Folks, We Just Ain’t Goin’ Back!

I’m writing this note on March 16th, so I don’t know what will happen in the couple of weeks before you read this. What has happened is what could have been easily predicted. After keeping rates at 0% for far too long, the Federal Reserve decided they were going to show who was boss and raise rates until something broke, just like they always do. And something did break. At the time of writing we’ve had two of the 20 largest banks in the country fail and another only survived due to $30 billion deposited by other major banks.*

This banking crisis is much different than the last one in 2008. Back then, it was bad mortgages that caused the problems. Now it’s “guaranteed” treasury securities that banks were required to own that, due to rising interest rates, cratered in value, causing their balance sheets to look upside down. Funny how regulations that seem good at the time come back to haunt later on. ^

So, the fix is for the Fed to inject money into the system via “secured” loans that are supposed to provide some breathing room,^ effectively ending their “tightening,” at least for now. I don’t know the end result. But I do know it’s not going to be smooth sailing. As the old saying goes, is there ever just one cockroach?

Maybe it’s time to look at some new ideas. Perhaps 5+% on fixed accounts and stock market strategies protecting as much as 20% to the downside^* would put some calm into your investing world? Or maybe accounts that have no risk to the downside and are linked to returns in the major indexes? To learn more, please visit our website and/or call for a 15 minute discussion.

*https://www.zerohedge.com/markets/first-republic-bank-shares-crash-exploring-strategic-options

^https://www.zerohedge.com/markets/heres-what-latest-bank-bailout-does-and-why-treasury-quietly-freaking-out ^*Buffered accounts may provide up to 20% protection from index declines while also allowing for 100% participation in the index chosen. Please refer to a product prospectus for specific information on costs, crediting methods and buffer protections.