Wednesday's Markets Update (March 22, 2023)

23 Mar 2023 by rate3

On Wednesday, after the FOMC decided on a 0.25 point increase (Fed's Projections: current - 5.1, 1st year - 4.3, 2nd year - 3.1, longer - 2.5), traders played the classic "buy-the-news-sell-the-fact" game, resulting in the NASDAQ retreating 1.6 percent (o: 11857, c: 11669) and BTC plunging 5.5 percent (closing at 26667) from its day's opening (28220).

Powell's commentary delivered during the follow-up press conference demonstrates that the Fed board is unanimous in their decision to put the cart before the horse. Continuing with the rate hike, aiming to destroy the labor market, will only lead to a more severe and prolonged recession without addressing the main causes of inflation, which include a historic worsening of the global macro-economic climate, with staple supply chains (notably for energy and food) disrupted for the foreseeable future, and gigantic consumer markets gradually closing up for the world's leading corporate producers on both sides of the ocean.

Powell's unobserved policy will also contribute substantially to the unprecedented takeover of private businesses by governments and large corporations, using autocratic, above-the-law methods of governance that gradually replace collegial decision-making processes. We are now at the beginning of this process, where, under the guise of pursuing financial stability, Washington bureaucrats are facilitating the consolidation of banking assets under the direct management of a select few, who are subordinated to entrenched politicians and financial behemoths.

Exhibit C: On March 16 several banks, including JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, deposited $30 billion with First Republic Bank after Fitch and SP downgraded its credit rating. FRB holds a balance of over $200 billion, $166 billion of which is comprised of loans. Most of these loans, specifically $102 billion, are secured by residential real estate in Boston, New York City, San Francisco, and Los Angeles. This move might be just the first step in building a wall that separates the quasi-competitive banking market of the past from the centrally regulated financial Gulag of the future.