Chart of the Week
It is always a long weekend when you are waiting on Sunday night for a possible press release from the central banks and regulators. I recall the same anticipation after market volatility in 2008 and 2020 as leaders looked to stabilize the global financial system. This time, the U.S. Federal Reserve and global central banks (Canada, England, Japan, and Europe) announced a coordinated effort to support the banking system and keep dollars flowing.
In addition, an agreement for UBS to acquire Credit Suisse was made with the support of the Swiss National Bank. The move came after Credit Suisse entered 2023 with its stock already at a 48-year low, selling well below its 2007 peak reflecting its continued challenges to right the ship following the Great Financial Crisis in 2008.
What We’re Reading
Psychological Paths of Least Resistance – Morgan Housel
Current State of the Housing Market – Calculated Risk
Why a Long-Term Bond Bull Is Still Bullish – Morningstar
Podcast of the Week
The Regulatory Blunder That Gave Us the Silicon Valley Bank Disaster – Bloomberg, Odd Lots
The Past Week
Inflation was in line with forecasts, though it had less attention than the last several months. Housing starts improved while retail sales fell short. Despite calls for an economic slowdown, jobless claims remain below 200,000. The Philly Fed Index and Industrial Production both disappointed, providing some support for the economists with negative forecasts.
The Week Ahead
Financial stability is the third, but arguably most important, mandate of the Federal Reserve. Given the volatility in banking and support required over the weekend, many question whether inflation should be the main concern. If inflation remains at the forefront, then expectations are for another increase of 0.25% in the Fed Funds rate. There remains a chance we see a pause or a discussion of a pause in the pace of rate increases.
Thank you for reading.
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