Click here for the PDF: The Weekly Beacon – March 24 2023
We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: FED, FED Funds Rate, Interest Rates, Inflation, Jerome Powell, FED Press Conference, Bank Failures, Silicon Valley Bank, Signature Bank, SEC, Hollywood, Justin Sun, Celebrities promoting cryptocurrencies, Mortgage rates, Mortgage payments, Housing market.
FED raises rates
The Federal Reserve has risen rates to combat inflation. Those rising rates have impacted consumers, investors, businesses, and now banks. Check out last week’s edition of The Weekly Beacon for a summary of what has happened across the banking industry and why two U.S. banks (Silicon Valley Bank and Signature Bank) failed over the last week and a half (Click here to read it). These were the two biggest U.S. bank failures since 2008 and Silicon Valley Bank was the second largest U.S. (inflation-adjusted) bank to fail ever.
Many believed that this instability and these bank runs would lead the FED to pivot its policy from raising rates to cutting rates or at the minimum pausing their rate increases for the time being. Numerous big names across the industry voiced their opinions over the last few days, mostly advocating for a FED policy pause.
The banks believed the FED would raise rates by 0.25% or pause the rate increases. Why does this matter? Just a few weeks ago every major U.S. bank was forecasting a 0.5% interest rate increase. Their tone changed when banks began to fail. Many believed that these banks’ failure could be a signal for the FED to pause and let their policy run its course.
On Wednesday, Jerome Powell announced that the FED would be raising interest rates by 0.25% along with most banks’ forecasts. A month ago, investors would have cheered this on but fast forward to this week and they were quite unhappy with the FEDs move.
Click here to continue reading: The Weekly Beacon – March 24 2023