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: Bank failures, JP Morgan Chase, First Republic Bank, SVB, Financial Crisis, FDIC, Bank runs, Bank assets, Bank stock returns, Bear sterns, Jamie Dimon, Consumer spending, CPI, Hotel prices, Hotel demand, inflation, Apple’s dominance, Insider trading, Trading in Washington, Political power, Populism in DC, Nancy pelosi, Mitch McConnell, Private equity, Pension management, Consumer defensive stocks, Pepsi, Price multiples, Earnings, FED, FOMC, Real rates of return, Jerome Powell, Market movement.
Financial markets have reached new heights over the last few years. In 2021, the SPAC market boomed. In 2022, the classic 60/40 portfolio had its worst year on record. In 2023, we reached a new bank failure record. The total assets of banks that have failed in 2023 are almost 1.5x greater than the total assets of banks that failed in 2008.
The only major difference is there have only been 4 bank failures this year. There were more than 150 banks that failed during the Financial Crisis. Does this mean there will be many more bank failures through the end of this year? It is possible. Contagion across the industry looks likely and the big banks will not be able to bail out every regional bank that fails (especially as the frequency increases).
One person who is sure that the current banking crisis is close to its finish is Jamie Dimon, CEO of JP Morgan. JP Morgan led by Dimon has capitalized on the regional banking crisis (they did the same thing during the Financial Crisis).