Mike Wilson Sees Bank Crisis As Bear Market Crescendo

"The risk of a credit crunch has increased materially, in our view," Morgan Stanley's Mike Wilson said Monday, in a note called "This Is Not QE." As discussed on several occasions here last week, the sharp increase in the Fed's balance sheet was predictable. We knew banks needed liquidity and FHLB issuance to meet demand from lenders in their region was a good leading indicator for how acute those needs were. The scope of the discount window borrowing made a great chart, but there were bank ru

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5 thoughts on “Mike Wilson Sees Bank Crisis As Bear Market Crescendo

  1. I’m a little bit confused here. Back in the 1970s and early 80s when inflation was high, rates were high and Volcker pushed short rates to 18% your chart showing bank liabilities and M2 levels seems much flatter than the readings for the current period. What’s the difference?

  2. So Wilson seems to be saying that the market will splat, and that will be a buying opportunity. I’d prefer he focus on getting the first leg of the trade right, before he wakes up in CandyLand.

  3. The bank crisis seems to have overshadowed the debt ceiling “negotiations” and I wonder if concerns about federal default are playing some role in the current liquidity and confidence “crisis.” Of course, the declining value of bonds due to rising interest rates seems sufficient to me to cause a crisis.

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