SVB is Now In the Hands of the FDIC

[Rb0891]

Unless I’m misreading, they’re guaranteeing all deposits.

Bank will still be on the hook but they’ll just file bankruptcy I’m sure.


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It seems the bank is done. All deposits guaranteed by the FDIC. No taxpayer money… well except the fees that fdic is going to charge the other banks (the taxpayers) to fund this.

Doesn’t seem to me like this is a real big loss issue as the assets are there, just currently valued as shit due to the interest rates. The big issue long term seems to be the erosion of the laws of capitalism as is always the case. I am certainly no expert.

 

[derklug]

But the execs all got their bonuses before the Feds took over.
Wonder if companies with all of their working capital in the bank will be able to access enough of their cash to pay bills.

 

[BOOGIE MAN]

@MG0h3 you moving tsp allocations and current funds?

 

[MG0h3]

@MG0h3 you moving tsp allocations and current funds?

I moved my TSP out of the funds tracking Dow and S&P like Mid Feb. I was looking at a 3800-3850 reentry until this crap happened Friday. Then I was thinking maybe lower. But it appears everyone is happy according to figures.

Went to “G” which used to be bonds earning a percent or two but now it says cash. New platform is goofy.


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[Adower]

Bailing out their friends and donors.

Can’t wait to see Tuesday’s report.

 

[Klaus]

Bailing out their friends and donors.

Can’t wait to see Tuesday’s report.

Deposits were backstopped. The bank was not bailed out. Equity holders are wipes out and everyone will lose theor job.

 

[Blk04L]

Quite a few banks futures plummeting this am prior to opening

First Republic drops 70%, leads decline in bank stocks despite government's backstop of SVB

 

[Weather Man]

Unless I’m misreading, they’re guaranteeing all deposits.

Bank will still be on the hook but they’ll just file bankruptcy I’m sure.


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When the Feds declared them insolvent and closed them, that was it. 2 banks closed and stockholders zeroed out.

The depositors are happy, but we'll see how stockholders react.

 

[Weather Man]

Holy crap! FRC is down 70% premarket!!!!!!!!!!

 

[Klaus]

Klaus,

Thoughts on the macro environment for the normal guys for the short/mid term?

For me in specific, I plow money into my 401K in a Target 2045 retirement fund with a portion of the portfolio holding dividend producing company stock from my employer. In addition, I have a separate IRA that is structured around emerging market funds and S&P Index funds and that are heavily DRiPed.

Any leftover gets smashed into legacy cryto (BTC and ADA). I hold very little cash.

Im at an age where I dont sweat financial down turns, I look at the as an opportunity.

Words of wisdom for my situation?

I wish I could offer some brilliant advice that would make you rich. The longer I do this the more realize that my crystal ball does not work as well as I think.

If you can afford to stay invested stay invested. Not doing anything is often the best thing.

Cost averaging is the only thing that works. Say you have 12k. Don't put it all in at once as your performance will be determined by the exact date that you put it in. Instead do 1k a month for 12 months.

As far as specific market calls, I am long bonds, gold and cash relative to stocks. But I made these calls months ago. In the near term I will be adding to bonds.

As I have clarity on fed interest rate trajectory I will pivot to stocks. I will put more into the market at that time. I cost average as well.

Value stocks will outperform growth stocks initially. As the fed pivot becomes clear and as we exit recession growth stocks will outperform.

Your positioning seems fine for what sounds like a high amount of risk tolerance. As fed pivots, consume less and save more. By save I mean invest.

How much you save vs. consume is the most impact full decision you can make.

Your EM positioning should do well as US rates come down. The dollar will weaken relative to other currencies. Capital will flow to EM. The counter is that EM is levered to US consumption so if we are entering a recession then EMs may be hurt.

It is possible that domestic consumption of EMs is enough to outweigh this.

Also, take a look at the holdings of your EM fund. Chances are you are very long China and Chinese banks in particular.

BTC may be a very interesting asset to hold right now. If you are worried about systemic financial risk then a store of value outside of the financial system makes sense.

Hope this helps

 

[Klaus]

Expectations for fed rate done changed

 

[Klaus]

@Kornilov to the point of my EM comment. As expectations for fed funds rate decrease -> expectations for USD fall -> capital will flow to EM

 

[Klaus]

I have a massive gold all on and this warms my heart. Daddy needs another car....

 

[Klaus]

BTC following. @Kornilov

 

[Klaus]

"Its not systemic"

 

[VegasMichael]

Because it is a systemic issue. I am not sure how I can be clearer than that.

Read my response to Bruno. It should be clear. If it is not you are not following the plot.

I did. But I haven't seen or heard of any big bank runs with any of the big boys. Yet. We'll see what happens this week.

 

[Weather Man]

The UK arm of collapsed US lender Silicon Valley Bank has been bought by HSBC for 1 Pound.

 

[Klaus]

 

[Klaus]

I did. But I haven't seen or heard of any big bank runs with any of the big boys. Yet. We'll see what happens this week.

Re read my post to bruno. Then read it again. The issue is that there is a massive mismatch in assets and liabilities that is covered up by stale valuations of the investment portfolio.

This is the very definition of systemic. This is what this looks like at an aggregate level.

The reason that the fed is taking action overnight on a sunday is because. it. is. systemic.

 

[Klaus]

PS there *is* a run on all of the other banks. By guys like me. We are sweeping cash balances from all of our accounts. This amounts to 10s of mil getting sucked out of bank balance sheets. Everyone in my position is doing this right now.

One guy like me amounts to thousands of individuals......

Are other banks going to fail? Dunno.