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On the SPOT™ blog (05/04/2023) [G..]

Regional bank woes have resurfaced after news article showed that PacWest Bancorp was considering strategic options. This has perhaps put stocks of regional banks under pressure as it makes it appears as if regional bank crisis may not be over. Economic news showed that unemployment claims rose last week, productivity dropped and labor costs rose in Q1. Investors are also assimilating yesterday's FOMC and Federal Reserve Chairman's comments. Feds raised the interest rate by 0.25% and signaled that it may (as opposed to will and was made clear that no decision was made yet) pause further rate hikes until they re-asssess the economy, inflation, financial markets, impact of regional bank failures, debt ceiling negotiations etc. Comments also suggested that some additional policy tightening may be appropriate to be sufficiently restrictive to return inflation to 2% over time as they continue to see elevated inflation and robust job market The commentary from Federal Reserve Chairman sounded +ve but also pointed to uncertainty in that he seemed to suggest that he expects US economy to have modest growth and not recession but the possibility of recession exists. He mentioned that inflation taming has a long ways to go and that banking conditions have broadly improved. Credit might tighten and that might present headwinds to the economy. Gist of it is that Feds will make data-driven decision. Amidst all this mixed data, all three major US indices are in the red this morning (PST).

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