Stansberry Research, Released on 1/30/23
“It’s all cleared. What happened in March was an overreaction,” says Joseph Wang, chief investment officer of Monetary Macros and author of Fed Guy, as banks announce earnings in the wake of the recent banking crisis. He points out that the U.S. has more than 4,000 banks nationwide and macro indicators signal the panic has been subsided. For instance, the emergency lending that the Fed provides to commercial banks fell in late March.
He claims that the government will jump into action to navigate this ongoing chaos just like during the 2008 financial crisis. “Whenever something bad happens, they are going to be peppered over just like that, ” he says. He believes the Fed will keep hiking interest rates to contain inflation. “Because of inflation, there’s a real fundamental regime change of how the Fed operates,” he explains, arguing that we are expected to see a 25 basis point hike in the next Fed meeting in early May. He concludes that in today’s stagflation environment, investors will be better off investing in commodities such as oil and energy.
00:00 Is the banking crisis behind us?
7:08 Banking crisis and regulations
9:43 Credit tightening
16:16 The financial system as a whole
19:26 What should the Fed be doing?
22:37 Has the Fed been transparent?
25:47 U.S. dollar
32:29 Central bank digital currencies
Joseph Wang is a former senior trader on the open market desk at the Federal Reserve Bank in New York and the author of the book Central Banking 101.