27 April 2023 - Thoughts on the Market

The past month has overall been a choppy month in the markets. Whether one looks at Bitcoin, equities, bonds, commodities, or currencies, the markets have essentially been in broad choppy ranges. This range-trading, however, masks the deeper stories beneath the surface.

We have seen yet another mid-sized U.S. bank, First Republic Bank (FRC), come under severe selling pressure as depositors have fled what they fear will be the next bank collapse. Once investors lose confidence in the safety of a bank, their flight from the bank becomes a self-fulfilling prophecy. The rapid withdrawal of high percentages of a bank’s assets inevitably leads to a bank’s collapse, or at least a forced takeover. On a larger scale, we have seen the same scenario play out with Credit Suisse. Put simply, our banking system is based on trust, so trust must be maintained above all.