"This Is Not 2008, This Is Not Lehman," Says A 40 Year Veteran Trader
"This Is Not 2008, This Is Not Lehman," Says A 40 Year Veteran Trader
The Credit Suisse disaster was the topic of Kenny Polcari’s latest note on markets that I wanted to offer up this morning. His take is fairly different than mine.
The Credit Suisse disaster was the topic of Kenny Polcari’s latest note on markets that I wanted to offer up this morning. His take is fairly different than mine: Kenny doesn’t see a major financial crisis brewing as a result of the banking blowups of recent days. I don’t necessarily agree - my take on the situation - and the names I’m buying as a result - was published yesterday in this article and in this podcast:
But I wanted to offer up his take on the situation strictly for that fact: it’s the opposite of mine and may help readers gather perspective.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
Here’s his take on markets heading into the Thursday, March 16, 2023, trading day:
The post has been lightly edited for punctuation and grammar.
Credit Suisse gets saved!
The Swiss National Bank steps up and saves Credit Suisse (offering a $54 billion line of credit). Did anyone really expect anything else? Come on.
They are Swiss and Credit Suisse is a national treasure. The Swiss were never going to let Credit Suisse go down the drain and, as expected, the stock was up this morning (QTR’s note: shares have since pared gains as we head toward the cash open).
The European banking sector that got smashed yesterday is rebounding (Ibid).
Stocks and bonds had a wild day yesterday. Fear was on the rise, stocks fell and bonds rose, leaving many to ask what is going on? Larry Fink (Blackrock CEO) put out his annual letter and let’s just say it wasn’t bullish. By 4 pm yesterday the Dow was off by 280 pts or 0.9%, the S&P’s down 28 or 0.7%, the Nasdaq though rose by 6 pts (on the assumption that the Fed is pausing), the Russell lost 31 pts or 1.7% and the Transports lost 135 pts or 1%.
Bond yields plunged, with the 2 yr. now yielding 4%, the 5 yr. yielding 3.6%, the 10 yr. now yielding 3.49%. Recall that last week these same bonds were yielding 5.2%, 4.9% and 4.25% respectively. The swift price rise in bonds (as well as the surge in Gold – which traded from $1890 to $1942) was a move to safety as investors panicked over what some think is a banking crisis.
Fear is sweeping the globe (QTR’s note: I disagree, I think we are nowhere near fear yet as I outlined earlier in the week on a podcast), confidence in the banking system is challenged and the crisis that began out in California one week ago has now spun a web enveloping regional banks, super-regional banks, money center banks, Swiss banks, Italian banks, French banks…..who we didn’t hear from? Greece?
Do you remember when Greek banks were at the center of the drama? How great would this be if this was just about the Greek banks? But alas, it is not….