Summary: Another chapter in the Banking Turmoil of 2023– the end of Credit Suisse, a long-standing Swiss banking institution. The Indicator recaps how it got to the end of a road full of bad bets, unprofitable lending and scandal. We also hear about the discomfort in markets in the aftermath of the UBS-Credit Suisse merger down due to the write-down of “CoCo” bonds We seized this opportunity to create a quick, refresher (or even intro!) exercise on capital structure.
Summary: February inflation numbers are out and the bottom line is that inflation remains stubbornly high. However, the Fed’s job, laser focused on price stability till now, gets complicated in the aftermath of the SVB collapse. Today’s exercise asks students to debate whether the Fed should pause interest rate hikes as it weighs the tradeoffs between fighting inflation and stressing bank balance sheets.
Summary: A discussion of this week’s current events without SVB would be incomplete! The Indicator boils down SVB’s problems to three key points. In the Teaching Ideas exercise, students will use SVB’s actual 2022 balance sheet to learn how a seemingly dramatic and complicated phenomenon like a bank failure still just boils down to the bread-n-butter basics!
Summary: There appears to be fear that another recession is approaching the United States, but what are the warning signs for the country’s economy? From talks about inflation, interest rates, and borrowing, the yield curve is known to be a powerful and the most accurate predictor of recessions.
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