SVB collapse reveals grim economic woes: Big Short’s Danny Moses
Big short investor Danny Moses said the collapse of the Silicon Valley bank is exacerbating the economic slowdown despite government action to mitigate the impact. “You can’t assume that regulators have any idea what they’re actually dealing with now, considering they were completely unprepared … by what just happened at Silicon Valley Bank,” the founder said from Moses Ventures to CNBC’s “Fast Money”. on Tuesday. “That should make people nervous.” Moses, who is known for successfully betting against the housing market before its implosion in 2008, speculates failures are just beginning “There’s a credit dynamic to raising rates. We’re only now getting the delayed effects,” Moses said. “Ninety-nine percent of people didn’t see this coming. So, the all clear is clear? I don’t think so.” higher. Moses characterized the move as a knee-jerk reaction to the idea that the Federal Reserve will pause rate hikes prematurely. He said the strength will not last because the cost of capital is rising. He also warned that there were still ominous problems in the country bank balance sheets of commercial real estate and auto loans.” If you believe it is so [the economy] will slow down, it’s only accelerated that slowdown because banks really need to scale back activity,” Moses said. He expects the first-quarter earnings season, which starts next month, to bring more clarity to Wall Street. ‘The Fed is kidding itself’ “The Fed is fooling itself if it thinks this situation is just going to go away,” Moses said. “The [SVB] was a little vase sitting on the window,” he added. This week, Moody’s Investors Service downgraded the US banking system to negative from stable. The move came after regulators and the Treasury Department stepped in to address solvency-related fears “We still generally underestimated what happens when you raise rates in this market,” Moses said, referring to the central bank’s move to raise interest rates since March 2022 by 450 basis points the Fed next week.” The Federal Open Market Committee holds its two-day monetary policy meeting on interest rates next Tuesday and Wednesday
https://www.cnbc.com/2023/03/14/svb-collapse-exposing-grim-economic-problems-big-shorts-danny-moses-.html SVB collapse reveals grim economic woes: Big Short’s Danny Moses
