Stock market running out of steam with reopening trades fading… Fed’s Kashkari warns bank losses could trigger next financial crisis

Stock market running out of steam with reopening trades fading…

  • With recent spikes in coronavirus cases and fluctuations in the economic data, the historic rally has taken a pause as the market seems to be stuck in a range amid elevated volatility.
  • “Although the stock market was suggesting a V-shaped recovery, the more likely scenario is rolling Ws,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
  • As signs of a virus resurgence mount, investors have turned increasingly cautious.
  • The rally in those popular reopening trades — airlines, cruise lines and hotels — is seemingly losing steam.

Fed’s Kashkari warns bank losses could trigger next financial crisis…

The head of the Minneapolis Federal Reserve warned Friday that banks should “stop paying dividends” and “raise capital” as more Americans struggle to pay their loans and credit losses mount at America’s large banks amid the ongoing coronavirus pandemic.

“They can essentially inoculate themselves from COVID,” said Neel Kashkari, who ran the 2009 auto bailout.

 

Ultra-wealthy stocking up on gold…

ZURICH/LONDON (Reuters) – As stock markets roar back from the coronavirus-led rout, advisers to the world’s wealthy are urging them to hold more gold, questioning the strength of the rally and the long-term impact of global central banks’ cash splurge.

Beginning Of The End For Dollar?

Dollar-denominated financial markets appeared to suffer a dramatic change on or about the 23 March. This article examines the possibility that it marks the beginning of the end for the Fed’s dollar.

At this stage of an evolving economic and financial crisis, such thoughts are necessarily speculative. But an imminent banking crisis is now a near certainty, with most global systemically important banks in a weaker position than at the time of the Lehman crisis. US markets appear oblivious to this risk, though the ratings of G-SIBs in other jurisdictions do reflect specific banking risks rather than a systemic one at this stage.

A banking collapse will be a game-changer for financial markets, and we should then worry that the Fed has bound the dollar’s future to their fortunes.

The dollar could fail completely by the end of this year. Against that possibility a reset might be implemented, perhaps by reintroducing the greenback, which is not the same as the Fed’s dollar. Any reset is likely to fail unless the US Government desists from inflationary financing, which requires a radically changed mindset, even harder to imagine in a presidential election year.