If the banks are sounds and resilient, and the situation is stabilizing, please tell bank stock investors. After Yellen's headline that they are not considering expanding the FDIC insurance cap, banks stocks tanked and are just a few bps from the low of the entire crisis.
@biancoresearch Powell did say depositors can assume their deposits are safe…
@biancoresearch Must have been a coordinated effort to get this announcement in while Powell was speaking. No way it was coincidental.
@biancoresearch @BillAckman Bank stock investors or the amateurs trading them now? Wait until 1q results in a month when deposits at regionals haven’t drastically declined. Banks will hold higher liquidity from conservative FHLB draws, deposit betas a bit higher + lower FF futures = lower EPS but not -20%
This is no where close to being over as evidenced by charts like BofA and KRE. This will take months to play out & is highly deflationary. The last thing we need is to have Powell tightening more in the midst of a highly deflationary banking crisis. He runs the risk of spreading asset contagion to commercial & residential real estate which is really where the problems are for banks & is one of the reasons the entire sector has broken below previous support & is leading the market lower. Do Powell & Yellen not realize this banking crisis is just getting started? Seems tone deaf to me.
@biancoresearch As expected of course
The Fed's aggressive tightening is leading to a decline in commercial bank deposits and the wider M2 money supply. An inflationary, debt based system, does NOT function well with a falling money supply, which encourages a painful deleveraging. As long as conditions remain this tight, and aggregate deposits continue to fall, banks will remain under pressure, and the wider US economy risks a deflationary bust.
The Fed's aggressive tightening is leading to a decline in commercial bank deposits and the wider M2 money supply. An inflationary, debt based system, does NOT function well with a falling money supply, which encourages a painful deleveraging. As long as conditions remain this tight, and aggregate deposits continue to fall, banks will remain under pressure, and the wider US economy risks a deflationary bust.
@biancoresearch Time banks get hit. They can ignore it all they want.
@biancoresearch @bsurveillance Expanding deposit insurance would just open wide the door to moral hazard. If depositors with >$250k in the bank are so fearful of their uninsured deposits, go #Bitcoin or #GOLD or some other strategy to protect their investments & not rely on the gov’t to do so.