One Year On, Bank Credit Finally Shakes Off Silicon Valley Bank

Silicon Valley Bank failed one year ago, and unlike Bear Stearns in 2008, it was not a harbinger of systemic collapse. A credit chill developed in the aftermath, which has now been entirely reversed, with total bank credit above the pre-SVB level, almost at an all-time high. Credit bottomed in October, the same week as the stock market, and two weeks before the November FOMC formally acknowledged “tighter financial and credit conditions.” Credit has grown at a $917 billion annual rate since then, and stocks are up almost 30% with or without the Magnificent Seven. That eliminates our most significant recession worry, and makes the No Landing outcome so obvious that it has become in-consensus. Positive economic surprises no longer have the power to move markets higher. It feels like a good time for a correction in equities.