The 100 year event is upon us
‘The possibility of a Minsky moment in markets and geopolitics has increased. Even if central bankers successfully contain contagion, credit conditions look set to tighten more rapidly because of pressure from both markets and regulators.’
That was a team of JPMorgan Chase & Co. strategists, led by Marko Kolanovic, weighing in on recent stress in the banking sector, which they say has piled more pressure on credit markets as central banks have raised interest rates to combat inflation.
Named after economist Harold Minsky, a “Minsky moment” refers to a sudden market crash caused by a sharp fall in investor confidence, which also marks the end of a growth phase for credit or business activity.
The banking crisis of the past week has indeed increased nervousness. Bank of America’s March survey of global fund managers, out Tuesday, revealed that a “systemic credit event” is now seen as the biggest threat to markets. Stresses in U.S. shadow banking and corporate debt and developed-market real estate could trigger such an event, said strategists.
Kolanovic, the bank’s chief global markets strategist, said the outbreak of stress in the banking sector will likely affect central banks for some time, as it has shifted the risks in their outlooks. A case in point, he said, was the European Central Bank, which, in addition to raising its key interest rate by 50 basis points, dropped its forward guidance and announced a higher core-inflation forecast last week. Due to announce an interest-rate decision on Wednesday, the Federal Reserve is “already past the point of no return — a soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending),” he said.
The Crises is hyper inflation that will never happen.. Because the FED will not back away from interest rate hikes. Despite wallstreets wishful thinking. A Minsky moment put them at least in the poor house, And many of them in jail if they do not get lynched first.