Expect Higher Unrealized Losses Next Friday When The Big Banks Report

One would expect that Unrealized Losses will have increased in Q1 2024 as compared to Q4 2023 as yields have increased over that period. The large banks are due to report earnings the morning of Friday April 12th.

• Large unrealized losses will cause banks to become more conservative in their lending practices given the high interest rate environment. This is especially true of those banks that have already deployed the capital from loans granted through the Fed’s former bailout program, the BTFP.

• Look to the Fed’s Discount Window as a barometer to the general health of the Banking sector. We will track this each week (HERE).

• The Fed would have us believe that there is no stigma attached to borrowing from the Fed’s Discount Window. However, there is a stigma, and rightfully so. The Fed is not referred to as the “lender of last resort” for no reason. If borrowing from the Fed was not a “negative”, why does the Fed wait 2 years or more to publish data about which banks borrowed from the Discount Window? See the most recent bank borrowing data published by the Fed HERE.

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