We made it through a difficult week with the various averages and indexes climbing over 1%.
For the year, the NASDAQ has almost climbed 15%.
This all happened with the Fed raising the Fed funds rate up 25 basis points and a buyer emerged for SVB.
The Swiss banks seemed more stable.
For all the concern, we were able to move forward.
My main concern is that as always, the taxpayer is on the hook. It will cost more to bank as the Fed will charge the remaining good banks for the losses that the FDIC had to cover.
Nothing is free is life.
At least some of the movement of deposits out of regional banks to big money center banks slowed.
The narrative moved from the Fed fighting inflation to stabilizing the banking sector.
As such, it seems that most analysts predict the rate increase will
end soon.
Some look for rate decreases as the economy moves into recession. Not so sure I buy into that theory, but it appears that we are closing in on 5%.
A couple of 25 basis point moves will get us to where the Fed said they wanted and then let this thing play out.
We will need time to adjust to the fact that loans come with interest.
The era of free money coming to an end.
My concern is that the financial concerns will move the Fed away from fighting inflation.
It is essential that the Fed backs up the financial markets.
Without public faith in the banking system, nothing else really matters.
I believe we are getting back there, but there is a huge price to pay for past fiscal spending.
Inflation is not going away and the middle class will bear the brunt of the pain.
Inflation didn’t come in late at night and we just woke up and it was there.
It will take far longer for it to come back down.
There is one other looming problem and that is the student loan crisis.
The payments have been suspended until August.
The Supreme Court will have to decide whether the loans can be forgiven.
The problem is that again someone has to pay.
It will be the taxpayers. It just seems there is no way around large tax increases.
This will not be a stimulus for investing or the economy.
All of the things we have put off will come home to roost.
In the meantime, you are sitting there trying to figure out your next move.
Sometimes it is better to minimize losses over trying to hit homeruns. There are still great companies out there such as Apple and Microsoft.
Growth companies like Nvidia are hard to ignore. You even get paid on your CDs now.
I will say that volatility will not go away and that can be your benefactor.
