Price versus Financial Stability

An excerpt from our First Quarter 2023 Investment Brief:

The March mini banking crisis was an unintended consequence of the abrupt shift by the Fed and other major central banks from a long period of extraordinarily easy monetary policy to a rapid tightening focused on fighting inflation. The period of easy money encouraged investors to move out the risk spectrum and to increase leverage, thus compressing risk premiums and contributing to froth in highly speculative rolls of the dice from crypto, to SPACs, meme stocks, and beyond.