Credit flows precede economic growth by 6-12 months, suggesting that a credit crunch's impact is not immediate.
Current liquidity stress is fading due to Federal Reserve policies, but the question remains whether it will evolve into credit stress.
insights INSIGHT
Impact of Emergency Lending
Historical data shows that spikes in emergency lending lead to tighter lending standards, even with liquidity backstops.
The initial contraction in bank credit seen in March was likely technical, and a significant contraction will take time to manifest.
insights INSIGHT
Market Euphoria vs. Reality
Market behavior suggests the worst is over, with assets like Bitcoin, banks, and emerging markets rallying.
This contradicts the negative trend in credit creation and potential economic slowdown, creating a disconnect between market sentiment and underlying economic reality.
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On today's episode of The Macro Trading Floor, Alfonso & Andreas begin by breaking down the bank earnings on the back of the recent banking turmoil across markets. We then discuss why markets are rallying as everything from the S&P, Banks & Bitcoin begin to retrace prior losses. With the U.S Dollar also erasing its gains against other major currencies, is this the perfect environment for a continued rally, or not? Finally, Alf & Andreas share their actionable trade ideas, but to hear that, you'll have to tune in! -- Today's show is sponsored by Public.com: Get a 4.9% yield when you open a government-backed Treasury Account.* That's a higher yield than a high-yield savings account.** Go to https://public.com/macrotradingfloor *26-week T-bill rate (as of 4/16/23) when held to maturity. Rate shown is gross of fees. **As compared to the national high-yield savings average of 3.43% (Source: Time.com/NextAdvisor as of 12/30/22). -- Follow Andreas: https://twitter.com/AndreasSteno Follow Alf: https://twitter.com/MacroAlf Follow Blockworks: https://twitter.com/Blockworks_ Subscribe To The Macro Compass: https://www.themacrocompass.com/ Subscribe To Steno Research: https://stenoresearch.com/ Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/ -- Disclaimer: Nothing discussed on The Macro Trading Floor should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
