To hike or not to hike, that is the question. Or at least it *was* until markets decided on 25bps (87% chances). Powell didn't disappoint, yet markets proceeded to tank. I share my thoughts in this brief thread. 1/
In past days, CBs had scrambled to shore up markets through the institution of new programmes (BTFP) & enhanced facilities. Anything to arrest the wild volatility in rates that had skyrocked on the back of banking system risk anxiety. 2/ $TLT x.com/goingjgalt/sta…
In past days, CBs had scrambled to shore up markets through the institution of new programmes (BTFP) & enhanced facilities. Anything to arrest the wild volatility in rates that had skyrocked on the back of banking system risk anxiety. 2/ $TLT x.com/goingjgalt/sta…
Authorities had been forced to guarantee all deposits at two failed US banks over the past days, yet fell short of guaranteeing the safety of deposits across all banks. When @SecYellen said no full insurance was considered, markets cratered. x.com/c_barraud/stat… 3/ $SPX $SPY
Authorities had been forced to guarantee all deposits at two failed US banks over the past days, yet fell short of guaranteeing the safety of deposits across all banks. When @SecYellen said no full insurance was considered, markets cratered. x.com/c_barraud/stat… 3/ $SPX $SPY
Latest developments confirm deposits are structurally less sticky than anticipated. Lower deposit levels at small / mid-sized banks increase cost of capital & curtail their ability to lend. Lowerr credit and... tightening lending conditions. 4/ $KRE $KBE
Problem? US relies on capillarity of banking system to provide funding to economy and most is done by small / mid-sized banks. GS: Banks <$250bn in assets account for: - 50% of C&I loans - 60% of resi loans - 80% of #CRE loans - 45% of consumer loans 5/ $KBE $KRE
Want individual #CRE exposures by banks? GS & MS for the win! No wonder @lloydblankfein said “this situation will act in a way that is similar to a rate rise”. 6/ $KRE $KBE $SPX $SPY $TLT