SVB Panic, Bad Bank of Bad Fed?
I mentioned it the other day in my article that the increase of the Fed Fund rate has been the most aggressive in all history. And they are crashing the economy. It’s too fast a too quickly and it creates problem for banks who do not have enough time to adjust their portfolio. So bank who took too much risk or are heavily invested in more sensitive sectors like venture capital and technology, have to deal with greater loss. Check out my previous article. The Fed is just too aggressive a is basically throwing a wrench in the Financial system wheels. Banks do not have the time to adjust and are force to sell their Bonds before maturity and incur a loss on them because of higher rates. The bank run only amplifies the problem as banks need to sell their Bonds before maturity in order to raise cash.
Big banks are not the one in trouble as they have more cash reserves.
This looks like the big banks sharks will be eating the small ones for dimes on the dollars. This could force the Fed to lower rate sooner which could fuel an rally in Bonds and eventually Equities as it stabilizes.