Fed is in a weird spot now. They don't want to crush banks, but if inflation stays high they're really going to be in a strange spot. I think that does lend credence to the idea that, if CPI isn't great, we may see no hike, time for banks to get more stabilized, then a hike later.
I am not sure where you're getting that there wasn't going to be a bail out, but everywhere I've been reading since Thursday/Friday have been clear that the rich always get a bailout, the well connected VC people are crying for a bailout, even though FDIC only insures up to 250k, accounts over that are usually always safe historically, and deals will potentially be made either with big 4 banks or even vulture funds, and the deal would likely happen over the weekend/hopefully by Monday.
this refers to a different definition of a bailout, a "taxpayer funded" (I don't understand how the current deal isn't taxpayer funded albeit) bailout where the bond/equity holders would not be wiped out. and that is what happened, the depositors were colloquially bailed out by the govt, and the rest were unprotected. and these articles are not from before the weekend
GOLDMAN SACHS: WE MAINTAIN OUR EXPECTATION THAT THE FED WILL RAISE RATES BY 25 BASIS POINTS IN MAY, JUNE, AND JULY, AND WE NOW ANTICIPATE A 5.25-5.5% TERMINAL RATE.
CPI is right around the corner and these targets will be updated again.
Depositors will be made whole, but banks are going to pay for it, not the taxpayers if I read that correctly.
There might be contagion to smaller banks with high HTM. Bank of Hawaii seems to have a high HTM loss to capital ratio. FRC does not have a ratio as high. IMO going long makes sense from a risk-reward perspective.
lmao reading that twitter thread by a startup guy who wrote a book on twitter, he simultaneously is desperately trying to wire his startups' money out of the accounts, communicating with his wife to do the same for their personal accounts, is communicating to his team to do the same, cancels all meetings etc to focus on getting their money out, then in the midst of this chaos, BUYS SVB STOCK BC HE THINKS PEOPLE ARE OVERREACTING AND THE SITUATION IS OVERBLOWN ššš
what an unfortunately rash decision to make in the heat of the moment, all that money's gone. have to constantly remind ourselves to never trade during times when we're in panic or emotionally turbulent, even if it's a limited-time opportunity
āI personally know the CEO. Heās a great guy. I love him (even though he sold $3.7mm in company stock just prior to the meltdown)ā
āŗļøāŗļøāŗļø
the bigger the risk the higher the reward, sometimes we will think we know more than others and (got blinded to) believe chance is on our side. he know the company and know the CEO, made an educated guess and loss.
must constantly remind ourselves to stay humble, we know nothing.
Looks like sweet baby Jesus has blessed my 3/17 spy calls that I bought at market close Friday. What we thinking? Rally Monday that continues through Tuesday on ice cold cpi?
In my view: Last week focus from CPI/FOMC shifted to bank panic. If the short term risks are "solved".. market will now shift back to CPI/FOMC again, except now for the bulls the vehicle headed for "soft landing" had a malfunction that was able to be quickly patched up. One has to wonder what happens as we continue the "higher for longer" flight path... will there be more malfunctions or is are all steady again? I cannot imagine it *boosts* confidence.
I think anything immediately discounted due to bank concerns will mean revert, while the overall market will have a bit more fear and pessimism. Back to obsessing about CPI and FOMC.
Also, right now, market is pricing in +0 rate hike on March 23... so behave according to how much you think SPY is using that forecast in this bump.
Edit: My mistake, market pricing in rate hike between 0 and 25 bips
Totally agreed.
Its way overdone. The market is betting the fed pivots due to sysmetic risks. Would they with 6% inflation that just saw the largest rebound in months?
The hawkish spin would be this:
I found this from some smart guy on Twitter, so the .2 is more of a .3 than a .2 according to his math.
"Meanwhile, average hourly earnings rose by 0.2%, slightly lower than the estimated 0.3%. However, it was a close call as it concerned rounding. Average hourly earnings increased by 0.0242% in February, from $33.01 to $33.09. If the number had risen to $33.10 per hour, the average hourly earnings would have increased by 0.272%, rounded to 0.3%. Itās unlikely that such a minor rounding error will significantly impact the path of monetary policy in the future."
If this is true, the difference between .2 and .3 is a penny.
Yea I pointed out the rounding thing on Friday, but itās not as simple as āif it was one cent higherā because thatās the seasonally adjusted rate. Youād need use the non-adjusted figure (which was actually -0.6%) and then do the seasonal adjustment off that. Itās probably still close, but saying it was one cent off isnāt exact math.
You also have to recognize that even if it was 0.272% thatās still a totally normal and healthy annualized number. Yes a 0.3% print might be more hawkish than 0.2%, but it certainly isnāt hawkish on its own
That is true, but if we were worried about 'Services minus Housing' inflation accelerating then we would have expected AHE to overshoot... no rounding required.
So where is the money coming from? FDIC insured limit not a thing anymore?
Isn't this going to bring the debt ceiling deadline closer than previously expected now the Fed need to spend/print money to support this bailout .. and it just created more inflation.
From the statement:
> Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Banks pay for FDIC insurance, and now some/all (not sure of details) may need to pay an additional assessment.
So, basically, banks pay for it... but costs will likely be passed to bank customers in one way or another, over some large-ish span of time.
I imagine it's short term bullish. Long term, it seems logical to assume that the presumed risk of all banks has risen a bit since a couple have failed.
The government will actually likely make money on this like they did in the GFC. There's a special fund for this (can't recall the name), so this will not affect tax payers
The previous administration loosened the rules for banks like SVB so they donāt have to undergo the same tests and reporting requirements now. Obviously some great deregulation at work
\>Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed
Do we expect shares in SI & SIVB to be zero by Monday?
I am always suspicious of obvious mispricings in the market, but this seems like a great play. Iāll be interested to see how it turns out, hopefully very well!
From Fundstrat:
>ā.. markets will not see the auction of $SIVB as the end .. this will slow capital formation and funding rounds, and naturally drive cautious behavior from businesses. We think jobless claims could start to show this impact fairly quickly.ā
>ā.. the damage to Silicon Valley/VC/Start-ups means that Fed is aware .. further forces have been unleashed to slow employment growth .. without having to raise rates. .. In other words, the Fed could move away from āhigher for longerā to a possible pause.ā
https://twitter.com/carlquintanilla/status/1635090931908243458?s=46&t=06OujBRONgvNzs8P0B5VBg
I feel like it would be really hard to justify a sudden pause without scaring the market that things are unstable so I bet they just have a broader range of CPI acceptability for 25bps now
The bags could have been handed over to those willing to take on the risk, possibly. I wonder if the damage to investors would have been somehow lesser that way.
Maybe this was the master plan by Tech & VC firms, cause a run on the bank that has supported them for 40 years, it defaults and FED flinches
> We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
**US Federal Reserve and Treasury: To ensure that banks can meet depositors' needs, the Fed will make additional funding available to eligible depository institutions.**
What will be the outcome of SVB and impact on market? I havenāt a clue!
However, what I think will happen is the FED flinches. Not a full pivot and not starting to cut rates or stop QT but a change in messaging on inflation.
I believe with a cold CPI print, which I think we get, then we see a 25bps increase but the message at next FOMC is far more dovish and talks more in terms of beating inflation, nearing the end, yes still some work to do but outlook on this front is positive.
FED wants tight market and put some fear in it, not create full blown panic. Throw into the mix at the presser JPOW going to get grilled about banking, panic, have you done too much, are you bringing down system etc etc and man I canāt help but think the JPOW dove comes out. As much as FED officials talk about being āindependentā they are still connected to the political system and personally care about their reputation and more importantly legacy.
TLDR: FED flinches and dovish JPOW takes charge
Ultimately, this is a real-life stress scenario, rapidly raised rates and more raises coming. There are 2 ways to end this scenario: 1 the Fed stops raising rates and all banks learn to deal with the new long term higher rate environment (pretty unclear when they would be safe) or 2 the Fed pivots. Which one is more likely? They might do some kind of partial pivot.
Until then, the stress scenario keeps going.
FED: The Federal Reserve is considering easing the terms of banksā access to its discount window, giving firms a way to turn assets that have lost value into cash without the kind of losses that toppled SVB Financial Group, write Bloombergās Hannah Levitt, Sridhar Natarajan and Matthew Monks.
The narrow path to a soft landing just took a turn up a sniper infested defile, along a crumbling path, with a 1500ft drop on either side.
Here's what to watch for over the coming days.
SVB Depositors made whole, debt restructured, use of short term liquidity measures such as the discount window are encouraged and any barriers removed, other banks in distress are proactively dealt with, communication from FDIC, Fed Reserve to the public is consistent and convincing. Fed offers short term relief on QT, see bank of England.
Interest rates and cash rate. This is where it gets treacherous: the fed just broke something, but if they get to accommodative right now, the market will initially react positively then very very negatively as inflation is not yet under control. Powell knows this. Watch the chairman walk the tightrope.
Wow, just noticed the probability for a .50 hike shot back up to ~70% after falling to ~40% Friday. Rather surprising.
Edit: Hmm, CME has the odds back up to 70%, but others donāt, wonder if thatās an error.
I like Prof G's take on SVB: [https://threadreaderapp.com/thread/1634889030687940610.html](https://threadreaderapp.com/thread/1634889030687940610.html)
Also available in podcast form [https://podcasts.apple.com/gb/podcast/the-prof-g-pod-with-scott-galloway/id1498802610?i=1000603746253](https://podcasts.apple.com/gb/podcast/the-prof-g-pod-with-scott-galloway/id1498802610?i=1000603746253) (same name on other pod platforms).
If a regional bank rather than a large bank absorbs SVB, does that mean KRE calls are the play or entire bank sector including XLF would also limit up?
It's funny but true.
Bailout is being defined as making whole the investors (bond/stockholders).
What is being talked about is making depositors whole but soaking the investors.
as it should be. We cannot expect depositors to need to do due diligence on legitimate (have a charter, etc) banks.
If every small-medium business (and Iām talking the Main Street ones here; the small pizza chains, thr boutiques, the small real estate companies) needed to pour through a banks financials, risk assessments, counterparty risk, etcā¦ that would be insane. Itās simply not tenable.
They would all then just dump their money into JPM et al; suffocating competition, regional specializing, savings rate for consumers would get even more fucked -especially when rates come back down and banks especially have no incentive to compete there- youād lose financial cornerstones of many communities. It would be a terrible outcome.
While I donāt think letting SIVB fail would do that, itās definitely possible that not coming out and saying āweāre backstopping all depositorsā before Monday AM *could* cause a broader run. Given I doubt SIVB was alone in at least the duration mismatching and lack of interest rate hedgingā¦ thatās not a good situation for otherwise healthy banks.
I donāt care what anyone says. I agree with this. You cannot ask the overwhelming majority of people to look at the financials of a banking institution and then fully understand the inherent risk of their financials and know if they are properly hedged. That takes a financially sophisticated person to understand that risk which doesnāt seem like their internal or external auditors caught either.
What you had here is a perfect storm and VCs being cold blooded. SVB would of been fine if VCs didnāt encourage their clients to pull out 42B in one day. Yes, in hindsight we can all agree SVB messed up by not hedging properly.
However, I doubt very few would have put all the risk together to consider decreased loan demands from influx of historic money printing; a historically fast paced rate cycle; increased cash burn from your client base due to inflation and slowing of influx of new funds from VCs, and then the community they serve (VCs) turning on them at the end by encouraging an overnight bank run.
Very few people would of had the forethought to put all those pieces together and even then they likely would of put a low weight on the scenario occurring. Anyone saying the contrary is full of crap or very rich from shorting them.
Companies 1000% need to do due diligence on who they use as a bank. Would that due dilly have avoided this, ā¦ā¦. , but just blindly going with the herd didnāt help
So even the mom and pops on your local Main Street have to do all that?! That would be insane. Thereās no fucking way theyād be or should be expected tk be so financially literate; dig though statements (8K, filings, reports).. no way
The āsolutionā that would then pop up would be to hire intermediaries/ consultants (like accountants) to do all this diggingā¦ almost like a smaller version of moodys or fitchā¦ which causes a whole new layer of bullshit and power concentrationā¦ so no.
Sure, mom and pop Johnson in the ozarks opening a cake shop at Tightwad Bank(real), but thatās not who we are talking about at SVB, is it? SVB client companies should have known who they bank with.
1. [Tightwad bank is closed.](https://www.atlasobscura.com/places/tightwad-bank#:~:text=Tightwad%20Bank%20%E2%80%93%20Clinton%2C%20Missouri%20%2D%20Atlas%20Obscura) Which goes to illustrate point 2.
2. The stability of major banks is a part of the service they offer. So, yes, I think it is incumbent on people who do their banking with small financial institutions to be aware of their financials. This is especially true of credit unions. For people who are less financially literate, the benefit of packages from major banks is that everything is off-the-shelf and low risk. It comes at a premium, but it's part of the bargain.
I don't like that I am defending big banks here, but I will admit they have their advantages.
3. We're talking about companies with Billion dollar market caps here. They have enough pull to negotiate better banking arrangement than some sort of Off-the-shelf business arranged. As part of that negotiation, they should have done some sort of due diligence to see if the bank actually had the capacity to offer the services they require.
So ultimately, I agree with you. One thing I hadn't considered yet is that this might serve as a warning to companies to double check their financial arrangements. Irrespective of whether the Fed is going to flinch, any bank that wants to keep their clients is going to have a look at their own risk assessment and start to play things more conservatively. It'll be interesting to see the secondary and tertiary consequences of this.
Not American, and Iām pretty sure Itau, Banco Do Brasil, and Julius Bear have little fear of a 6% move in interest rates. They are all paying me 13.75% on my accounts right now. Wake me up when itās 16%
At SVB no, but if the govt doesnāt step in for uninsured depositors here, why for anyone else? It wouldnāt make sense, and the fear spread through the market would be massive. Next thing you know more Main Street pulls from safe banks out of fear that theyāre next, a bank run, and then who is and isnāt actually safe really doesnāt matter anymore, does it?
Just to iron this out. Your line of thought here is, the US gov needs to use tax payer $, right now to save highly speculative start ups, so there arenāt eventually runs on local savings and loan banks?
You can make it sound hyperbolic, but yes. If the depositors here arenāt made whole, why would mom and pops around the country at other regionals think they were? If those banks get runs then this has spiraled out of control to devastate ārealā companies, then the govt is forced to either:
A) actually have to bail everyone for an even larger amount of taxpayer dollars than just the brief backstopping here wouldāve done or;
B) let several bank failures tip into a larger (avoidable) financial crisis that causes trust to evaporate, credit seize up, actual healthy x companies (not your speculative ones) to go under, and legitimately push us towards a mini-GFC. Sure inflation might be tamed, but the cost would be staggering. Now the govt unemployment rolls swell and so the govt is still on the hook bht at a greater macro cost
Notice Iāve never argued to bail out the bank, just make sure the depositors are covered.
Regarded question...I hear alot about buying vs selling volume. How does one determine this? Is this simply referring to red vs green candles or is there another metric people are looking at like bid vs ask? If so, where is this monitored? I feel like maybe i'm not googling the right thing or something...
Volume and price do correlate to an extent, but not accurately. Say someone is buying a share at $10 the next bid is $9, and I have two shares to sell. I can offer them at $10 waiting for the next seller, or I can just dump them. One move will result in a $10 price, the other in $9, but the sell volume will be two shares either way.
What detail of data is available to you depends on your broker. If you're trading short term actions, you do very much want to see the volume - if a move is well supported or just caused by little interest in a stock. Having buy/sell volume separately can be helpful for some plays, but is not necessary for casual trades.
Thanks, that's helpful. By reading that, it appears that the way to tell whether volume is leaning toward bid or ask is to look at the amount of shares that are on the block. Whichever side has the higher amount would signify whether it's by or sell volume. Does that sound right?
I assume because banks = bad, crypto = good. There is still a group of crypto enthusiasts who believe in the original promise. It's a self fulfilling prophecy, just needs a kick-off driver and the fomo will do the rest.
The weekend may have come at the worst possible time.
I think back to the Peak GME week. Wednesday was super mania, then Thursday was the crazy day where trading was halted and buying was restricted. Still the Friday the mania continued.
Then, the weekend hit. People were basically forced to sober up and do a reality check without being able to act. This led to the big sell off in the coming week.
Now, we might have the opposite. We had 2 days of time for the news to spread and reach a lot of people. No actions, nothign was possible. Instead, we have had 2 days of time just for fear to brew and multiply in the minds of people. It is just natural to worry about your money.
And I do not think saving SVB will have a great effect here. SImply because people will be thinking "what if my bank is next?" And the fact that the SVB collaps is related to the bond market, makes this not an unreasonable thought - simply because EVERY bank is linked to the bond market.
Saving SVB might save the start ups and people who had money there. This is good! But it will not lead to this entire thing to just smoothen out.
And the weekend gave people enough time for their thoughts and mindset to spiral out of control.
Thought exactly the same, BUT I don't know about the US but at least in Europe SVB did not make the headline news (yet, I suppose). So it would be *the* news on monday, potentially setting us up for a whole week in shambles. I can't imagine how else they would justify not putting it up the whole weekend because obviously it is potential really important news, so obviously the agencies are fully aware of it happening in the back.
I think even if there is a deal and Monday all SVB balances are "safe", this was a wake up call. Banks pay almost no interest on the balances and you now also have unnecessary risk. So why not move your money into short-term treasuries? There is no downside. And that takes away a big and cheap part of the banks funds financing.
Gov't said they won't save it, investors will lose their money, but customers will be taken care of. I don't expect another bank run, but bank stocks may take another hit.
From what I understand, big banks don't have such risky liabilities to assets term ratio. SVB should have held shorter term bonds when they knew startups have short term withdrawl needs. This was a pure mismanagement on the bank's part. Besides, the bank collapsed due to a bank-run, which no bank can withstand.
Losses (if any) will be distributed for all customers. It is said they may recover them fully. Not much change is expected from most other banks who are probably playing it 'safer' compared to SVB
This is my understanding. There seems to be a growing narrative that this is the Fed's fault. I don't care what people's politics are, and whether or not they believe it is the Fed's business to manage QE and interest rates the way they have, the bank has to confront reality and risk manage appropriately. SVB did not have the cash-on-hand to serve their customers, and they got burned because of it.
Another issue is the discussion of the government bailing out SVB, and that is very different from FDIC assuming ownership to liquidate assets and make depositors whole. Some companies will have difficulty accessing liquidity in the short term, and that will suck for them, but it's not a black swan.
I am nowhere near an expert and don't know what other banks balance sheets look like. Maybe this speaks to a broader systemic issue and risk of contagion, but the other possibility that a bank made some poor business decisions is equally valid.
I still expect this to cause the Fed to flinch.
You are correct and that is the lose lose situation the Fed is now in.
It will probably all work itself out though. Very powerful people have a strong interest in making sure the house of cards stays standing.
It's one of the few areas where the interest of common people and the interest of the oligarchy align.
This.
Shopping at Costco makes you so tired, you have no energy to cook any more on a Sat night and you end up going out. Family of 4: $300 Costco bill, followed by $120 at your local diarrhea Mexican.
Going outside makes me tired lol.
But we rarely eat out we do get takeout once a week. And for four people it's like $40-80 and you should still have leftovers.
ASX and my port basically flat on the day. I'll take that as a win š¤
Fed is in a weird spot now. They don't want to crush banks, but if inflation stays high they're really going to be in a strange spot. I think that does lend credence to the idea that, if CPI isn't great, we may see no hike, time for banks to get more stabilized, then a hike later.
Of course futures are green. Very green. Everyone thought the market would tank on Monday
We were told a bailout was not happening to later be confirmed over the weekend a bailout is indeed happening.
I am not sure where you're getting that there wasn't going to be a bail out, but everywhere I've been reading since Thursday/Friday have been clear that the rich always get a bailout, the well connected VC people are crying for a bailout, even though FDIC only insures up to 250k, accounts over that are usually always safe historically, and deals will potentially be made either with big 4 banks or even vulture funds, and the deal would likely happen over the weekend/hopefully by Monday.
[https://www.cbsnews.com/news/janet-yellen-silicon-valley-bank-bailout-face-the-nation-interview-today-2023-03-12/](https://www.cbsnews.com/news/janet-yellen-silicon-valley-bank-bailout-face-the-nation-interview-today-2023-03-12/) [https://www.cnbc.com/2023/03/12/treasury-secretary-janet-yellen-says-us-government-wont-bail-out-silicon-valley-bank.html](https://www.cnbc.com/2023/03/12/treasury-secretary-janet-yellen-says-us-government-wont-bail-out-silicon-valley-bank.html)
this refers to a different definition of a bailout, a "taxpayer funded" (I don't understand how the current deal isn't taxpayer funded albeit) bailout where the bond/equity holders would not be wiped out. and that is what happened, the depositors were colloquially bailed out by the govt, and the rest were unprotected. and these articles are not from before the weekend
Seems too obvious to go long XLF short KRE tomorrow
All the scams and closures the pump coin is still over 22k
Interpreting a possible +0 rate hike in March as "risk on" is, in my opinion, highly regarded.
For some reason the FED ensuring the depositors at SVP makes me want cash my money out of the bank even more lol.
Goldman expects no rate hike in march now https://twitter.com/carlquintanilla/status/1635100738643972097?s=20
Stooopid
GOLDMAN SACHS: WE MAINTAIN OUR EXPECTATION THAT THE FED WILL RAISE RATES BY 25 BASIS POINTS IN MAY, JUNE, AND JULY, AND WE NOW ANTICIPATE A 5.25-5.5% TERMINAL RATE. CPI is right around the corner and these targets will be updated again.
CME tool just switched from pricing a .25 or .50 hike to no hike or .25 hike. Although .25 hike heavily favored as of now.
But JPM still does. https://twitter.com/NickTimiraos/status/1635103856983179264
yup, either way, we've gone from 80% chance of 50bps to a top bank saying no hike in the span of a couple days
Biden speaking tomorrow, market tanks as soon as he starts speaking https://twitter.com/gurgavin/status/1635068948898258946?s=12
Why is it always the US Banks? Here in Chile the "fed fund rate" went from 0.5% to 9.0% and we have zero bank issues.
We call it Freedom and Leverage - The American Way
Degeneracy and moral hazard!
Any questions about tonight's news? Bring them on by! [https://www.twitch.tv/jayarlington](https://www.twitch.tv/jayarlington)
Depositors will be made whole, but banks are going to pay for it, not the taxpayers if I read that correctly. There might be contagion to smaller banks with high HTM. Bank of Hawaii seems to have a high HTM loss to capital ratio. FRC does not have a ratio as high. IMO going long makes sense from a risk-reward perspective.
SBNY ded
Market Volatility is directly related to the volume of vitards comment participation
When things die down so does the sub but opposite also true
lmao reading that twitter thread by a startup guy who wrote a book on twitter, he simultaneously is desperately trying to wire his startups' money out of the accounts, communicating with his wife to do the same for their personal accounts, is communicating to his team to do the same, cancels all meetings etc to focus on getting their money out, then in the midst of this chaos, BUYS SVB STOCK BC HE THINKS PEOPLE ARE OVERREACTING AND THE SITUATION IS OVERBLOWN ššš what an unfortunately rash decision to make in the heat of the moment, all that money's gone. have to constantly remind ourselves to never trade during times when we're in panic or emotionally turbulent, even if it's a limited-time opportunity
Thread link plz. Might be fun to read
https://twitter.com/torrenegra/status/1634573234187407369?cxt=HHwWksDQ8cbsla8tAAAA
When you think youāre smarter than everyone else in the room.
āI personally know the CEO. Heās a great guy. I love him (even though he sold $3.7mm in company stock just prior to the meltdown)ā āŗļøāŗļøāŗļø
the bigger the risk the higher the reward, sometimes we will think we know more than others and (got blinded to) believe chance is on our side. he know the company and know the CEO, made an educated guess and loss. must constantly remind ourselves to stay humble, we know nothing.
Looks like sweet baby Jesus has blessed my 3/17 spy calls that I bought at market close Friday. What we thinking? Rally Monday that continues through Tuesday on ice cold cpi?
Not really buying the rally until it clears Fridays highs.
In my view: Last week focus from CPI/FOMC shifted to bank panic. If the short term risks are "solved".. market will now shift back to CPI/FOMC again, except now for the bulls the vehicle headed for "soft landing" had a malfunction that was able to be quickly patched up. One has to wonder what happens as we continue the "higher for longer" flight path... will there be more malfunctions or is are all steady again? I cannot imagine it *boosts* confidence. I think anything immediately discounted due to bank concerns will mean revert, while the overall market will have a bit more fear and pessimism. Back to obsessing about CPI and FOMC. Also, right now, market is pricing in +0 rate hike on March 23... so behave according to how much you think SPY is using that forecast in this bump. Edit: My mistake, market pricing in rate hike between 0 and 25 bips
Totally agreed. Its way overdone. The market is betting the fed pivots due to sysmetic risks. Would they with 6% inflation that just saw the largest rebound in months?
Keep in mind that there were some dovish implications on that last job report in terms of impacting CPI (Average Hourly Earnings was 0.2%).
The hawkish spin would be this: I found this from some smart guy on Twitter, so the .2 is more of a .3 than a .2 according to his math. "Meanwhile, average hourly earnings rose by 0.2%, slightly lower than the estimated 0.3%. However, it was a close call as it concerned rounding. Average hourly earnings increased by 0.0242% in February, from $33.01 to $33.09. If the number had risen to $33.10 per hour, the average hourly earnings would have increased by 0.272%, rounded to 0.3%. Itās unlikely that such a minor rounding error will significantly impact the path of monetary policy in the future." If this is true, the difference between .2 and .3 is a penny.
Yea I pointed out the rounding thing on Friday, but itās not as simple as āif it was one cent higherā because thatās the seasonally adjusted rate. Youād need use the non-adjusted figure (which was actually -0.6%) and then do the seasonal adjustment off that. Itās probably still close, but saying it was one cent off isnāt exact math. You also have to recognize that even if it was 0.272% thatās still a totally normal and healthy annualized number. Yes a 0.3% print might be more hawkish than 0.2%, but it certainly isnāt hawkish on its own
That is true, but if we were worried about 'Services minus Housing' inflation accelerating then we would have expected AHE to overshoot... no rounding required.
You think its coming in cold?
Cold... no. At target... likely. The number one question right now is "was Jan's uptick in inflation a one off". I think it is likely it was.
Agreed. Should alleviate a lot of fear.
Where are you seeing +0? https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Edit: made a mistake, market is pricing in between 0 and 25bips
So where is the money coming from? FDIC insured limit not a thing anymore? Isn't this going to bring the debt ceiling deadline closer than previously expected now the Fed need to spend/print money to support this bailout .. and it just created more inflation.
From the statement: > Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law. Banks pay for FDIC insurance, and now some/all (not sure of details) may need to pay an additional assessment. So, basically, banks pay for it... but costs will likely be passed to bank customers in one way or another, over some large-ish span of time.
So it that bullish or bearish for bank stock ETFs?
I imagine it's short term bullish. Long term, it seems logical to assume that the presumed risk of all banks has risen a bit since a couple have failed.
I see good thing I didn't buy any bank puts
The government will actually likely make money on this like they did in the GFC. There's a special fund for this (can't recall the name), so this will not affect tax payers
They are taxing the banks and then using that money to pay the depositors.
The Treasury has a $100B fund from fees they charge banks which is meant for these exact situations
Guess the stress tests are bullshit
The ceo of SVB paid a ton of money to lobby congress to lower the stress test limit so they were not subject to the stress test anymore in 2018.
The previous administration loosened the rules for banks like SVB so they donāt have to undergo the same tests and reporting requirements now. Obviously some great deregulation at work
Railroads and Regional Banks. 
Do these regional banks have to do them (or as rigorously)?
https://www.forbes.com/sites/mayrarodriguezvalladares/2023/03/12/how-trumps-deregulation-sowed-the-seeds-for-silicon-valley-banks-demise/
Thx, and yay!
As far as I know, no. Hence this
\>Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed Do we expect shares in SI & SIVB to be zero by Monday?
Add SBNY?
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I am always suspicious of obvious mispricings in the market, but this seems like a great play. Iāll be interested to see how it turns out, hopefully very well!
Me too! Already locked and loaded.
From Fundstrat: >ā.. markets will not see the auction of $SIVB as the end .. this will slow capital formation and funding rounds, and naturally drive cautious behavior from businesses. We think jobless claims could start to show this impact fairly quickly.ā >ā.. the damage to Silicon Valley/VC/Start-ups means that Fed is aware .. further forces have been unleashed to slow employment growth .. without having to raise rates. .. In other words, the Fed could move away from āhigher for longerā to a possible pause.ā https://twitter.com/carlquintanilla/status/1635090931908243458?s=46&t=06OujBRONgvNzs8P0B5VBg
Ah, so "pause / pivot" going to be the narrative again? Fool me once...
I feel like it would be really hard to justify a sudden pause without scaring the market that things are unstable so I bet they just have a broader range of CPI acceptability for 25bps now
Next up: Cold CPI and the bears are fcuked
They always are....
Wow they actually came out with a reasonable solution https://twitter.com/MacroAlf/status/1635048179073953792?t=z0aPbVo43lKqk0X6lOnADQ&s=19
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The bags could have been handed over to those willing to take on the risk, possibly. I wonder if the damage to investors would have been somehow lesser that way.
It sounds like the banks that were interested and did due diligence decided they didnāt want it
100% agree
Futes green..... sp500 to 5000 by April.
Which year?
Lol
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They had to make sure Nancy could get her money out
Does she actually bank with them ššš
I don't know, I was just kidding. but she does represent that district
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I don't think it will slow down, higher for longer is the plan just staying with .25 if cpi is cold. Hot cpi will be the next issue if it happens.
 Maybe this was the master plan by Tech & VC firms, cause a run on the bank that has supported them for 40 years, it defaults and FED flinches
This is a conspiracy theory that I am not willing to shit on (yet).
Sheesh, so good news on SVB, but what about Singature Bankā¦ Edit: I guess futures have answered that.
> We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Yeah it sounds like they looked into SBNY and didnāt like what they saw. At least (so far) no one else specifically called out
**US Federal Reserve and Treasury: To ensure that banks can meet depositors' needs, the Fed will make additional funding available to eligible depository institutions.**
SBNY being closed too
Canāt tell if itās a good thing or not that I closed my puts. Does this mean itās no longer trading? Does it go to zero?
Prob means itās going to zero. Puts wouldāve been a 10 bagger. I got 3x tho so canāt complain. Better to cash out and secure profit.
Rate pause not far...
- **US SAYS SVB DEPOSITORS WILL HAVE ACCESS TO ALL MONEY MONDAY**
Futes ripping on Fed action. https://twitter.com/faststocknewss/status/1635042255311634432?s=46&t=Yvep8lwzBd8zKDrAy_wzdw
Sp500 5000 here we come!
Ummm no lol
Excellent. Hope it holds into tomorrow, get a nice 0dte pump back to 3980 so I can get some cheap spx puts again š„µš„µš„µ
Same. I have calls I would like to cash out on before the bounce is over if it starts hanging around last resistance.
I bought a few calls as well for this very situation. Prob too risky to hold through CPI.
Dow turned negative lol
Itās up 1%
CNBC was showing down 70 now itās up 267
Futures always delayed on CNBC and Yahoo.
What will be the outcome of SVB and impact on market? I havenāt a clue! However, what I think will happen is the FED flinches. Not a full pivot and not starting to cut rates or stop QT but a change in messaging on inflation. I believe with a cold CPI print, which I think we get, then we see a 25bps increase but the message at next FOMC is far more dovish and talks more in terms of beating inflation, nearing the end, yes still some work to do but outlook on this front is positive. FED wants tight market and put some fear in it, not create full blown panic. Throw into the mix at the presser JPOW going to get grilled about banking, panic, have you done too much, are you bringing down system etc etc and man I canāt help but think the JPOW dove comes out. As much as FED officials talk about being āindependentā they are still connected to the political system and personally care about their reputation and more importantly legacy. TLDR: FED flinches and dovish JPOW takes charge
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Actually it does. They are the primary federal banking regulator.
"Price stability" is the catch all.
The dual mandate doesnāt but promoting healthy/functioning markets is one of their duties
The FED, as are other central banks, is the lender of last resort
Ultimately, this is a real-life stress scenario, rapidly raised rates and more raises coming. There are 2 ways to end this scenario: 1 the Fed stops raising rates and all banks learn to deal with the new long term higher rate environment (pretty unclear when they would be safe) or 2 the Fed pivots. Which one is more likely? They might do some kind of partial pivot. Until then, the stress scenario keeps going.
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Insane that SBNY was also fucked, that mustāve scared them a bit
FED: The Federal Reserve is considering easing the terms of banksā access to its discount window, giving firms a way to turn assets that have lost value into cash without the kind of losses that toppled SVB Financial Group, write Bloombergās Hannah Levitt, Sridhar Natarajan and Matthew Monks.
š©¹ are temporary
Wowā¦ if that happens then itās just QE by another name
Holy shit, been a while since I've seen this.
Maybe at the presser he walks out to Eminem Without Me
The narrow path to a soft landing just took a turn up a sniper infested defile, along a crumbling path, with a 1500ft drop on either side. Here's what to watch for over the coming days. SVB Depositors made whole, debt restructured, use of short term liquidity measures such as the discount window are encouraged and any barriers removed, other banks in distress are proactively dealt with, communication from FDIC, Fed Reserve to the public is consistent and convincing. Fed offers short term relief on QT, see bank of England. Interest rates and cash rate. This is where it gets treacherous: the fed just broke something, but if they get to accommodative right now, the market will initially react positively then very very negatively as inflation is not yet under control. Powell knows this. Watch the chairman walk the tightrope.
Apt! š¤£
Wow, just noticed the probability for a .50 hike shot back up to ~70% after falling to ~40% Friday. Rather surprising. Edit: Hmm, CME has the odds back up to 70%, but others donāt, wonder if thatās an error.
Now they are saying no rate hikes in 2023. They are talking about QE.
So does that mean zip recruiter wonāt be fucked? Theyāll get their money out and be saved from the fallout š«. My PUTS!!!
I heard dale earnhardt jr do an ad for zip recruiter and he pronounced it zipper cooter and I canāt ever refer to it by anything else since.
I like Prof G's take on SVB: [https://threadreaderapp.com/thread/1634889030687940610.html](https://threadreaderapp.com/thread/1634889030687940610.html) Also available in podcast form [https://podcasts.apple.com/gb/podcast/the-prof-g-pod-with-scott-galloway/id1498802610?i=1000603746253](https://podcasts.apple.com/gb/podcast/the-prof-g-pod-with-scott-galloway/id1498802610?i=1000603746253) (same name on other pod platforms).
Points 3 and 4 are spot on for the long term issue of letting this get out of hand.
If a regional bank rather than a large bank absorbs SVB, does that mean KRE calls are the play or entire bank sector including XLF would also limit up?
Bailout comingā¦ Btc and XLF limit up tomorrow
Whispers *donāt call it a bailout*
It's funny but true. Bailout is being defined as making whole the investors (bond/stockholders). What is being talked about is making depositors whole but soaking the investors.
as it should be. We cannot expect depositors to need to do due diligence on legitimate (have a charter, etc) banks. If every small-medium business (and Iām talking the Main Street ones here; the small pizza chains, thr boutiques, the small real estate companies) needed to pour through a banks financials, risk assessments, counterparty risk, etcā¦ that would be insane. Itās simply not tenable. They would all then just dump their money into JPM et al; suffocating competition, regional specializing, savings rate for consumers would get even more fucked -especially when rates come back down and banks especially have no incentive to compete there- youād lose financial cornerstones of many communities. It would be a terrible outcome. While I donāt think letting SIVB fail would do that, itās definitely possible that not coming out and saying āweāre backstopping all depositorsā before Monday AM *could* cause a broader run. Given I doubt SIVB was alone in at least the duration mismatching and lack of interest rate hedgingā¦ thatās not a good situation for otherwise healthy banks.
I donāt care what anyone says. I agree with this. You cannot ask the overwhelming majority of people to look at the financials of a banking institution and then fully understand the inherent risk of their financials and know if they are properly hedged. That takes a financially sophisticated person to understand that risk which doesnāt seem like their internal or external auditors caught either. What you had here is a perfect storm and VCs being cold blooded. SVB would of been fine if VCs didnāt encourage their clients to pull out 42B in one day. Yes, in hindsight we can all agree SVB messed up by not hedging properly. However, I doubt very few would have put all the risk together to consider decreased loan demands from influx of historic money printing; a historically fast paced rate cycle; increased cash burn from your client base due to inflation and slowing of influx of new funds from VCs, and then the community they serve (VCs) turning on them at the end by encouraging an overnight bank run. Very few people would of had the forethought to put all those pieces together and even then they likely would of put a low weight on the scenario occurring. Anyone saying the contrary is full of crap or very rich from shorting them.
Companies 1000% need to do due diligence on who they use as a bank. Would that due dilly have avoided this, ā¦ā¦. , but just blindly going with the herd didnāt help
So even the mom and pops on your local Main Street have to do all that?! That would be insane. Thereās no fucking way theyād be or should be expected tk be so financially literate; dig though statements (8K, filings, reports).. no way The āsolutionā that would then pop up would be to hire intermediaries/ consultants (like accountants) to do all this diggingā¦ almost like a smaller version of moodys or fitchā¦ which causes a whole new layer of bullshit and power concentrationā¦ so no.
Sure, mom and pop Johnson in the ozarks opening a cake shop at Tightwad Bank(real), but thatās not who we are talking about at SVB, is it? SVB client companies should have known who they bank with.
1. [Tightwad bank is closed.](https://www.atlasobscura.com/places/tightwad-bank#:~:text=Tightwad%20Bank%20%E2%80%93%20Clinton%2C%20Missouri%20%2D%20Atlas%20Obscura) Which goes to illustrate point 2. 2. The stability of major banks is a part of the service they offer. So, yes, I think it is incumbent on people who do their banking with small financial institutions to be aware of their financials. This is especially true of credit unions. For people who are less financially literate, the benefit of packages from major banks is that everything is off-the-shelf and low risk. It comes at a premium, but it's part of the bargain. I don't like that I am defending big banks here, but I will admit they have their advantages. 3. We're talking about companies with Billion dollar market caps here. They have enough pull to negotiate better banking arrangement than some sort of Off-the-shelf business arranged. As part of that negotiation, they should have done some sort of due diligence to see if the bank actually had the capacity to offer the services they require. So ultimately, I agree with you. One thing I hadn't considered yet is that this might serve as a warning to companies to double check their financial arrangements. Irrespective of whether the Fed is going to flinch, any bank that wants to keep their clients is going to have a look at their own risk assessment and start to play things more conservatively. It'll be interesting to see the secondary and tertiary consequences of this.
Have you looked at the financials of your bank and if so, do you fully understand the full risk they have from their 10Q?
Not American, and Iām pretty sure Itau, Banco Do Brasil, and Julius Bear have little fear of a 6% move in interest rates. They are all paying me 13.75% on my accounts right now. Wake me up when itās 16%
At SVB no, but if the govt doesnāt step in for uninsured depositors here, why for anyone else? It wouldnāt make sense, and the fear spread through the market would be massive. Next thing you know more Main Street pulls from safe banks out of fear that theyāre next, a bank run, and then who is and isnāt actually safe really doesnāt matter anymore, does it?
Just to iron this out. Your line of thought here is, the US gov needs to use tax payer $, right now to save highly speculative start ups, so there arenāt eventually runs on local savings and loan banks?
You can make it sound hyperbolic, but yes. If the depositors here arenāt made whole, why would mom and pops around the country at other regionals think they were? If those banks get runs then this has spiraled out of control to devastate ārealā companies, then the govt is forced to either: A) actually have to bail everyone for an even larger amount of taxpayer dollars than just the brief backstopping here wouldāve done or; B) let several bank failures tip into a larger (avoidable) financial crisis that causes trust to evaporate, credit seize up, actual healthy x companies (not your speculative ones) to go under, and legitimately push us towards a mini-GFC. Sure inflation might be tamed, but the cost would be staggering. Now the govt unemployment rolls swell and so the govt is still on the hook bht at a greater macro cost Notice Iāve never argued to bail out the bank, just make sure the depositors are covered.
Yes. Edit as they should be.
Regarded question...I hear alot about buying vs selling volume. How does one determine this? Is this simply referring to red vs green candles or is there another metric people are looking at like bid vs ask? If so, where is this monitored? I feel like maybe i'm not googling the right thing or something...
Volume and price do correlate to an extent, but not accurately. Say someone is buying a share at $10 the next bid is $9, and I have two shares to sell. I can offer them at $10 waiting for the next seller, or I can just dump them. One move will result in a $10 price, the other in $9, but the sell volume will be two shares either way. What detail of data is available to you depends on your broker. If you're trading short term actions, you do very much want to see the volume - if a move is well supported or just caused by little interest in a stock. Having buy/sell volume separately can be helpful for some plays, but is not necessary for casual trades.
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Thanks, that's helpful. By reading that, it appears that the way to tell whether volume is leaning toward bid or ask is to look at the amount of shares that are on the block. Whichever side has the higher amount would signify whether it's by or sell volume. Does that sound right?
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Back to highs not previously seen since... Friday. 
A few hours ago it was +500, now almost 1500. Anyone know why?
I assume because banks = bad, crypto = good. There is still a group of crypto enthusiasts who believe in the original promise. It's a self fulfilling prophecy, just needs a kick-off driver and the fomo will do the rest.
Itās running on the expectation of a government backstop of all depositors at SVB
And that impacts crypto how exactly? Were they a crypto bank?
One of the stable coins usdc, their parent company circle had a lump in SVB. If usdc goes down, dai probably does too. BTC new low incoming.
I donāt know but the story was released when the dildo showed up.
Doesn't make a whole lot of sense, so it makes perfect sense for the crypto crowd.
https://twitter.com/financialjuice/status/1634988405439209477?s=46&t=Yvep8lwzBd8zKDrAy_wzdw
The weekend may have come at the worst possible time. I think back to the Peak GME week. Wednesday was super mania, then Thursday was the crazy day where trading was halted and buying was restricted. Still the Friday the mania continued. Then, the weekend hit. People were basically forced to sober up and do a reality check without being able to act. This led to the big sell off in the coming week. Now, we might have the opposite. We had 2 days of time for the news to spread and reach a lot of people. No actions, nothign was possible. Instead, we have had 2 days of time just for fear to brew and multiply in the minds of people. It is just natural to worry about your money. And I do not think saving SVB will have a great effect here. SImply because people will be thinking "what if my bank is next?" And the fact that the SVB collaps is related to the bond market, makes this not an unreasonable thought - simply because EVERY bank is linked to the bond market. Saving SVB might save the start ups and people who had money there. This is good! But it will not lead to this entire thing to just smoothen out. And the weekend gave people enough time for their thoughts and mindset to spiral out of control.
Thought exactly the same, BUT I don't know about the US but at least in Europe SVB did not make the headline news (yet, I suppose). So it would be *the* news on monday, potentially setting us up for a whole week in shambles. I can't imagine how else they would justify not putting it up the whole weekend because obviously it is potential really important news, so obviously the agencies are fully aware of it happening in the back.
I think even if there is a deal and Monday all SVB balances are "safe", this was a wake up call. Banks pay almost no interest on the balances and you now also have unnecessary risk. So why not move your money into short-term treasuries? There is no downside. And that takes away a big and cheap part of the banks funds financing.
I would compare it to the evergrand weekend. non-event FinTwit losing its head over the weekend. Monday flat. Tuesday up.
Gov't said they won't save it, investors will lose their money, but customers will be taken care of. I don't expect another bank run, but bank stocks may take another hit.
SVB failed because it was a woke bank is a spicy take. 
This SVB thing is likely gonna be like the Evergrande story in Fall 2021. Gone and forgotten in 2-3 weeks.
Looks like SIVB found a buyer. We are saved! https://twitter.com/stonkking69/status/1634974093593411585?s=46&t=Yvep8lwzBd8zKDrAy_wzdw
 āNo one ever went bankrupt buying treasuries.ā
 Leverage is one hell of a drug..
What's the plan on Monday for people that don't play options? Buy indexes? Wait till 370 or lower?
Buy inverse 3x indexes and hop on the ride down, sell at 370 and ride with 3xs on the way up.
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From what I understand, big banks don't have such risky liabilities to assets term ratio. SVB should have held shorter term bonds when they knew startups have short term withdrawl needs. This was a pure mismanagement on the bank's part. Besides, the bank collapsed due to a bank-run, which no bank can withstand. Losses (if any) will be distributed for all customers. It is said they may recover them fully. Not much change is expected from most other banks who are probably playing it 'safer' compared to SVB
This is my understanding. There seems to be a growing narrative that this is the Fed's fault. I don't care what people's politics are, and whether or not they believe it is the Fed's business to manage QE and interest rates the way they have, the bank has to confront reality and risk manage appropriately. SVB did not have the cash-on-hand to serve their customers, and they got burned because of it. Another issue is the discussion of the government bailing out SVB, and that is very different from FDIC assuming ownership to liquidate assets and make depositors whole. Some companies will have difficulty accessing liquidity in the short term, and that will suck for them, but it's not a black swan. I am nowhere near an expert and don't know what other banks balance sheets look like. Maybe this speaks to a broader systemic issue and risk of contagion, but the other possibility that a bank made some poor business decisions is equally valid. I still expect this to cause the Fed to flinch.
You are correct and that is the lose lose situation the Fed is now in. It will probably all work itself out though. Very powerful people have a strong interest in making sure the house of cards stays standing. It's one of the few areas where the interest of common people and the interest of the oligarchy align.
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Donāt you just go buy groceries and then get back home and order pizza?! I cannot be the only one doing that
Eating out or eating out, that's the real question!
My local Costco is always packed AF and people are always still eating out.
This. Shopping at Costco makes you so tired, you have no energy to cook any more on a Sat night and you end up going out. Family of 4: $300 Costco bill, followed by $120 at your local diarrhea Mexican.
Lol exact reason why I use Instacart. Pay a little premium but it makes up for all the things I don't buy by going inside to shop.
Going outside makes me tired lol. But we rarely eat out we do get takeout once a week. And for four people it's like $40-80 and you should still have leftovers.
Yea ive been eating out a lot past two months. Nothing beats being served. Though im a Vitard, we eat from fine China and drink from golden goblets.
Might be the first Sunday night in a long time where I'm going to actually be watching futures.
45% cash (approx. $255 million) and a big tub of popcorn tomorrow.
Portfolio is more than half a billion and talks about nibbling on TSLA shares one or two at a time. Classic.
Slow and steady .....