Quote:These banks will be tapping funds at roughly 4.5% or possibly higher due to the Fed’s recent rate hike, whereas the yield on their held maturity securities varies with institutions, she said. Wood noted that the now-defunct Silicon Valley Bank’s yield was 1.6% and Charles Schwab Corp.’s was likely around 1.7%. The net interest margins of banks will turn into net interest losses, which will feed into earnings and so there will be a slow bleed, she said. The fund manager also noted that the M2 money supply turned flat and then negative in January and February. “I don't see why it is going to turn around, especially with the Fed continuing to move interest rates up. So I do believe that there has been a very big mistake,” Wood said. She underlined the fact there were warnings such as the credit default swap bumps since January 2022 and the inversion in the yield curve that started with it.'Very Big Mistake': Cathie Wood Warns Banking Crisis Could Bleed Into Earnings - Charles Schwab (NYSE:SCHW), SPDR S&P Regional Banking ETF (ARCA:KRE) - Benzinga
Quote:However, much like the lag consistent with Fed rate hikes -- economists say rate rises aren't truly felt until around 18 months after they are put in place -- the effect of tighter lending standards, fewer new-loan offerings and the follow-on into business investment and consumer spending may not be evident for some time. "Whether the likely tightening in credit over the next few months is enough to tip the overall economy into a recession is unclear, but the room for error against our pre-SVB growth forecasts is depressingly small," said Ian Shepherdson of Pantheon Macroeconomics.Bank Crisis Credit Crunch Will Clip S&P 500 Earnings, Slam Stocks - TheStreet