The Fed has made no indication they would extend the Bank Term Funding Program launched last March 2023 to rescue major banks such as Silicon Valley Bank. The BTFP expired March 12. Arthur Hayes had written he expected some banks would fail as a consequence which would force the Fed to deploy emergency QE measures once again. This could rock markets at first as happened last March into which Hayes hoped to short, but then he says QE would save the day.
On the other hand, it is possible banks may simply be less reluctant to lend which could slow the economy.
We are currently seeing a frothy rise in commodities including gold, oil, minerals, and other commodities and BTC. BTC's rise is largely due to inflows into the Bitcoin spot ETFs but part of the rise could be due to the anticipation of renewed QE to save upended banks now that the BTFP has ended. Of course, good luck trying to time a black swan.
Nevertheless, UVXY which runs opposite to stock indices can be an instrumental play should a black swan hit. That said, black swans are rare and the view from Hayes that a growing number of bank failures could occur is far from certain.
Market Lab Report - BTFP expired March 12. Black swan ahead?
| Published: | 13 Mar 2024 11:48 ET |
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