The Institutional Risk Analyst

Market risk realized today becomes credit risk tomorrow...

The sharp rise in bank stocks in 2021 coincided with a surge in operating income due to COVID. Now we reverse that trend in 2022...

Even as Powell signals willingness to take interest rate targets higher, he has put off a decision on the Fed's balance sheet until June.

Will Fed Chairman Jay Powell fold in terms of further rate hikes if the S&P 500 falls 1,000 points in a day?

If the Fed causes another liquidity crisis as it ends QE and shrinks the balance sheet, then Chairman Powell should immediately resign.

There a brisk debate ongoing in the fixed income markets over how much the Federal Open Market Committee will raise interest rates and when

And in the meantime, we view the end of QE as a net negative for global stocks as well as crypto. Everything is correlated in a crowd.

Many of the better managed financials that we track have become sellers of assets rather than buyers in the past several months.

In the Q3 2021 edition of The IRA Bank Book, we document the slow destruction of US bank asset and equity returns by the FOMC.

There is, after all, no free lunch for investors when the Fed is serving the thin meal of Financial Repression

Cheap liquidity c/o the FOMC does little for bank earnings when asset returns are also falling

Why did the Fed feel the need to absorb $351 billion in cash yesterday via reverse repurchase (RRP) transactions?

We anticipate significant loan loss reserve releases back into income in Q1 2021 and thereafter as banks adjust their loan loss provisions

Remember when Fed Chair Yellen expressed surprise that more young people were not buying homes?

Unless the FOMC relents and eases up on its massive purchases of Treasury securities and MBS, bank earnings are likely to decline further

No matter who wins the presidential election in November, have no doubt that Chairman Powell is the most important man in town...