced an absolutely disastrous crash, collapsing bond prices have blown a 620 billion dollar black hole in bank balance sheets, residential real estate prices have started to plummet, and now the largest commercial real estate crisis in the entire history of the United States is looming.  The good news is that stock prices are holding steady for now, but that can only last for so long.  Just like we witnessed in 2008, a major banking crisis will inevitably hit the stock market really hard.

I wish that it wasn’t true, but without the banks we don’t have an economy.

And right now we are “in the midst of a nationwide banking crisis not seen since The Great Recession”…

The Top 3 Reasons the US Has Entered the Inflation Death Spiral