Summary
The politicians and the Fed have caved. I guess we will not have to see Mr Ackman cry on national television again this week.
Contagion risk appears to have been nipped in the bud. As I write, S&P futures have rallied about 1%; the US 2-year note continues the track lower (in yield); and the USD sell-off continues.
The demise of SVB has not only cast daylight on the worst parts of what we knew already about the private asset market (dubious mark to market practices, hubris etc). Now we get to get to layer in a big dose of spectacular risk management incompetence and naivety.
Is this the ‘something that needed to break’ to give central banks the excuse to pause their tightening cycle?
As investors rushed into short dated US Government bonds on Friday as equity markets sold off, oil and precious metals found a bid. Time for commodities?
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