Navigating the Dual Challenges of Banking Crisis and Inflation for the Fed

The recent bank crisis, including the failure of Silicon Valley Bank and troubles at Credit Suisse and Deutsche Bank, is a shot across the bow for the Federal Reserve. The Fed will likely have to start the end-game sooner rather than later, and the market is already rallying in anticipation of a pivot from the Fed to stop raising rates. However, the drying up of liquidity from banks pulling back on credit will likely hurt small and medium-sized businesses, which make up a significant portion of the US economy. The author recommends investing in big-cap tech, aerospace and defense, and oil refiners, while cautioning against commercial office REITs.