Thread by @TFL1728

Quick thread on the strategic importance of Credit Suisse and why the Fed's support of it is so important.

Famously, the SNB holds a big equity portfolio, at last count ~$139B. These are mostly US large caps. /1
whalewisdom.com/filer/swiss-na…

Last Summer I took heat from the skeptical on Fintwit for my 'thesis' of a war between Davos and the Fed because the Fed sent billions in a lifeline to the SNB who helped out $CS. /2

This happened at the same time as Blackrock's assault on the Bank of England, bringing down PM Liz Truss, installing Davos boy Rishi Sunak.

At the time I noted the two banking jurisdictions in Europe not under ECB control were assaulted simultaneously. No coincidences /3

$CS has been under constant attack since then, with the latest push occurring while the Fed clearly decapitated $SIVB and Signature Bank. Move/Countermove. /4

$CS is a key driver of SNB monetary policy. It's their $JPM. Without $CS a run on the SNB is very possible. For the Fed, who just set off a wave of instability across the eurodollar system, the SNB is a key partner, as they provide key liquidity to US equities such as $AAPL /5

It's not a stretch to then conclude that the Fed will support CS through the SNB to support US equity markets.

If you are the Fed you want to allow global capital to flow into US stocks as safe havens
/6

If you are Davos, you want to cut off all avenues of escape from the incipient capital flight Powell set off with the BTFP and not bailing out $SIVB, the SNB and $CS play a big role in this.

For Davos, volatility is their main weapon, and you increase vol by drying up volume. /7

If you want to hurt the Fed after the Fed clearly hurt you a continued assault on CS is a logical move.

ft.com/content/5e4a8d…

Who do you think ordered this at this moment in time? Paging @wef

https://twitter.com/DiMartinoBooth/status/1636799219003424774

So, strategically, the Fed will pay certain prices to achieve larger goals. This is what so many in Fintwit fail to grasp, wanting to just ab react and scream "BACKDOOR QE!" "IT'S ALL A CLUB!" blah blah blah.

Think about relationships. Map incentives. /8

Conclusion: The Fed and NY will continue to try and support CS as the chess game continues.

Whether that's good or bad for anyone outside of the Marriner-Eccles building or Wall St. is anyone's guess. But that's the lay of the land. /end
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