Monthly Outlook - April 2023

Summary of the month

The increase in interest rates represent low interest rates for some investments and this has led to the collapse of several banks in the United States such as Silicon Valley Bank. This has led many to lose confidence in private banking as well as central banking and its monetary policies.

March was a positive month with an immense amount of volatility. Driven mainly by several failures of large banking institutions which caused ripples in all markets and reversed under the prospect of Fed intervention.

Silicon Valley Bankwith nearly $$ 200 billion in assets and over $$ 170 billion in deposits by the end of 2022, collapsed within days when high interest rates forced them to sell securities at a loss and depositors fled. The institution suffered a crisis of confidence.

Credit Suisse was also acquired by UBS for just $3.2 billion, after the lender saw the stock collapse. And that its largest investor refused to participate in the latest fundraising to support its recovery plan.

Macro Corner

In March things started to break down with the Fed's rate hikes. While the S&P and Nasdaq were positive for the month. Looking at the bottom line understates the volatility that took place during the period, especially in the banking sector. The collapse of Silicon Valley Bank followed by Credit Suisse shows how much damage accelerated rate hikes have done beneath the surface. Hidden in bank balance sheets, fragility is only exposed when the first domino falls.