Episode description

This is a quick market note for today, given the news on global banking, risk, and signs that we could be seeing a sovereign debt crisis unfold.

Here’s a pertinent take from J. Kyle Bass this morning. If you don’t know Kyle Bass, he is the Dallas-based Hayman Capital hedge fund manager who first came to public prominence for shorting the subprime fallout. Since then he has become a nearly unmatched financial analyst on China.

One of his tweets this morning in regards to the global banking situation is as follow:

“First, banking crisis globally. Then “country runs” for countries with poor balance-of-payment situations and highly-levered banking systems. The U.S. will be a safe haven when things move into “country runs”, which is just around the corner. Over a decade of zero rates, followed by reckless rate hikes will break many banks and countries. EM’s (Emerging Markets) are going to be smashed, along with highly-levered DM’s (Developed Markets)”

In 2008 we had the failure of 25 banks with $373 billion in combined assets.

So far in 2023 we’ve had the failure of 2 banks with $319 billion in combined assets, and more banks globally coming under stress.

To make the right comparison we need to look at the dollar figure accurately.

The $373 billion in 2008 is ballpark equivalent to $521 billion in 2023 dollars.

More to drop on this in the coming days. Thanks.