[NotAnEconomis23]

What the Fed isn't doing is assure the greater market that the fundamentals of why the banks failed will be fixed. The Fed screwed up by raising interest rates too quickly. Don't just assuring depositors that their money is safe, assure everyone that the money in their 401ks (which invest in banks) is also safe. Publicly come out and pause interest rates. Admit that there is a strong possibility of lowering interest rates in the short to medium term future. There are massive ripple effects of moving cash, and retirement accounts. The Fed MUST get off their high horse, admit they made mistakes, and be transparent about getting help from industry experts. Without eating humble pie, the Fed will capsize the economy.

[mwerd]

Let's hope not, that would be a disaster. Inflation is far more pernicious than regional bank instability. The fed is acting appropriately in response to a spendthrift Congress, and in the process, stressing the system. There's not a good alternative, especially from the Fed's seat. I'm not trying to make it a political argument, but you're really pointing the finger in the wrong direction. The fed has two mandates when it comes to monetary policy - price and employment stability. That price stability is about market wide inflation, not bank stocks. Banks come and go. If you expect the Fed to prioritize something other than those two mandates, I do believe you're kidding yourself. Rate hikes will continue until the labor market or the inflation data indicate they should stop.

[NotAnEconomis23]

Employment is a lagging indicator. Waiting until bank failures cause employment to crater is too little, too late.

I agree that many of the bank stocks are probably over valued. They're not going to rebound quickly.

The Fed can't control inflation. They can try to influence demand of goods and services by controlling interest rates, QE, etc. They cannot make up for the commodities supply deficiencies cause my Russia/Ukraine conflict. (Reduced supply of grains, oil, metals, etc.) Reduced supply also increases inflation.

We just had a run on the deposits of several banks. Next is a run on the stocks for the banks. (Financial institutions make up 7% of GDP) There are many institutions and retail investors who just received a message from Yellen and Powell that their investments are not safe. Even the big banks are falling. Migrating deposits to large banks will not stop the run on financial equities. It is already having a cascading effect on the broader market.

[postalrat]

Are you predicting the feds will continue to raise rates in the next couple months?

[mwerd]

Yes. Unemployment below natural level and inflation still high single digits. They will raise rates. They have no choice. It's literally their dual mandate to do it.

[albatross13]

https://fred.stlouisfed.org/series/M2SL

Lol.

[denton-scratch]

> The Fed screwed up by raising interest rates too quickly.

Surely the screw-up was reducing interest to 0% in the first place?

Once you do that, going back to any positive interest rate is an increase of infinity%.

[NotAnEconomis23]

Agreed. Transitory inflation, lol.