“We feel that SVB’s slide into the abyss isn’t quite a Lehman moment but a warning sign that we have trouble in the banking system, built up through the years of free-spending, i.e., money printing at the Federal Reserve,” says Arpit Shah, Co-Founder & Director at Care Portfolio Managers Private Limited.
In an interview with ETMarkets, Arpit Shah at Care PMS, with 15 years of experience in Capital Markets, which manages Rs 500 Cr of AUM through its 2 strategies, said: “During Lehman crisis, interbank lending had dried up as the assets they were holding had witnessed huge loss in value”
The U.S. economy and stock market continued to struggle in the quarter gone by. Economic uncertainty may have peaked in 1st half of 2022 but it still remains high. US stock markets continue to feel the weight of Federal Reserve policy tightening, shrinking market liquidity and slower economic growth and were down by ~25% as of Sept 2022, their worst performance since 2002.
The world’s 2nd largest economy is facing a series of headwinds including protracted COVID curbs, global recession risks impacting exports and a property downturn. The effects are yet to be seen as the government tries to revive economy and give support to the struggling property sector.
Inflation, which is the center point of concern has started to decline with October data showing lowest inflation figures since Jan 2022. This has resulted in hopes of Fed reducing its aggressive tightening policy as early as Dec when the odds for a 0.5% rate hike have increased significantly.
As per Reuters, growth seems to have likely slowed to 6% in 3rd quarter vs 13.5% in 2nd quarter. However, India still continues to be the fastest growing economy in the world.