Commercial Real Estate Is The "Boa Constrictor" That Will Crush The Economy And "Force The Fed To Restart QE"

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by Tyler Durden
Sunday, Apr 16, 2023 - 02:47 PM

Just over a month ago, shortly before Silicon Valley Bank stunned markets with its overnight collapse and sparked a shockwave that took down several other large regional US banks and culminated with the historic failure and last ditch taxpayer-funded bailout of Credit Suisse, we explained that while the bank liquidity crisis may come and go - especially if the Fed panics and floods the market with liquidity, which is precisely what it did as it immediately CTRL-P'ed some $400BN in reserves into existence quickly pushing the reserves level for small bank above the reserve constraint line we warned about ago last December (although even that emergency action is now fading fast)...

... the solvency problems would linger for a long time, courtesy of commercial real estate in general, and the crumbling office sector in particular (see "JPM Soars After Beating Across The Board, Raising Outlook"), something Morgan Stanley reaffirmed several weeks later with what we described last week as the CRE doomsday report in which the bank made the following observations: