Beginning in March 2022, the Fed carefully began raising interest rates as an attempt to curb rising inflation and ultimately orchestrate a soft economic landing rather than an all-out recession. Since that time, interest rates have risen at the fastest pace in over 40 years. The sharp rise in interest rates, although helpful for inflation, has other effects on the economy as evidenced by the failures of Silvergate Capital and Silicon Valley Bank and their impacts on the markets this month. In addition, troubled Credit Suisse was purchased by UBS and 11 large banks created a $30 billion rescue package for First Republic. Last week, the Fed was left with the conundrum of continuing to raise interest rates to curb inflation or hold off due to bank failures and potentially demonstrate some uncertainty about the security of the banking system. Interest rates were increased once again.
Considering all the recent occurrences, I thought I would share a few insightful resources with you:
1. The first resource, “The Soundness of the Banking System,” is an article written by Larry Adam, Raymond James’ CIO. It highlights the similarities between Silvergate Capital and Silicon Valley Bank. He also shares his thoughts on whether this is an isolated incidence or has the potential for a financial contagion with an ongoing economic impact.
2. I’m also sharing a 10-minute video from Raymond James Chair and CEO, Paul Reilly. This video was a message to Raymond James advisors and associates that we have been invited to share with clients. In light of the recent bank shutdowns, it discusses Raymond James’ secure positioning and its ability to weather economic downturns. Please use this link and enter the following password: rjstrength
3. Lastly, I’m sharing Raymond James Bank Enhanced Savings Program which keeps funds safe and liquid. New deposits from external sources qualify for this program with an attractive APY and FDIC insured deposits.
As always, if you have questions or concerns about your financial plan, please do not hesitate to reach out to us.
Todd M. Wike, CFP®
CERTIFIED FINANCIAL PLANNER™
Managing Partner, Potomac Financial Group
2022 RJFS Chairman’s Council Member*