The Aftermath: Credit Suisses Lifeline and Consumer Spending

In a morning where more banking turmoil emerged and stocks opened sharply lower on Wall Street, traders shifted pricing to indicate that the Fed may hold the line when it meets March 21-22. According to CME Group data, the probability for no rate hike shot up to as high as 65%. Trading was volatile, though, and the latest moves suggested nearly a 50-50 split between no rate hike and a 0.25 percentage point move. Chairman Jerome Powell and his fellow policymakers will resolve the question over raising rates by watching macroeconomic reports that continue to flow in, as well as data from regional banks and their share prices that could provide larger clues about the health of the financial sector.

In this episode of The Higher Standard, Chris and Saied examine this news and determine the effect it will have on the economy as a whole.

They discuss the Census Bureau's most recent Household Pulse survey, which indicates that about 36% of consumers say it has been "somewhat" to "very difficult" for them to pay their usual bills in the last seven days.

Chris and Saied look at data from the Labor Department, revealing that inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil. The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%.

They also offer some thoughts on news that Credit Suisse Group AG is borrowing up to 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss central bank to shore up its liquidity, capping a day in which fears about the health of global banks leapfrogged to Europe from North America and the giant lender’s shares dropped as much as 24%.

Join Chris and Saied for this fascinating and informative conversation.

Enjoy!

What You’ll Learn in this Show:

• Why the CPI will likely continue to come down.
• The real cause of the recent bank failures.
• Why Bank of America received more than $15 billion in deposits after the failure of Silicon Valley Bank.
• The levels of regulatory scrutiny banks are required to have as they grow.
• And so much more...

Resources:

"Bank stocks rebound, but crisis makes the Fed’s next move harder" (article from The Washington Post)

"Where inflation is... and isn't" (Yahoo! Finance via Instagram)

"BofA Gets More Than $15 Billion in Deposits After SVB Fails" (article from Bloomberg)

"What’s going on with Silicon Valley Bank?" (Dave Ramsey via Instagram)

"Goldman Sachs no longer expects the Fed to hike rates in March, cites stress on banking system" (article from CNBC)

"Stablecoin USDC breaks dollar peg after firm reveals it has $3.3 billion in SVB exposure" (article from CNBC)

"More Americans say they can't pay their bills. Here are the states where it's worst." (article from CBS News)

"Banks Borrow $164.8 Billion From Fed in Rush to Backstop Liquidity" (article from Bloomberg)

"One of the best ways to figure out what the Fed will do next is to look at regional bank stocks" (article from CNBC)

"Credit Suisse Promises Overhaul in Wake of Rout as Regulators Offer Lifeline" (article from The Wall Street Journal)

"Economy Shows Signs of Cooling as Bank Troubles Spread" (article from The Wall Street Journal)

"Wholesale prices post unexpected decline of 0.1% in February; retail sales fall" (article from CNBC)

"Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago" (article from CNBC)

"Moody's cuts outlook on U.S. banking system to negative, citing 'rapidly deteriorating operating environment'" (article from CNBC)