The Institutional Risk Analyst

Many of the better managed financials that we track have become sellers of assets rather than buyers in the past several months.

In the Q3 2021 edition of The IRA Bank Book, we document the slow destruction of US bank asset and equity returns by the FOMC.

There is, after all, no free lunch for investors when the Fed is serving the thin meal of Financial Repression

Cheap liquidity c/o the FOMC does little for bank earnings when asset returns are also falling

Why did the Fed feel the need to absorb $351 billion in cash yesterday via reverse repurchase (RRP) transactions?

We anticipate significant loan loss reserve releases back into income in Q1 2021 and thereafter as banks adjust their loan loss provisions

Remember when Fed Chair Yellen expressed surprise that more young people were not buying homes?

Unless the FOMC relents and eases up on its massive purchases of Treasury securities and MBS, bank earnings are likely to decline further

No matter who wins the presidential election in November, have no doubt that Chairman Powell is the most important man in town...