The U.S. Federal Reserve has a big conflict. The monetary policy goals of the U.S. Federal Reserve are to foster economic conditions that achieve both stable prices and maximum sustainable employment. Given the insolvency of Silicon Valley Bank and the…
The monetary policy goals of the U.S. Federal Reserve are to foster economic conditions that achieve both stable prices and maximum sustainable employment. Given the insolvency of Silicon Valley Bank and the risk to financial conditions, the Federal Open Market Committee should probably pause their rate hikes and possibly cut rates.
It’s clear to us that the FOMC mandate likely needs to change and the Federal Deposit Insurance Corporation program support needs some modernization. Like we saw in 2001 and 2009, these changes take time for Congress to act. It was a modern day run on the bank seemingly co-ordinated via Silicon Valley’s own social media channels. When confidence shakes, Wall Street always shoots first and asks questions later. They are shooting any bank that has similar risks to assets as SVB and Signature Bank.
In Canada, the ZEB equal weight bank ETF should fall in sympathy with the U.S. led stress. For us, we are looking below $30 to add exposure. We have not liked the valuation at all over the past year and have had very little direct exposure.
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