Banking turmoil is good for stocks as Fed pumps more cash: fund manager

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The banking turmoil is a win for stocks as the Fed is opening the cash spigot, a top fund manager says

"It's possible what we're seeing actually, is a lot of people pricing in some stimulation, some liquidity coming in from the Fed which is supporting asset prices and the bond market," he added.

In the wake of SVB's collapse that rattled the banking sector, the Fed has taken steps to pump more cash into the financial system in order to prevent more bank runs. For example, it has created an emergency loan mechanism dubbed the Bank Term Funding Program that will allow banks to raise cash by pledging their bond holdings as collateral.

That can work in stocks' favour because an increase in financial liquidity makes more money available to invest in high-risk assets such as equities. Alongside stocks, bitcoin is also enjoying its best quarter in two years amid the banking chaos as more investors view it as a

 

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