I should add "a very sharp" banking/insurance deal maker.
From MarketWatch, November 10:
J. Christopher Flowers says the current economic expansion could be threatened by higher inflation and a drop in stimulus
Bank and insurance deal maker J. Christopher Flowers says rising interest rates will help the financial sector in the short run, but he’s cautious about any sharp spikes.
“If you were going to bring a Christmas present to the big banks, higher interest rates would be a good one,” said Flowers, founder and CEO of New York-based private-equity firm J.C. Flowers & Co., which currently manages about $6 billion.
Inflation is good up to a point because it raises net interest income for banks and boosts profitability. But if its gets too high, inflation exerts a “corrosive force” on the broad economy, Flowers told MarketWatch in an interview. A “comfortable level” of inflation would be around a 5% yield on a 10-year Treasury, compared with about 1.5% now and climbing, he said.
Flowers, a Goldman Sachs veteran who launched the firm in 1998, said the credit environment has been like something out of the childrens’ classic “Alice in Wonderland”– when the White Knight talks backward or everything is suddenly way out of proportion, for example.
Back when the COVID-19 crisis first hit in 2020, everybody expected credit performance by lenders to be a catastrophe but instead it has been a spectacular success, because Congress and The Fed sent trillions of dollars to people, who then paid back their loans. That’s resulted in a fantastic credit performance for everybody.
“Someday the party has to end, but when? That’s such a good question,” Flowers said. “Things that can end it: interest rates go up a lot or if the federal money flowing into people’s hands stops.”....
....MUCH MORE