issue. what does it mean overall for the mid-sized and smaller banks? you want community banks. i think that s one of the important parts of this first republic event. the big banks know that too. they know that it s good to have different size banks all around. you want to have community banksst yobanks and you want them to be healthy. that s why the rollback of dodd frank, you had democrats and republicans that wanted to make sure there were not such st stringent rules. i think the jury is still out about whether rolling the regulations back allowed this to happen. it might be one of the factors. but for the most part, this is a big interest rate story. interest rates went up so far, so fast. it really caught out a lot of the smaller banks. janet yellen getting questions about that yesterday. yes. the interest rate hikes. and we ll be watching the regional banks this morning. they re a little weak this
they were. this is not a bailout. point number four, markets have not figured out what thissen moos and there will be more revealed today. goldmansa sachs believes this will cause the fed to stop raising interest rates, this is part of an interest rate story. what happened with silicon valley bank, their clients are tech start-ups, in california, technology companies. they are interest rate sensitive, they were already unnerved about what they were seeing with the monetary system and fed rate hikes and lay on top of it, the ceo says stay calm. when you are a ceo and that is what vivek ramaswamy pointed out, when you say stay calm, you get opposite reaction.
is what s happening. we re tanking. the fundamentals are strong. there s been fomo, fear of missing out for so long. now it turned into fear. you can see people find a buy point where people say finally, after three years one of the world s biggest investors is saying buy the dip. not doing it yet. the interest rate story, inflation and interest rates parallel each other. i m old enough to remember in the 70s when we worry about 15%, 16% inflation rates. it s a 30-year mortgage now, 3.5%. might go to 4. those are hardly numbers for people to be jumping out of windows over. i think complacency is a big issue. we ve been in a bull market for so long. if you look back 20, 30 years ago, 10% a year drops were totally normal. this market, if it had grown at an historic level, it should be
these rates would never go up. and that was a wrong reality. so this is just a reality check. now, we hope it doesn t become more than that, but for now it s a reality check. we ve all been wrong before but there does seem to be some general agreement about where this is right now. i want to bring josh barrow in. although i see josh barrow here but i don t think i ve got a camera on him. here we go. hi. josh from business insider. you ve been listening and watching what s going on. what do you think? i think the interest rate story is really key here but i think there are a few theories about why isht rates are going up that have different implication ppz one thing is we got the report on friday morning with wage growth looking very good. if that s a story about wages are going to go up, that s going to take corporate revenues, they ll pay out less in profits, that could be a message that the stock market is falling but it s good for ordinary workers. if i were the president
cut that s going to greatly drive up the federal budget deficit. the federal government s going to borrow over a trillion dollars this year. we ve been through a 20-year period where there s been an endless appetite for government bonds and the government can run whatever deficit it wants it doesn t seem to drive interest rates up. if we re at a point where we re running this deficit we re at the peak of the economic cycle where there s already strong demand out there for capital. that means the government could pay higher interest rates on its borrowings in the future. that will drive up interest rates for everything. higher mortgage rates, higher credit card interest rates and also it will be more expensive for companies to borrow money. if that happens it becomes more expensive to invest and grow that could offset a lot of the positive economic effects from the tax cut. so if that s the interest rate story we re having right now that s a pretty negative story and one that with make