ECON [FINANCE] 2023 Banking Crisis DEATHBURGER Thread 2023.2.0 will UBS actually eat Credit Suisse before the Open???
- Thread starter night driver
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night driver
ESFP adrift in INTJ sea
Thanks, Jules. The chart in post 277 explained HOW we went from +100 to -531 in half an hour this afternoon.
My gut feel is that SOMETHING fairly large-ish and UNEXPECTED broke this afternoon and we haven't seen what it was yet.
My gut feel is that SOMETHING fairly large-ish and UNEXPECTED broke this afternoon and we haven't seen what it was yet.
bw
Fringe Ranger
Feels like the kitchenware battle in the Beauty and the Beast cartoon. I'm surrounded by falling cutlery.
LYKURGOS
No Surrender, No Defeat!
The rate hike was another boot on the throat of banks who have long term treasuries. Things break when direction changes fast and the rate of change is faster I believe than Volkers (percentage wise). Let’s see who’s on deck Barclays? Bank America is in the hole.
Powell and Yellen are quite the tag team
Almost as good as Austin and Miley
Powell and Yellen are quite the tag team
Almost as good as Austin and Miley
What broke was Yellen.
The administration castrated the rally with the ‘if you ain’t a bank for billionaire Cali venture capitalists and a Progressive Cali governor then you can go to hell!’
We only bail out The Taliban, Ukraine and our leftist west coast bestie friends. With 10% for “the big guy”
HarvestMama
Contributing Member
Curious what he shared there because he deleted it.
John Green
Veteran Member
How about UBS backing out of the Credit Suisse deal ? Not confirmed but that would be big.
Dollar Short
Veteran Member
I think this clip presents a fairly accurate depiction of the current Fed (and other central banks) strategy to deal with the twin crises of banking and inflation:
View: https://www.youtube.com/watch?v=t2KH1rHi_kw
Warm Wisconsin
Easy as 3.141592653589..
I figured why the market dumped other than they didn't rule out more rate hikes.
Key Fed number today is its 0.4% Q4 growth forecast for 2023. Q1 2023 is tracking a strong 0.6%. So 0.4% Q4 is already a recession forecast, since - to get there - you need negative quarter over quarter growth in the course of 2023. The Fed is bracing for recession...
Key Fed number today is its 0.4% Q4 growth forecast for 2023. Q1 2023 is tracking a strong 0.6%. So 0.4% Q4 is already a recession forecast, since - to get there - you need negative quarter over quarter growth in the course of 2023. The Fed is bracing for recession...
The Hammer
Has No Life - Lives on TB
Pretty much sums it up.
Southside
Has No Life - Lives on TB
Southside
Has No Life - Lives on TB
Oh hell, we may not make April 6th,
TKO
Veteran Member
That didn't work so well with SVB.
Greenspode
Veteran Member
I have a couple of Capitol One cards, and I got an email from them today offering me $1,000 if open a savings account with them, deposit $10,000, and leave it there for 90 days.
bw
Fringe Ranger
So they're willing to pay 40% APR for your cash. Think they're feeling stressed?
jward
passin' thru
zerohedge
@zerohedge
2m
Replying to @zerohedge
CRE exposure by bank
View: https://twitter.com/zerohedge/status/1638741181164077057?s=20
@zerohedge
2m
Replying to @zerohedge
CRE exposure by bank
View: https://twitter.com/zerohedge/status/1638741181164077057?s=20
vector7
Dot Collector
The same people who told us our banks are safe and secure tell us our elections are safe and secure
And Vaccines are safe and effective…
Our borders are secure....
And the water in East Palestine is safe to drink.
View: https://twitter.com/StephHoover8/status/1638718947846496257?t=FcUsn868KDe7_l4bS-4uBQ&s=19
And Vaccines are safe and effective…
Our borders are secure....
And the water in East Palestine is safe to drink.
View: https://twitter.com/StephHoover8/status/1638718947846496257?t=FcUsn868KDe7_l4bS-4uBQ&s=19
Tristan
Has No Life - Lives on TB
The Cub
Behold, I am coming soon.
Look out!
UBS set for talks with Michael Klein to terminate Credit Suisse investment bank deal - FT
March 21, 2023 at 2:30 PM CDT·1 min read(Reuters) - UBS is set to enter talks with Michael Klein to terminate a deal that would have seen the Wall Street dealmaker take control of much of Credit Suisse's investment bank, the Financial Times reported on Tuesday.
UBS on Sunday agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.
Klein, a veteran dealmaker, was merging his eponymous advisory boutique into Credit Suisse's investment banking operations to create CS First Boston as a standalone business which he would have led from New York.
UBS has now assigned a legal team to examine how to void the contract Credit Suisse signed with Klein in the cheapest way possible, according to the FT report, which cited people with direct knowledge of the matter.
"We assume he (Klein) is cherry picking. The deal was done when the selling bank had a gun held to its head and we are no longer in that position," a person close to UBS said, according to the report.
UBS and Credit Suisse declined to comment, while Klein could not be immediately reached for comment.
(Reporting by Anirudh Saligrama in Bengaluru; Editing by Shounak Dasgupta)
UBS set for talks with Michael Klein to terminate Credit Suisse investment bank deal - FT
UBS on Sunday agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking. Klein...
SmithJ
Veteran Member
If you read the details it’s clear that Credit Suisse is stronger than it appeared and that UBS wants it all, and is trying to void part of the deal that would have spun a section off to an American companyLook out!
UBS set for talks with Michael Klein to terminate Credit Suisse investment bank deal - FT
March 21, 2023 at 2:30 PM CDT·1 min read
(Reuters) - UBS is set to enter talks with Michael Klein to terminate a deal that would have seen the Wall Street dealmaker take control of much of Credit Suisse's investment bank, the Financial Times reported on Tuesday.
UBS on Sunday agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.
Klein, a veteran dealmaker, was merging his eponymous advisory boutique into Credit Suisse's investment banking operations to create CS First Boston as a standalone business which he would have led from New York.
UBS has now assigned a legal team to examine how to void the contract Credit Suisse signed with Klein in the cheapest way possible, according to the FT report, which cited people with direct knowledge of the matter.
"We assume he (Klein) is cherry picking. The deal was done when the selling bank had a gun held to its head and we are no longer in that position," a person close to UBS said, according to the report.
UBS and Credit Suisse declined to comment, while Klein could not be immediately reached for comment.
(Reporting by Anirudh Saligrama in Bengaluru; Editing by Shounak Dasgupta)
UBS set for talks with Michael Klein to terminate Credit Suisse investment bank deal - FT
UBS on Sunday agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and agreed to assume up to 5 billion francs ($5.4 billion) in losses, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking. Klein...news.yahoo.com
This is actually a positive from UBS standpoint. What it really means is that they forced it under too quick. Bad for the swiss,in that regard.
emiliozapata
Senior Member
I pray so, simply so I won't have to see anymore capital 1 commercials with the racist actor Samuel L Jones asking what's in my wallet
thompson
Certa Bonum Certamen
The Federal Reserve now believes its work is nearly done: Morning Brief
The Federal Reserve has raised rates aggressively in the last year and projected on Wednesday its work raising rates is likely done. Dealing with the fallout of these moves, however, appears to be a project just getting underway.
The Federal Reserve now believes its work is nearly done
Myles Udland
Thu, March 23, 2023 at 4:30 AM CDT
An eventful day for the Federal Reserve left investors with a clear message — our work is nearly done.
Alongside the central bank's announcement it had raised the target range for its benchmark interest rate by 0.25%, the Fed released updated economic projections that showed its current interest rate hiking cycle has nearly come to an end.
Interest rates now stand in a range of 4.75%-5%. The Fed's "dot plot," which outlines interest rate expectations from Fed officials, suggested only one more 0.25% rate hike is likely coming this year.
And that would conclude one of the more consequential periods in Fed history — the consequences of which are just beginning to be fully realized.
At the center of the Fed's impending pause in rate hikes is a bank crisis that grows out of the Fed's own actions.
During a press conference on Wednesday, Fed Chair Jerome Powell sought to distance the broader banking system from Silicon Valley Bank, which had been the 16th-largest bank in the U.S. before being taken into receivership on March 10 after suffering tens of billions in deposit outflows.
"At a basic level, Silicon Valley Bank management failed badly," Powell said. "They grew the bank very quickly. They exposed the bank to significant liquidity risk and interest rate risk."
Powell added that the bank "experienced an unprecedentedly rapid and massive bank run" due to its "very large group of connected depositors."
Specific failures. Specific customer dynamics.
And, as Powell acknowledged, a situation likely to face specific investigations regarding this failure.
But the ramifications for the broader economy will not be quite so localized.
In the world of central banking, the impacts never are.
Because whether or not Powell's comments declaring the "banking system is sound and resilient" become a modern version of Ben Bernanke's infamous declaration before Congress in 2007 that "we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system," altering the course of interest rate changes will — and does — have enormous impacts on the economy.
Central bankers and economists often refer to raising or lowering interest rates as a "blunt tool." And while much is made about the "long and variable lag" of monetary policy, the power of this interest rate tool is not in dispute.
The housing market in the U.S. has been crushed under the weight of higher interest rates.
The tech sector has been punished by rising rates, a dynamic that first meant big tech stocks stopped going up, then more speculative venture projects were funded less enthusiastically, and now the bank that helped fund much of this industry has failed.
And one of Europe's largest banks, Credit Suisse (CS), was finally administered the death blow investors had awaited for years and subsumed by its larger rival, UBS (UBS), last weekend.
Asked Wednesday how the Fed incorporated this month's baking sector stress into its rate forecasts, Powell said, "What I heard [during the FOMC meeting] was a significant number of people saying they anticipated there would be some tightening of credit conditions, and that would really have the same effect as our policies do."
In other words, the Fed's forecast doesn't call for higher rates because the impacts additional rate hikes might impose on financial markets and the economy are already being felt.
Look at the Fed's forecasts, and we see a central bank that believes its work raising rates is nearly done.
Look at the banking system, and we see a central bank only beginning to realize what work is yet to come.
PrairieMoon
Veteran Member
My favorite Shooter scene!
"The world ain't what is seems, gunny....the moment you think you got it figured, you're wrong."
jward
passin' thru
zerohedge
@zerohedge
3m
Stocks & Crypto Erase Post-Fed Losses, Banks & Bond Yields Keep Dropping
View: https://twitter.com/zerohedge/status/1638925870445522946?s=20
@zerohedge
3m
Stocks & Crypto Erase Post-Fed Losses, Banks & Bond Yields Keep Dropping
View: https://twitter.com/zerohedge/status/1638925870445522946?s=20
THIS.
Again, first inning of this. Regional banks have massive problems with commercial real estate. I believe the outstanding amount is like 11.3 Trillion. ~4.5 trillion of that is repricing this year (most is funded with variable rate interest loans) and there WILL be defaults/pushbacks onto the banks. I believe that this will be the next domino--and I believe Powell yesterday said he doesn't see an issue in commercial real estate segment. Now that Yellin has also backed out of the "everyone gets bailed out" lie I think a lot of regional and smaller banks are feeling naked and will continue to see reserves pulled and transferred to big banks. They will use that to buy the small banks out on the cheap, push the unrealized debt on to the BTFP facility which the Feds will have to choke down and print the money to give to the big banks.
Once that is over, the big banks (TBTF) ARE the banking system and the Fed is trapped. Rates won't have an effect on the country other than maximizing TBTF profits. They will gladly hold your deposits at 0.1% and rotate in and out of the overnight repo market making 5% on your money. They will largely become Venture capitalist havens because they cannot lose money any more.
I think the only answer is to keep raising interest rates now and cause a deflationary depression. It preserves the currency and restores reasonable pricing. I don't think they are competent or apolitical enough to do it though.
hiwall
Has No Life - Lives on TB
This ^^^
The Fed should have did at least a half percent increase yesterday and then plainly said they would continue raising rates by that amount. But they are cowards.
Prediction (which is likely wrong):
Fed will lower rates faster than they raised them. Fed will start QE by year end.
Inflation will soar (no matter what the Fed does).
Codeno
Veteran Member
And seeing that inflation is actually a tax in and of itself, the people doing this to us don't give a flip what the inflation rate is, other than to use it as a blame the other party talking point while campaigning.
George Carlin, again...
ChicagoMan74
ULTRA MAGA
The tweet was deleted...what was it?
ChicagoMan74
ULTRA MAGA
In somewhat related news:
nypost.com
Walmart laying off hundreds in ominous sign for economy
Walmart has been investing heavily in automation over the past few years.
nypost.com
I will give it a try. Hopefully I'm not too wrong. I like to think of it like a house of cards. Go back to before the federal reserve was funded. Business was built based on capital. Money was raised, goods and services produced and sold back to the broader economy for a profit. That profit was then used to build more efficient means, new shops, new services, new streams of income. This is normal.
The central bank, however, has taken over management of the process. It lends money that it creates out into the economy at interest. By doing this it can spur growth, but the capital raised doesn't go back to the people who earned it but rather to the bank to pay the interest. When that happens the only way to continue to spur economic growth is to print more and more money. Business now is not build by capital, but rather by debt. But its worse than that.
Bring in fractional reserve lending. This brings in more and more lending at higher rates. More debt is created. More exotic loans are made that pay ever higher and higher returns to the bank. Like a ponzi scheme the money is pulled from the lower, small business folks that require credit to conduct business and transferred to the banks. They take their cut and relend YOUR money that is on deposit to someone else. Monetary supply expands faster than the underlying economy because of interest.
Eventually, however, the Ponzi becomes so skewed that the bottom layer can't support the weight of all of the leverage from the top. Perhaps taxes are too high. Perhaps the bottom layer has too much debt (mortgages, credit cards, student loans, car loans) and cannot afford to service or pay that debt. They default, declare bankruptcy, whatever. That loan is bad and won't be repaid. That results in a loss for the bank, and just as the case where money was leveraged UP, it begins to also cascade throughout the system.
We saw this type of event in 2008. People had access to cheap loans and poor lending standards and bought a lot of property they really couldn't afford. The banks bundled up these mortgages, resold them to pension funds and anyone else who wanted a much higher rate of return. Then people had trouble paying back these mortgages. They went bad and the mortgage back security they were bundled in defaulted. This formed a cascade through the banks who had them and the only thing that kept it going was government cash...."TARP"....that you paid for. This didn't fix the problem, it bandaged over it.
Today its happening again. Inflation has made things unaffordable, and the loans made predicating that the good times would keep going were based on the infusion of trillions during Covid. Inflation crushes the lower folks. They begin to default. Small banks start feeling it and people get scared. Their money is in the bank so they pull it out, also they have been pulling it out to buy "stuff" which was overpriced since COVID. That money is gone. Banks have counted on that cash and taken out risky investments that are underwater. If they sell they lose money. If they don't they are insolvent. and on and on.
The bottom level of cards is collapsing. Unemployment and inflation are the culprits. The second level is the small and regional banks. They are beginning to fail. The bigger banks as well like Credit Suisse. The big banks have trillions in derivatives. Once they begin to fail the cascacade is unstoppable and will take everything down. No loans, no business, no jobs, no economy. 1920s-30s style depression.
But out of those ashes comes sound money, again created by people taking risks and gaining rewards. The cards are falling. Raising interest rates exacerbates it but protects the currency. The only other option is to print enough money to pay off all of the debts, destroying the currency in a hyper-inflationary inferno. This is like Zimbabwe or the Weimar Republic. You crush the citizenry who can't service any of the debt or pay bills because inflation drives prices up faster than they can make money. There is still a depression but now there is no basis to rebuild on as there is no viable currency. This is why many believe they will go down that path, to start a "New" currency issued by the bank itself--CBDC.
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