The hottest Banking Sector Substack posts right now

Jerome Powell may be at a defining moment where his actions could have major consequences for policy and markets.
Today’s Fed press conference and policy decision are especially important and worth close attention because they could shift market expectations.
Detailed analysis of the situation is available only to paid subscribers, so the deeper takeaways are behind a paywall.

Artificially low interest rates from central bank credit expansion lure entrepreneurs into projects that look profitable but aren’t supported by real consumer preferences, creating a boom that later collapses when policy tightens.
Even if businesses correctly anticipate rate moves, changes in the money supply divert resources into non‑wealth‑generating activities, and variable, unpredictable time lags make it impossible to reliably time or avoid those distortions.
Because firms must chase observable demand or risk failure, the harm from expansionary monetary policy becomes self‑reinforcing and cannot simply be undone by better expectations, so boom‑bust cycles persist.

The Eurozone faced its first profound crisis triggered by Europe's banks, not public debt, during the North Atlantic credit boom.
The financial crisis revealed institutional deficits in the Eurozone, showing the deep connection between state and business interests.
Despite efforts at recovery, European banks still struggle to match the profitability and success of their American counterparts, raising concerns about the future of banking in the Eurozone.

Treasury market faced concerns of liquidity impact due to bill issuance changes
Chair Powell's comments hinted at cautious approach to rate cuts and balancing risks
Market anticipation of aggressive Fed policy due to various economic indicators

Soft landing in the US economy refers to a scenario where interest rates increase without causing a recession. Achieving a soft landing is challenging due to the unpredictable effects of rising rates.
Current economic indicators suggest a potential slowdown, with data like US bank lending growth declining and bankruptcy filings increasing. These factors could lead to significant economic problems if extended.
Consumer spending in the US may face limitations, as issues like high credit card debt and rising delinquencies pose risks. The Federal Reserve's actions regarding interest rates could impact future economic outcomes.

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The US banks profited greatly during the Covid-19 pandemic despite millions dying, indicating a stark wealth disparity.
Capitalist oligarchs gained $5 trillion during the pandemic while a vast majority of people suffered financially.
The US government largely neglected its people during the pandemic, resulting in high death tolls and emphasizing the stark individualistic nature of the country's response.

The Federal Reserve struggled with liquidity tightening, leading to emergency measures and a new financial crisis.
Understanding the monetary plumbing system is crucial to comprehending the impact of Quantitative Tightening (QT) on the banking sector.
Quantitative Tightening (QT) may not continue for long, as challenges in the banking sector could be exacerbated without further accommodations from the Federal Reserve.

Understanding balance sheet policy is crucial in modern monetary policy.
Recent balance sheet movements have had a direct influence on money supply.
Significant shifts in the balance sheet policy can impact inflation and banking sector stability.

The recession that has been expected is delayed, and there are indications that the economy continues to grow.
Inflation is decreasing, and the Federal Reserve aims to maintain this trend through its monetary policy.
The technology sector has seen a resurgence in 2023, particularly in big tech companies and AI developments.

Capital One is acquiring Discover Financial Services, creating the largest vertically integrated card provider and the sixth largest U.S. bank by deposits.
Both Capital One and Discover have seen a rise in bad credit among their subprime borrowers in the past two years.
Consumer credit quality has been deteriorating sharply as pandemic savings decrease, interest rates rise, but consumer spending remains high.

Economies are supported by layers of money from the government, banking sector, and corporations, providing choices to citizens.
The concept of a cashless society has evolved with the emergence of central bank digital currency (CBDC), sparking increasing interest and discussion.
The development of CBDCs highlights a complex interplay between private sector interests, potential threats to financial stability, and the evolving role of central banks in the modern financial landscape.