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Equal Librium Market - 3/9/23

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1 hour ago, Jimbo said:

THE HIDDEN BANK BOND LOSSES IN PLAIN SIGHT

Answer

Unless you were short any bank stocks .... just a warm fuzzy feeling and perhaps a few more subscribers.

Thats why the equation:

Knowledge + Capital + Action = Happiness

Is so important.

However what amazes me is how long the market took to cotten on to the blindingly obvious.

The lag between the knowledge and the action was a rather long one.

 

Also no body seems to be thinking about Insurance companies ...which are ofter big bond holders.

A timely article about the impact on insurers would be very useful.

 

and thats the main problem - you cant trade based on knowledge because market could push valuation higher and you will lose based on your shorts. I think thats its very hard to earn money based on knowledge. Many smart guys offer content, reports, but if its just macro etc its very hard to earn money just like that based on reports. You could be losing money for even one year or half because....you have to dance till music play like Ceo of Citi one said.

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It turns out that Silicon Valley Bank is among the 20 largest banks in the US.

SV Bank is a key bank for early-stage businesses. It is the banking partner for nearly 50% of VC-backed tech and health companies listed on Wall Street. If it were to collapse, it would be the second largest collapse in history. Famed investor Peter Thiel is reportedly recommending that cooperating companies withdraw funds from the bank.

 

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THE BANKS REAL PROBLEM

The problem is no so much the banks bond losses.

They can hold them to maturity.

The problem is that they will have to fund these low yielding assets for a long time with more expensive short term deposits.

So the Banks will be in a negative free cash flow situation.

Not good for their stock prices.

Lots of capital raisings and mergers coming up.

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