Financial thread

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Silicon Valley Bank are not one of the too big to fail crowd so they will be allowed to fail.

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I can't see this Bank being bailed out either. What is concerning is how far the Government/Bank of England will go in supporting those small Tech companies that seem to be heavily linked to SVB, and will it set a precedent going forward if there is more to come. Will the Fed still intend to go full Volcker after this? Non farm payrolls last week still pointed to a strong economy, fueling inflation.

I would assume that SVB could be the tip of an iceburg, even though, amongst regional Banks, SVB does seems to be a bit of an outlier when it comes to their lack of due diligence, or at least I hope they are, as many suspect that even the big boys are hiding unrealized losses of substantial amounts. Time will tell.

Update 13/3.
Maybe the Fed will no longer be going full Volcker after all. Goldman Sachs now expects the Fed to stop raising interest rates. The markets will probably love it for a time, but if it turns out to be correct, then you know for sure that the Fed have broken something. And when they eventually start to cut rates, it will be because the economy is tanking, and along with it most other economies around the world. Sad for Europe and the UK whose business cycles are ahead of the US, and are bottoming out, and the stock market cycles are currently in a nice accumulating sideways to upward phase.

Just like during the global financial crisis the vultures are never too far away. www.investing.com/news/stock-market-news/jpmorgan-pnc-among-suitors-for-svb-financial-in-deal-excluding-svb-bank--axios-3028461

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Looks like the Fed have been pumping liquidity to support the markets over the last couple of days. It will be interesting so see how long this goes on for. So do not fight the Fed.

The interest rate decision is due next week, and this move by the Fed could just give them the space to raise rates by 25 basis points without looking like they have broken something. Prior to the SVB debacle, markets were expecting the Fed to accelerate rates by 50 basis points next week, although nothing was mentioned about this in Powell's uncomfortable question and answer session last week. Not sure what Andrew Bailey will do, but I am sure he will be in constant communication with his boss about it.

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Money printing needed to fund depositors. Means higher inflation for longer.

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Mar 15, 2023 13:02:50 GMT sennockian69 said:

Money printing needed to fund depositors. Means higher inflation for longer.

Unfortunately yes, and turning into stagflation for many. Good play for Gold though, even more so if yields continue to fall overall. In which case Treasuries continue to look attractive to me going forward. Would like them to come of a bit though, big 3%+ jump today in IBTL

More negative news today regarding Credit Suisse. Smells like a potential Black Swan trigger. Careful out their guys.

Re investing.com
"Credit Suisse Group (NYSE:CS) stock plunged 15.8% after the Saudi National Bank, a top investor, said regulations prevented it from being able to provide any more financial assistance to the Swiss finance firm. The stock has come off its lows of the morning".

www.investing.com/news/stock-market-news/us-stocks-fall-as-credit-suisse-adds-more-pressure-to-bank-group-3031311

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Credit Suisse the turd that everyone avoids talking about.

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Mar 15, 2023 17:02:07 GMT sennockian69 said:

Credit Suisse the turd that everyone avoids talking about.

I thought that was Harry Wheeler.

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Mar 15, 2023 20:20:39 GMT sword65 said:

Mar 15, 2023 17:02:07 GMT sennockian69 said:

Credit Suisse the turd that everyone avoids talking about.

I thought that was Harry Wheeler.

Rumour has it that it is his pseudonym. I think he is in charge of their Credit Default Swaps. Now there's a phrase that could be haunting us in the future.

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Looks like Central Banks are willing to support the failed entities, but not bailing them out directly as such. Hmmm.

Whatever happens over the next few weeks/months, the Elephant in the room has got to be the US consumer and levels of unemployment going forward. Once levels start to rise (they are extremely low at the moment), things could get ugly quite quickly.

Update 18/3

This study does not bode well.  Apparently 186 Banks have similar vulnerabilities to SVB.
papers.ssrn.com/sol3/papers.cfm?abstract_id=4387676

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What is happening re 'bespoke tranche Opportunities' now. They are just another name for CDOs, right?

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Not sure to the degree to which large Banks are using them, however I assume that they are commonplace. I understand that they are the same, although I think the difference is that where CDOs are constructed by Banks, and sold to the market as packages, BTOs are constructed by a dealer for a client in relation to say levels of risk the client is willing to take. One other difference is that, unlike CDOs, I don't think that there is a secondary market for BTOs.

Interestingly, Credit Suisse were overexposed to CDSs (Credit Default Swaps) to the extreme, and they can be used as part of the construction of a BTO.

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Mar 22, 2023 16:24:51 GMT @cgr said:

Not sure to the degree to which large Banks are using them, however I assume that they are commonplace. I understand that they are the same, although I think the difference is that where CDOs are constructed by Banks, and sold to the market as packages, BTOs are constructed by a dealer for a client in relation to say levels of risk the client is willing to take. One other difference is that, unlike CDOs, I don't think that there is a secondary market for BTOs.

Interestingly, Credit Suisse were overexposed to CDSs (Credit Default Swaps) to the extreme, and they can be used as part of the construction of a BTO.

Bachmann Turner Overdrive?😁 oops!sorry wrong thread 🤣🤣🤣🤣

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Is the Fed Bankrupt?

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Commercial Office sector the epicentre of the next crash?

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Where is Maidstone a world leader?

My suggestion - converting office space to flats.

We are ahead of the curve.