If there was ever a case to just sit back and watch, this is it. Let me explain…
Fed head Powell made it very clear on Tuesday and Wednesday that he was going to hike rates “faster, and higher, and longer” than Wall Street wanted. When the bell rang Wednesday afternoon to close the market show, I was convinced he was going to give us a 50 basis point rate hike in less than two weeks.
But then Thursday we started hearing about some big trouble at the Silicon Valley bank, and the stock was getting slaughtered. Like falling 50% and then some. The problem seemed to be that they were sort of experiencing a run on their bank, after there was some questions about their liquidity situation.
Friday morning we got hit with two things. First the jobs report hit and it was sort of mixed, giving a couple different signals. Now first off realize that NONE of the official numbers are real. None. There’s so many hands in the cookie jar, and so many adjustments, no one knows how much fudging the other guy has done. So all we can do is go by the official baloney. Well they say 311,000 jobs were created.
In a normal world, more jobs would be great. But in a Wall Street driven, fed fearing world, more jobs than expected is bad. Yes the supposed unemployment rate moved up a bit, but then so did Labor participation, so it was sort of a wash. The bottom line was that the jobs number did nothing to convince me that Powell wouldn’t be doing a 50 basis point hike on the 22nd.
But then more and more word came hitting the wires concerning Silicon Valley Bank, and the big questions started. Did Powell’s rapid rate hikes “break” the debt/bond market? Were other banks in trouble? Were past hikes finally catching up and crashing things?
Then the news hit that the bank had been shut down by the California banking regulators and the FDIC was going to be in control of things. That sent panic waves across the market and the stock indexes were whipping around like a loose water hose. For instance at one point the DOW was green by 50 points, and not long after it was red by 400.