Market Update: Banks Struggle as Dow, S&P 500, and Nasdaq Rise.

Money is flowing out of smaller banks towards bigger banks and money market funds, with deposits at small banks falling by $120 billion in the week to March 15. European banks face similar strains, with Deutsche Bank's five-year CDS hitting 222 bps on Friday, the highest since late 2018, while UBS CDS shot up to 139 bps. Unless banks jack up their deposit rates to prevent the flight, they will eventually have to rein in the size of their loan portfolios, with the resulting squeeze on economic activity another reason to expect a recession is coming soon.