Central Bankers Jittery as Investors eye Wednesday Decison

Watching the Fed is like watching a slowmotion car wreck. They created this crisis by first slashing interest rates to zero to only panic and jack them up higher and faster than they ever had before. Slow-moving banks bought and HODL’d treasuries (like the Fed instructs them to), and don’t have the liquidity on hand to pay their customers withdrawing their money.

Incompetence, all over.

Good times!

Here’s a roundup of what’s happened since Saturday’s email:

• UBS buys Credit Suisse in firesale

• Federal Reserve Opens “Swap Lines”, easing access to dollars for international banks

• Fed to Announce Interest Rate changes on Wednesday morning

Given the continued capital flight and fallout, we expect the Fed to leave interest rates unchanged in its Wednesday announcement. It is the elevated interest rates killing the banking sector, and with commodity prices and real estate showing signs of weakness, the Fed has plausible deniability to pause.

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$BTC, $ETH, $NVDA, $AAPL, $COIN, $XOM, $TSLA, $MSFT, $AMZN

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Credit Suisse sold to UBS in Firesale

• UBS is buying Credit Suisse for almost $3.25 billion in a deal orchestrated by Swiss authorities to avoid further market-shaking turmoil in the global banking system

• Credit Suisse was valued at as much as $12 billion just one week ago

• Swiss authorities pushed for UBS to take over its smaller rival after a plan for Credit Suisse to borrow up to $54 billion francs from the country’s central bank failed to reassure investors and the bank’s customers

  AP News

Swap Lines For All

• Central banks announced that they would more frequently offer swap operations to help foreign banks get access to U.S. dollar financing, like an interbank Uber ride.

• The Fed is doing this to allow foreign banks to access much-needed liquidity without selling US treasuries

• Fed is papering over cracks with access to money to prevent further contagion

  NYTimes

Fed’s Wednesday Announcement

• Fed has raised rates 8 times since last year to cool economy, leading to collapse of Silicon Valley Bank among others.

• Small rise of 25 basis points likely outcome, 50 basis-point hike now “off the table” due to market turbulence. Contagion fears after recent bank failures could halt rate increases altogether.

• Some parts of American economy contracting including commercial real estate and energy prices, easing pressure on Fed’s inflation fight.

  Forbes

TWEET OF THE DAY

Balaji famously saw the COVID pandemic coming very early. He predicted all of the implications from WFH to lockdowns to the collapse of trust in institutions. He’s now on a bitcoin hype spree in the wake of the banking crisis.

We’re paying attention.

👀

AI ART OF THE DAY

The BRRR is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.