We have signs of another bank failure with PacWest down 35% in the pre-market. Shares of Western Alliance and Zion Bancshares are falling also. Look at First Horizon, TD Bank pulled out of the merger. Why buy when you can get a government deal? This is going to be very turbulent for the next few weeks. We have the FED moderating saying the hikes “might” slow or stop. The FED wanted to scare the markets and it certainly did. Washington is playing games with the debt ceiling. You think it is bad with banks, what happens when the rest of the world doesn’t want to use the US Treasury as a safe haven. They shouldn’t default on the nation’s debt because the bank failures will seem minor.
We always believe in investing but would encourage you to invest in things that are solid companies and do not expect money in the next 5 years. This is the best buying time in our opinion in many years. You will need to be very patient and there will be pain. The economy is contracting, and bank failures will only make the problem worse. It is never a problem until your bank is gone and you are worried about your funds. Yeah, you are FDIC insured(maybe) but it takes years to straighten that stuff out sometimes. It is much worse if you are unemployed. Everyone is cautious and the stock market hates uncertainty.
Coming up, we have jobless claims and the April jobs report. Interest rate hikes have a lagging effect. You can probably expect more pain as the 10 rate hikes are starting to have an effect. More job cuts, more bank failures and etc. The stock market could easily see another sell-off so just be cautious and invest in strength.
More to come soon!