Inflation - premature easing could spark another melt-up in stocks
The weekend saw a package of measures to rescue depositors in the failed Silicon Valley Bank and Signature Bank. That led to a day for the record books in world markets.
Outside the Armageddon-like landscape of bank shares, the stock market didn’t have a particularly exciting day.
The main reason for that: After SVB, the Fed is now expected to capitulate.
The Fed has no more important duty than safeguarding the stability of the banking system. That’s why it was created in the aftermath of the Panic of 1907, when the US discovered that it was reliant on one man, the original JP Morgan, to keep its monetary system functioning.
The Fed should plainly try to limit the damage to the banking system, while also minimizing the moral hazard it creates.
John Authers Bloomberg 14 mars 202
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