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Were These Regulators Just Asleep At The Wheel?

A report from the Idaho Statesman. “The median price of a single-family home in Ada County in February was $492,115, according to the Intermountain Multiple Listing Service. That’s down 10.5% from February 2022, when the median price was $549,900. In Canyon County, the median price of a single-family home in February was $389,945, according to the Intermountain Multiple Listing Service. That’s down 10.3% from February 2022, when the median price was $434,900, and down $5,500 from January. Single-family homes in Ada County spent an average 78 days on the market before going under contract in February. That’s up 143.8% from February 2022, when they spent an average 32 days on the market. The last time that metric was higher than 78 days was in February 2012, according to Boise Regional Realtors.”

“Mike Pennington, of John L Scott Real Estate in Boise, said most home builders have already taken steps to slash retail prices and, therefore, profits. He said he doesn’t see prices dropping much further. ‘Prices will slowly continue to creep upward,’ Pennington said. ‘Buyers who believe that if they wait to purchase a new home, prices will continue to drop dramatically. This simply will not be the case. If we are not already at the bottom, we are very close.'”

The National. “The US banking system faces risks amid the fallout from the collapse of Silicon Valley Bank and two other lenders as the Federal Reserve raises interest rates to curb inflation, Moody’s Investors Service has warned. The rating agency lowered its outlook on the US banking system to negative, from stable, due to the Fed’s rapid monetary tightening and weak risk management that amplifies the underlying asset-liability management risks of banks.”

“‘We have changed to negative, from stable, our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at SVB, Silvergate Bank and Signature Bank (SNY), and the failures of SVB and SNY,’ the rating agency said in the outlook note. In a separate note, Moody’s said that while the three banks were unique in their focus on cryptocurrency and venture capital or private equity, areas of non-bank finance that grew quickly during the era of easy monetary policy, ‘it is increasingly evident that other US banks are also facing ALM strains.'”

The Commercial Observer. “Following the collapse of two regional banks — including Signature Bank, one of New York City’s most active commercial real estate lenders — the market is abuzz with speculation around the health of other financiers, and First Republic Bankis top of mind. The San Francisco-based lender’s stock dropped nearly 62 percent Monday. First Republic may simply be the bank hitting headlines, sources told Commercial Observer.”

“‘What I can tell you is that they are not the only bank being scrutinized. There’s at least 20 banks that are getting super scrutinized by the FDIC and regulators,’ said Manish Shah, senior managing partner at real estate investment firmPalladius Capital Management. ‘The public may have latched onto First Republic because they are located in Silicon Valley and San Francisco and they happen to have a lot of private equity clients. But, if you look at it, there’s multiple banks that have regional or sector-specific focuses.'”

Bisnow Boston in Massachusetts. “Days after the second-largest bank failure in U.S. history, Boston’s life sciences and tech sectors are pivoting from worrying about short-term problems around accessing funds to the longer-term ripple effects the collapse could have on the region’s economy. ‘There’s a big SVB-sized hole in the ecosystem,’ said Ari Glantz, executive director of the New England Venture Capital Association. ‘I think the big question in the short term is: Who is able to step up and fill that role as a champion and service provider for these companies?'”

“Tech companies drove Boston’s office leasing market in the first two years of the pandemic, but the sector began to show cracks last year. The share of Boston leasing activity from TAMI firms — technology, advertising, media and information — fell from 41% in 2021 to 24% last year, according to CBRE. Many of those firms also began looking to give back office space last year. Boston’s overall sublease availability had a net addition of 1.5M SF in 2022, and tech companies made up 47% of the available sublease space at the end of the year, CBRE found.”

From ABC News. “Silicon Valley Bank’s failure on Friday raises concerns over the potential impacts on the climate technology industry, where SVB was heavily involved. Kiran Bhatraju, CEO of Arcadia, a tech company focused on combating climate change, expressed concern over the downfall of SVB on Twitter Saturday, writing, ‘What’s missing from the narrative is SVB is a climate bank.'”

“‘A point that seems to be getting lost in the conversation around SVB is the failure of the San Francisco Fed to monitor the risks that were growing at Silicon Valley Bank,’ Sen. Bill Hagerty, R-Tenn., a member of the Senate Banking, Housing and Urban Affairs Committee, tweeted Sunday night. ‘It is abundantly clear that SVB was terribly mismanaged. Their executives appeared to be more focused on diversity and ESG than managing their own risks. But why didn’t the SF Fed see this before it was too late? Was it because their CEO was on the board of directors of the SF Fed? Or were these regulators just asleep at the wheel? We need answers.'”

From NDTV. “Signature’s collapse on Sunday, when New York regulators swooped in after a surge of panicked withdrawals, was the third-largest bank failure in the US ever, behind Washington Mutual in 2008 and Silicon Valley Bank’s cataclysmic drop days ago. ‘Their downfall came when they got into this crypto business,’ said Al D’Amato, the former senator for New York, who was a director from 2005 to 2021. ‘They took their eyes off of that small entrepreneur.'”

“On Wall Street, views on virtual riches vacillate between scorn, suspicion and envy. Inside Signature, it was seen as an opportunity. Signature Bank was flying high when co-founder Scott Shay mused about success on a podcast early last year. ‘Banks essentially gave the back of the hand to the cryptocurrency world. And they were all thinking alike: ‘This is just a little fad, it’s some teenagers in a basement,’ Shay told an executive coach on the podcast. ‘Not to mention names, but some famous banking CEOs really said the whole thing was a joke.'”

The Guardian. “The question now is how Silicon Valley will adapt to these new realities. Amid a broader economic downturn and rising interest rates, the industry has far less cash flow than it once did – and without SVB the space will be even shorter on financing. ‘SVB was really the core foundation of the tech surge we’ve seen over the last decade,’ said Dan Ives, an analyst at Los Angeles-based investment firm Wedbush Securities. ‘The ripple effect will be felt for years to come This is going to tighten up the spigot on cash coming into startups in the Valley. With SVB – which was really the Godfather in the space – down, they are facing a very arduous path.'”

From CBC News in Canada. “According to the B.C. Real Estate Association (BCREA), more than 4,700 residential unit sales were recorded in the Multiple Listing Service (MLS) last month, down 46.5 per cent compared to February last year. During the real estate market’s peak, in February 2022, the average MLS listing price was $1.1 million, the association says. In February 2023 that number had dropped by 14.7 per cent to $941,575.”

From ABC Business. “Australia’s economy is still holding up on the back of household spending, but there are warning signs that a severe downturn may be nigh, with business confidence falling and consumer confidence at sustained lows not seen since the 1990s recession. The widely watched Westpac-Melbourne Institute survey of sentiment came in below 80 for the second month in a row — 100 is the level where optimists equal pessimists.”

“‘Runs of sub-80 reads have only been seen during the late 1980s/early 1990s recession and in the ‘banana republic’ period of concern in 1986, when the Australian dollar was in freefall after the federal government lost its triple-A rating,’ noted Westpac’s veteran chief economist Bill Evans.”

“Centrestage Costumes owner Mary Gurry has seen several recessions during her 40 years of running the shop. She remembers the downturn in the 1990s as the worst for her business. While she believes costume shops are somewhat recession-proof because ‘people love to party’ especially when times are gloomy, she expects another downturn to hit her business later this year. ‘We will see a downturn in the next 18 months … there’s no doubt because there’s mortgage stress out there already,’ she said.”

News Hub New Zealand. “The homes in some of Aotearoa’s wealthiest suburbs have plummeted in value in the latest data provided by CoreLogic. CoreLogic recorded a drop in value of more than $300,000 or more for 10 suburbs across the motu. CoreLogic chief property economist Kelvin Davidson said the drop in value would only be an issue for homeowners who were trying to sell now, after buying during the peak of the market. But it wasn’t just the upper end of the market that saw a drop in value. Davidson said more than a third of suburbs across the motu saw double-digit declines over the last year. ‘Wellington made up the bulk of the suburbs that posted the biggest falls.'”

“Property values fell by 20 percent or more in 31 suburbs, 30 of which were in the wider Wellington region. Davidson said Rotorua’s Fordlands was the only suburb outside of the Wellington region. ‘This confirms that this downturn has been pretty deep and broad-based across many parts of the country – to the detriment of existing property owners, but a sign of hope for aspiring buyers who have their finances approved.'”

Reuters on China. “Shanghai-based Zhenro Properties Group Ltd on Tuesday warned of a huge loss for fiscal 2022, hurt by a steep decline in demand for new homes amid a crisis in the country’s real estate sector. Cash-strapped Zhenro is expected to post an attributable loss of between 12.5 billion yuan (US$1.82 billion) and 13.5 billion yuan for the year ended Dec 31, compared with a profit of 809 million yuan recorded a year earlier. Zhenro is one of several Chinese developers that has missed offshore bond payments and struggled to repay debt in the past year amid slowing sales, with some now scrambling to enter into restructuring agreements with their creditors. Financial results from several property developers in recent days, including Kaisa Group, have revealed big losses.”

This Post Has 97 Comments
  1. ‘Moody’s said that while the three banks were unique in their focus on cryptocurrency and venture capital or private equity, areas of non-bank finance that grew quickly during the era of easy monetary policy, ‘it is increasingly evident that other US banks are also facing ALM strains.’

    If Moodys is warning, yer already fooked.

    1. But why didn’t the SF Fed see this before it was too late?

      LOL. The Fed caused it! Not by jacking rates up in the direction of normal, but by lowering them in the first place to create fake economic activity.

      1. Tim Pool has a couple theories.
        1. This is how they intend to bring around the CBDC.
        2. Evidently SVB donated millions to BLM. The theory is that SVB donates the money, SVB runs out of money, VC companies intentionally crash the bank, FedGov comes in to bail out with taxpayer money. And presto, taxpayers just donated millions to BLM, laundered through SVB. Just a theory.

        1. Taxpayers have been funding leftist organizations like BLM far longer than just this week. Why people listen to Tim Pool, I’ll never understand.

    1. “will not do business in the future with any members of Congress who voted to disregard the Electoral College.”
      Sounds like China, “Acceptable Social credit score” required to get a loan. Just make a profit, that is your job.

    2. Well, they were right. They’re not doing business with any of those Congress members.

      Or anybody else!

      Woke and broke.

      1. You will never, ever find good or reliable legal advice online for free. Attorneys are by and large money-grubbing scvm who live to make a buck. Any attorneys online will say the same thing: Seek the advice of an attorney. They are hoovering billable hours up their pig snouts.

          1. I know what I’m not: Pretending to be an attorney, an infectious disease expert, rich, etc. online. You’re a joke, lady.

          2. That right there is ironic. Only today would being trustee over the proceeds of an ordinary house get one accused of being rich.

          3. Pretending to be an attorney, an infectious disease expert

            BS in Biochemistry from UCLA
            JD with concentration in Intellectual Property from Boston University, admitted to practice in NY and before the US Patent & Trademark Office
            Former biotech patent attorney

            F off, a$$hole!

          4. Only today would being trustee over the proceeds of an ordinary house get one accused of being rich.

            No kidding!

      2. For certain protected classes (e.g., race, gender, age, disability, sexual orientation). Trump and members of Congress who voted to disregard the Electoral College would not be considered a protected class.

  2. Now that all of the scary news about the safety of keeping money in the bank has ended, could we please resume our regularly scheduled programming?

    1. The Financial Times
      Markets Briefing Equities
      European bank shares fall sharply as investor jitters resurface
      Credit Suisse leads fallers as financial stocks tumble
      A montage of a globe and a chart
      Measures from regulators have boosted confidence in the financial sector after the collapse of Silicon Valley Bank
      Martha Muir, Owen Walker and George Steer in London and William Langley in Hong Kong 2 hours ago

      European banking stocks tumbled on Wednesday, led by a dive in Credit Suisse shares after the Swiss lender’s largest shareholder said it would not provide it with any more capital.

      In Europe the Euro Stoxx Bank index dropped 6.4 per cent, as Credit Suisse shares lost more than a fifth in value. Société Générale lost 9.6 per cent, Bank of Ireland shed 9.2 per cent and BNP Paribas fell 8.8 per cent.

      Credit Suisse shares sank to a fresh low of SFr1.99 on Wednesday after the chair of the Saudi National Bank, which bought a 10 per cent stake in Credit Suisse last year, ruled out providing the Swiss lender with any more financial assistance.

    2. Updated Wed, Mar 15 2023 9:10 AM EDT
      Dow futures fall 600 points as Credit Suisse slide adds to financial sector woes: Live updates
      Alex Harring
      John Melloy
      Samantha Subin
      Regional banks will be a volatile group for some time, says Piper Sandler’s Siefers

      Stock futures fell on Wednesday as pressure on the financial sector increased with shares of Credit Suisse, a Swiss Bank that has large U.S. and global operations, tumbling more than 25%.

      Futures tied to the Dow Jones Industrial Average fell 632 points, or 2%, while Nasdaq-100 futures lost 1.6%. The 2% slide in S&P 500 futures put the broad index’s 2.1% year-to-date gain at risk.

      In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Wednesday morning attention turned to the big banks with shares of Credit Suisse hitting an all-time low.

    3. Stocks fall sharply as bank fears consume global markets
      By Alicia Wallace, Nicole Goodkind and Krystal Hur, CNN
      Updated 9:24 a.m. ET, March 15, 2023
      What we’re covering here
      – US stocks tumbled as investors fear the banking sector may have yet more problems to overcome. Credit Suisse’s shares fell sharply after the Saudi National Bank said it would not invest any more in the troubled Swiss bank.
      – CNN is hosting a special on the crisis after SVB collapsed, addressing what this means for banks and their customers everywhere. Send us your questions here.
      – A key price report showed progress in the battle on inflation, leaving room for the Fed to hike interest rates by just a quarter point — or nothing at all — at its policy meeting next week.

      1 min ago
      Are the problems facing Credit Suisse and SVB related?

      From CNN’s Allison Morrow

      Just as the panic over the US banking system appeared to fade, a fresh burst of anxiety blew in from Europe.

    4. Does it seem like the small number of banks that have failed are just isolated cases, or would canaries in the coal mine be a more appropriate description?

      1. The Financial Times
        Markets Briefing Equities
        European stocks and US futures dragged down by banks
        Investors fret over value of lenders’ bond portfolios and direction of central banks’ next interest rate moves
        A montage of a globe and a chart
        Measures from regulators have boosted confidence in the financial sector after the collapse of Silicon Valley Bank
        Martha Muir, Owen Walker and George Steer in London, and William Langley in Hong Kong 30 minutes ago

        European stocks and US futures were dragged down by chaos in the banking sector on Wednesday as investors continued to fret over the value of industry bond portfolios after the collapse of Silicon Valley Bank, and the direction of central banks’ next interest rate moves.

        Europe’s benchmark Stoxx 600 was down 2.3 per cent, with the UK’s FTSE 100 down 2.4 per cent and France’s CAC 40 off 3.2 per cent as investor jitters extended for a third day.

        Futures contracts tracking the blue-chip S&P 500 and the tech-heavy Nasdaq Composite both pointed to a 1.7 per cent decline at the open.

        The Euro Stoxx Bank index dropped 8.1 per cent, after Credit Suisse’s largest shareholder said it would not provide the Swiss lender with any more capital.

        Credit Suisse shares lost a quarter of their value, dragging peers lower. Société Générale lost 13.1 per cent, Bank of Ireland shed 8.4 per cent and BNP Paribas fell 11.8 per cent.

        The sell-off in bank shares piled renewed pressure on to a sector already reeling from the fallout of the SVB collapse, and dragged down broader equity markets in Europe.

        “Credit Suisse is an isolated case. But banks in Europe, because of regulatory pressure, had to load up on negative-yielding long-duration bonds at the worst time and now they are facing major unrealised losses on the balance sheet and the market is questioning whether Europe could see the same issue as the US,” said Charles-Henry Monchau, chief investment officer at Syz Bank.

    5. Greenspan Chides Investors
      By Edmund L. Andrews
      Aug. 27, 2005

      JACKSON HOLE, Wyo., Aug. 26 – Even as he was being praised for fostering two decades of rising prosperity, Alan Greenspan, the chairman of the Federal Reserve, warned on Friday that people have been unrealistic in believing that the economy has become permanently less risky.

      In the first of two speeches at a Fed symposium about the “Greenspan legacy,” the Fed chairman implicitly took aim at both the torrid run-up in housing prices and at the broader willingness of investors to bid up the prices of stocks and bonds and accept relatively low rates of return.

      Both trends reflect what Mr. Greenspan said was the increased willingness of investors to accept low “risk premiums, a willingness based on a complacent assumption that the low interest rates, low inflation and strong growth of recent years are likely to be permanent.”

      “Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher prices,” he said. “This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.”

  3. How is the value of your electronic tulip bulbs HODLings doing against the backdrop of crypto bank failure news? Are you able to read the writing on the wall?

    1. The Financial Times
      Cryptocurrency prices soar on support for Silicon Valley Bank depositors
      Bitcoin and ether jump 20% in the last three days after US authorities intervene
      A representation of virtual currency Bitcoin
      Bitcoin jumped 6% on Monday
      Scott Chipolina in London March 13 2023

      Cryptocurrency prices have soared as investors breathed a sigh of relief that US regulators moved to bolster the US banking system after the collapse of Silicon Valley Bank.

      Bitcoin and ether, the two most widely-traded coins, have surged by a fifth since their lows on Friday as traders were reassured by promises from US authorities that deposits at the failed Silicon Valley and Signature banks would be protected. Bitcoin jumped 6 per cent on Monday alone.

      The two banks, along with Silvergate, which also failed last week, were used by crypto companies as the conduit for payments between crypto and sovereign money, and custody of assets.

      1. “…the conduit for payments between crypto and sovereign money, and custody of assets.”

        Given how worthless sovereign momies are, according to the cryptobois, why do they even need these conduits?

  4. While she believes costume shops are somewhat recession-proof because ‘people love to party’ especially when times are gloomy,
    D@mn, now I see it all very clearly. Investing in Upscale nursing homes and Luxury college apartments wasn’t the key to flourishing during a recession, no, it is costume shops.

    1. “…no, it is costume shops…”

      Missed out on that one…

      Didn’t SVC hold a ‘dress in your favorite costume’ week or something similar? Why deal with those nasty old treasury rates when you can party at the office and share makeup tips?

      Is there a ‘costume shop’ ETF out there we can all invest in?

    2. Well let’s give credit where credit is due. She’s been in business for 40 years- through the 90s, the dot com bubble, the great recession… that’s a long streak. If she’s got her expenses down and she can sell a cheap luxury (which is what a costume party, murder mystery night, etc. are) she might be able to get through it.

      When I was in high school (and didn’t have money) groups of my friends would do murder mystery dinners/dates (very cheap entertainment and eating at home) and some would dress up with old clothes. Lot of fun and very cheap. Cheap entertainment like this can last through downturns.

      1. . She’s been in business for 40
        Fair enough, but I did notice Party City just went BK so I am not sure I am buy the whole “party through a recession” Theme.

    1. What happened?

      Marxism happened, with a little help from some Soros paychecks.

      “They’re not sending their best”

    1. Rate hike or no?

      There’s no formula for how long it takes. In the meantime, don’t do it.

  5. Good thing I moved my money last week from Silicon Valley Bank into Credit Suisse. I’m always in the know

  6. A reader sent these in:

    yeah…Fed is not done homies

    Fed puts in place a repo facility at par backstopped with taxpayers money but taxpayers are not allowed to know who uses the facility until a year after it expires. I understand the stigma issue, thank you, but this is definitely a bug red flag.

    Office REITs Continue to take a hit today. $DEI $BXP $SLG $VNO
    Real estate exposure is scary.

    So, I nuke crypto , and financials, and mention RE next, for the people who follow flow, what are they lighting up today? Meh reits 😉

    #vanre @StephenPunwasi “yield plunged at one of the fastest rates in a generation … with most yields falling—potentially signaling lower borrower costs. That is, if the panic-driven drop sticks around. However, it’s already showing signs of a reversal.”

    Danielle DiMartino Booth


    This is some sh$t! A lot of inventory:

    In early 2021, Powell said that it was unlikely that the recent surge in broad money supply would cause high price inflation, and that we have to unlearn the importance of monetary aggregates.

    Grocery courier Boxed said it might file for bankruptcy as it continues to explore a possible sale of the business less than two years after going public ⁦@WSJ

    The Kobeissi Letter

    JUST IN: JP Morgan, Citigroup and other large financial institutions trying to accommodate customers wanting to move deposits quickly.
    In other words, regional banks are losing customers quickly. There is outsized risk with large deposits at regional banks. Large banks win.

    The Bear Stearns Bounce: After the initial panic was squashed, S&P rallied ~15% and investors thought all clear. Meanwhile, it was only getting worse underneath the surface and then 2-3 months later it all fell apart.

    Shelter CPI moved up to 8.1%, the highest rate of housing inflation since 1982. Why is Shelter CPI still moving higher while actual rents are moving lower? Shelter CPI is a lagging indicator that had significantly understated actual housing inflation over the last 2 years.

    This is the problem for those hoping for a Fed pause, pivot, or cut.

    Inflation is in a much worse place in February 2023 than in February 2022. These are the facts. Tightening cycle cannot stop. Clearly this increases the odds of a recession in the not too distant future.

    What’s the safest bank/institution in the country? Plot twist…
    “This action by FDIC effectively means that deposits held with SVB are among the safest of any bank or institution in the country. We are actively opening new accounts of all sizes and making new loans.” – SVB CEO

    WARN notices lead unemployment claims by 4 weeks and they have gone vertical.

    Theres never been a more perfect moment for Powell to do a .50 and put his stamp on this. Biggest tech bank fails and tech is up 2.2% the next day. lol what a joke. too much money out there.

    Quick take on the inflation report – internals look a little worse than expected. Core inflation m/m is 6pct annualized. Not close to target in short term. Just looking at the macro stats would suggest 50bps hike next. Will shortly see JPs priorities:

    Signature Bank held a 12% share of the bank CRE lending market in the New York metro area, and the firm’s closure “will remove a significant source of liquidity in the New York commercial real estate market:”

    Banks are tightening up lending standards as liquidity dries up. Better have close to perfect credit if you want to qualify for a mortgage to buy a house.

    Toronto condo prices aren’t falling. Developers are just paying buyers back $216k over 2 years. 🤷‍♂️😂 This is what happens when the ass clowns at the BOC imply higher rates are temporary—just ensure losses aren’t recorded for 2 years so comps remain inflated.

    Just a reminder: Your house that was worth $462,107.54 at 2.7% rates. Is worth $280,898.82 at 7% rates.

    It’s pretty rich that Ken Griffin – a man whose immense fortune is based in large part on regulatory arbitrage, capture and lobbying – is instructing us on the f*cking moral hazard of regulatory change.

    2001: Not the time for a lesson on moral hazard.
    2008: Not the time for a lesson on moral hazard.
    2020: Not the time for a lesson on moral hazard.
    2023: Not the time for a lesson on moral hazard.
    Pst… it’s not an accident. It’s a robbery.

    Over the last few days we all learned the U.S. venture “capitalists” and entrepreneurs themselves don’t even believe in real capitalism. The only model that is apparent is “privatize profits, socialize losses”.

    I listed my mid 2000s Nissan for $1,000,000. It hasn’t sold yet, market is clearly frozen.

    Pretending start ups, with millions of dollars in cash, are the same thing as small businesses like dry cleaners and diners is wildly disingenuous

    Icahn biggest short is Commercial Real Estate

    A good thread from @jasonfurman on just how hot services inflation remains, and how the Fed still has a battle to fight to regain price stability. If it weren’t for the SVB fallout, he said, the Fed would probably hike rates by 50bp next week.

    The average 30-year fixed U.S. mortgage rate jumps back to 6.75%. Yesterday’s decline has already been wiped out.

    Danielle DiMartino Booth

    “Mount Laurel, NJ-based car leasing firm Automotive Rentals has paused ~$900M bond sale”
    Recall last pulled auto ABS was $222M pricing for American Car Center several weeks ago.

    The Fed’s detailed bailout plan 🔥🔥🔥

    The FED, US Treasury and FDIC right now to everyone 🔥

    “There is an infinite amount of cash at the Federal Reserve”

    Think I’ll call this the “real estate 101 inverted cannonball pattern” $MPW

    JPOW will be paying very close attention to this and he won’t like it a bit. As I said, 50 bp is not off the table. 3m annualized Atlanta Fed sticky inflation is not going anywhere

    Newsom Under Fire For Failing to Disclose Personal Ties to Silicon Valley Bank While Lobbying for Bailout

    Total Assets of the 371 US Bank Failures from 2010 through 2022: $168 billion
    Total Assets of the 2 US Bank Failures last week: $319 billion

    (2) The Housing Bubble…In the 5-year period from 2002-06, Miami home prices rose 126% (+17% per year). What happened next? US home prices plummeted, and Miami prices fell harder than almost anywhere else, down over 50% in the next 5 years.

    I don’t remember a time that I’ve had more requests for a cashout refi or HELOC. Peole need money and that’s a bad sign. Credit card debt is out of hand and the min payments keep growing. Just wait until we see the student loan payments start up again

    Danielle isn’t unique. This is how millions of millennial families live and spend—with massive debt. Covid stimulus offered a brief reprieve. It’s over. They’re done taking expensive vacations. If they haven’t bought a home yet, it’s not happening soon

    REMINDER: Americans have been dealing with 5%+ inflation FOR 20 MONTHS STRAIGHT. Much of this has shown up in shelter costs (housing prices and rents). And this is also with a “new” way of calculating inflation, so take it with a grain of salt

    1. “I don’t remember a time that I’ve had more requests for a cashout refi or HELOC. Peole need money and that’s a bad sign. Credit card debt is out of hand and the min payments keep growing.”

      Debt is slavery.

    2. Banks are tightening up lending standards as liquidity dries up. Better have close to perfect credit if you want to qualify for a mortgage to buy a house.


      1. https:// twitter. com/ GRomePow/ status/ 1636105287441723392?cxt=HHwWgMDRkeXFzrQtAAAA:
        Friend in Non-Conforming mortgage lending: “CFO said on a call Monday that this crisis is equal to the GFC.”

    3. “Danielle isn’t unique. This is how millions of millennial families live and spend—with massive debt. Covid stimulus offered a brief reprieve. It’s over. They’re done taking expensive vacations. If they haven’t bought a home yet, it’s not happening soon.”

      Danielle is a dumba$$. Let’s be real.

    4. Banks are tightening up lending standards as liquidity dries up. Better have close to perfect credit if you want to qualify for a mortgage to buy a house.

      Should have happened long ago. This is, first and foremost, a credit bubble.

    1. Stocks Slide Wednesday on Renewed Fears About the Banking System
      A major European bank’s troubles renewed concerns about the safety of the global financial system.
      By Tim Smart
      March 15, 2023
      U.S. News & World Report
      LONDON, UNITED KINGDOM – 2022/11/17: General view of Credit Suisse UK headquarters in Canary Wharf.
      (Photo by Vuk Valcic/SOPA Images/LightRocket via Getty Images)

      Bank stocks came under more pressure Wednesday as questions surrounding the fate of one of the world’s largest financial institutions, Credit Suisse, spilled over into the broader market.

      The Dow Jones Industrial Average opened down nearly 600 points as the bank’s largest investor, Saudi National Bank, said it could not buy any more shares beyond the 9.88% it already owns, citing regulatory limits.

    2. The Financial Times
      Credit Suisse Group AG
      Credit Suisse appeals to Swiss central bank for show of support
      Swiss lender tumbles more than 30% after top shareholder rules out further funding, sparking wider rout
      The spreads on Credit Suisse’s five-year credit default swaps widened to 565 basis points on Wednesday, from 350bp at the start of the month
      Owen Walker and Stephen Morris in London 25 minutes ago

      Credit Suisse has appealed to the Swiss National Bank for a public show of support after its shares cratered as much as 30 per cent, sparking a broader sell-off in European and US bank stocks.

      The request for a reassuring statement about Credit Suisse’s financial health came after its shares sank as low as SFr1.56, having earlier been halted amid a heavy sell-off, according to three people with knowledge of the talks.

      Credit Suisse also asked for a similar response from Finma, the Swiss regulator, two of the people said, but neither institution has yet decided to intervene publicly.

    3. CapRadio
      Silicon Valley Bank’s fall shows how tech can push a financial panic into hyperdrive
      By Scott Neuman | NPR
      Monday, March 13, 2023
      A pedestrian speaks on a mobile telephone as he walks past Silicon Valley Bank’s headquarters in Santa Clara, Calif., on Friday after a run on deposits made it no longer tenable for the bank to stay afloat on its own.
      Noah Berger / AFP via Getty Images

      Say “bank run” and many people conjure black-and-white photos from the 1930s — throngs of angry depositors clamoring for their money. But the sudden collapse of Silicon Valley Bank and Signature Bank shows how in an age of instant communication and social media, a financial panic can go into hyperdrive, facilitated by the ability to make instantaneous bank transfers and withdrawals.

      How fast did it happen? Consider that when Washington Mutual experienced a run as it collapsed in September 2008, depositors withdrew $16.7 billion over a 10-day period. By contrast, customers at Silicon Valley Bank tried to withdraw $42 billion — more than twice as much — in a single day, last Thursday.

      “You have transactions that can be done much faster … and get cleared much faster,” says Reena Aggarwal, the director of the Psaros Center for Financial Markets and Policy at Georgetown University.

      “So, everything speeds up,” she says. “I think that’s partly what happened here. But at the end of the day, it’s the underlying problems at the bank that caused this.”

      “All of that obviously makes this happen very quickly,” Aggarwal says.

      Mohamed El-Erian, an author and chief economic advisor at the financial services giant Allianz, tweeted that “supersonic speed of information flows” in an era of “tech-enabling banking” contributed to the rapidity of developments. Meanwhile, OpenAI CEO Sam Altman, referring to the bank collapses that preceded the Great Recession, tweeted on Sunday that “The world has changed since 2008; the speed of a cascade could be very fast.”

    4. The Financial Times
      US interest rates
      Turbulence strains interest rate markets as traders bet on Federal Reserve cuts
      Dramatic moves force futures halt while investors resort to phones to arrange big deals
      Federal Reserve building
      Futures markets suggested the Federal Reserve could begin to reduce interest rates as soon as June
      Kate Duguid in New York and Colby Smith in Washington an hour ago

      Investors have rapidly increased bets that the Federal Reserve will cut US interest rates this year in a frenzied day of trading that strained the functioning of markets.

      The turbulence was such that the main US futures exchange temporarily halted trading in certain interest rate contracts. Traders backing away from risk widened the gap between prices offered and bid for US Treasury securities. Deals in the $22tn Treasury market — the deepest and most liquid in the world — took longer and were more expensive to execute.

      The market moves on Wednesday came a week before the Fed is scheduled to decide on interest rate levels at its next monetary policy meeting after months of increases in the past year. Many bond traders now expect the Fed will not raise rates though some still see a chance of a 0.25 percentage-point increase as it battles stubborn inflation, according to pricing in futures markets. Expectations of a half-point increase prevailed in markets as recently as last week.

      Pricing in futures markets suggested that the Fed could begin to cut rates as soon as June by a quarter point and deliver further reductions to bring the central bank’s benchmark rate down to 3.9 per cent, which would be more than 1 percentage point lower than an expected peak of 4.9 per cent in May.

      Rate expectations have changed in the past week after failures of Silicon Valley Bank and two others in the past week triggered fears of a broader banking crisis.

      Quickly shifting rate projections triggered price fluctuations that forced exchange operator CME Group to halt trading for two minutes in certain contracts linked to the Sofr borrowing benchmark and federal-funds futures markets. Trading has since resumed.

      “There is a circuit breaker that gets tripped if those futures move more than 50 basis points, and that happened this morning,” said Tom Simons, money market economist at Jefferies.

      1. Pricing in futures markets suggested that the Fed could begin to cut rates as soon as June

        I always get a kick out of day traders that think the Fed will Heel to what they want.

        Besides, June? That’s a long way off, and 4% doesn’t sound like it would clean up any mess.

    5. The Financial Times
      Opinion Lex
      Credit Suisse: Swiss National Bank must step in to halt three-way doom loop
      The onus is now on the Swiss central bank to reassure investors
      The logo of Credit Suisse
      The threat to the ringfenced Swiss bank within Credit Suisse might still seem a distant risk. But its centrality also makes it a vulnerability
      10 hours ago

      Bankruptcy occurs gradually then suddenly, Ernest Hemingway wrote. Credit Suisse appeared to be losing its reputation in the same way. The shares of the Swiss lender, the European market leader in the field of risk management failure, crashed more than 30 per cent on Wednesday before staging a partial recovery.

      The proximate cause is that the bank’s largest shareholder, the Saudi National Bank, has dismissed suggestions it should inject fresh equity. This was just the latest in a cavalcade of bad news stories, including the Greensill and Archegos scandals.

      The onus is now on the Swiss central bank to reassure investors*, however nebulously, as Credit Suisse has requested.

    6. S&P 500 futures rise following a volatile session on Wall Street: Live updates
      Hakyung Kim
      Expect the market to break October lows, says BTIG’s Jonathan Krinsky

      U.S. stock futures ticked up Thursday morning after investor fears of a widespread banking crisis led to a volatile trading session. Credit Suisse announced plans to borrow up to about $54 billion from Swiss National Bank.

      Dow Jones Industrial Average futures
      were up 100 points, or 0.3%. Meanwhile, S&P 500 futures rose 0.4% and Nasdaq 100 futures climbed 0.5%.

      During the regular trading session, the Dow at one point fell 725 points before ending the day down by 280.83 points, or 0.87% lower. The S&P 500 dropped 0.7%, and the tech-heavy Nasdaq Composite edged 0.05% higher.

      The major averages had a rocky start in the morning following news that Credit Suisse’s largest investor, the Saudi National Bank, said that it could not provide additional funding for the bank. The announcement from SNB sparked a broad selloff over fears of a crisis in the financial sector. The indexes regained some ground in the afternoon after an announcement from a Swiss regulator stated that the Swiss National Bank would provide additional liquidity to Credit Suisse if necessary.

      “It’s no doubt changing the landscape of how we as investors look at the investability of financial institutions that fit in the banking sector,” said Keith Buchanan, portfolio manager at GLOBALT Investments. “It also makes us ponder just how the sector would navigate with, in the future, more forms of regulatory pressure on these corporations.”

      Buchanan continued, “There’s a race again for safe havens, particularly U.S. Treasuries. And you know, there’s a notion now, on a mixed note at that the Federal Reserve meeting next week, [they’ll] have perhaps have [a] less hawkish tilt to their action and rhetoric.”

  7. RE: “The question now is how Silicon Valley will adapt to these new realities.”

    Not to worry. In a world based on Fiat Currency (smoke) and Fractional Reserve System (mirrors) managed by morons (Economists), all reality is transitory . . .

  8. The Biden train has left the staion.

    Tom Elliott

    Weird how Biden, normally so voluble, kept this story in his vest for 55 years.

    Tom Elliott

    Biden: “I can remember exactly when my epiphany [on supporting gay marriage] was … I was a senior in high school. And my dad was dropping me off and I remember I was about to get out of the car and I looked to my right and two well-dressed men in suits kissed each other.”

    1. I was talking to a friend who is a realtor and she told me she and her husband both took part time jobs when the real estate market turned bad.

      Houses are still over priced by at least 50-100k and she said the market is bad. What’s going on?

      1. In my neck of the woods, houses are overpriced by at least $500K. Sellers are delusional. I’ve been waiting since 2005. Personal circumstances didn’t align with the last dip in 2012.

        1. dip in 2012

          It didn’t impress me. I made unconventional arrangements, which still suit me perfectly. Pretty soon I’ll celebrate two decades debt free. Still saving, not for anything in particular.

          1. I love being debt free. It’s one of the biggest things that slows me down from jumping on house. It’s also why I periodically consider moving to another state, but there’s a big cost to count with that one.

          2. I’d much rather be debt free than an underwater homeowner with the right to paint the walls the color of my choosing.

      2. This bust is shaping up to be an epic generational event. If you get in sync with it and are ready when the lists come out, you will acquire generational wealth for a significant discount. The government is already screwing it up and we have barely begun the descent.

        The three banks they just took over have massive inventories of bad loans on all kinds of assets that have yet to be realized. This process takes time but as they gobble up more banks the government is going to realize they have an enormous inventory problem to deal with.

        It is very telling that a suitable buyer has yet to come forward for SVB. It looks to me like the federal gov is going to wind up with a significant amount of property that will need to be disposed of but they will have to set up entities to deal with it and this takes time. There is an entire multiyear process of dumbshittery that has to occur first. You don’t want to front run it you want to patiently wait for the glut. Once it arrives in full you will be able to lowball like a boss and I suggest being a bit spiteful about it. In the mean time, keep saving up.

        1. Because Sasha and Malia are the biological daughters of Martin and Anita Nesbitt. Genetics don’t lie. Look at the photographs. And according to Wikipedia, Martin Nesbitt sits on the board of Norfolk Southern Corporation, the railroad responsible for the Chernobyl-like event in East Palenstine, OH. Isn’t that interesting!

  9. Well with now only a 25 BPS move on tap the Fed has only one tool left to turn the screw on America and it’s a hammer.


  10. “Theres never been a more perfect moment for Powell to do a .50 and put his stamp on this. Biggest tech bank fails and tech is up 2.2% the next day. lol what a joke. too much money out there.”

    Sounds like when (if I remember right) WAMU went up 5% after admitting they were reporting anticipated negative amortization on pay-option ARMs as current income. Methinks this isn’t March 2008, it’s 2007 when cracks were just beginning to appear, duly reported on but not seen as cause for concern.

    1. “Banks are tightening up lending standards as liquidity dries up. Better have close to perfect credit if you want to qualify for a mortgage to buy a house.”

      Okay, that’s late 2007 (again IIRC).

      1. The MSM termed it the “Credit Crunch” in midsummer 2007, IIRC around the time when Ben Bernanke opined that “subprime will be contained to $200 bn”. (He was only off by a factor of 20 or so…)

  11. Inflation drops to 6%, but housing costs remain high—and the Fed is still watching ‘supercore’ inflation
    Published Tue, Mar 14 2023 9:13 AM EDT
    Updated Tue, Mar 14 2023 9:47 AM EDT
    Mike Winters
    Jerome Powell, chairman of the US Federal Reserve, during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, DC, US, on Tuesday, March 7, 2023.
    Al Drago | Bloomberg | Getty

    The latest inflation numbers are in line with expectations, dropping to 6% year-over-year, with “supercore” inflation increasing slightly, according to Labor Bureau data.

    Supercore inflation is a new buzzword used by economists to describe the price of services for things like visiting the dentist or getting a haircut, but it excludes housing, food and energy costs. The concept has been a concern for a while: Federal Reserve chair Jerome Powell singled out supercore price growth as the “most important category” for understanding the “future evolution” of inflation in a speech last November.

    In February, “supercore” services inflation rose 0.2% for the month and was 4% higher than a year ago.

    Inflation is down overall compared with last year, but the underlying month-over-month price of all goods and services increased 0.4% in February, following an average monthly gain of 0.6% in the previous six months, as measured by the consumer prices index (CPI).

    The increase was driven mostly by shelter costs, which were up 0.8%, compared with 0.7% last month. This was largely expected, as consumers are still reeling from housing costs that have surged in the last two years.
    Supercore inflation remains elevated

    Even with year-over-year inflation moving closer to the Fed’s target benchmark rate of 2%, the cost of services has become a growing share of overall inflation in recent months, and the central bank is closely monitoring so-called supercore inflation.

    Here’s a look at how much costs for selected services have risen in the last year, as of February:

    Package delivery: 14.4%
    Pet-related services: 10.5%
    Hotels and motels: 7.4%
    Trash collection: 6.9%
    Laundry: 6.8%
    Dental services: 6.6%
    Haircuts: 4.8%

    Housing costs are excluded from supercore inflation because of the lag in how shelter prices are measured by the CPI. Plus, the Fed expects shelter prices to cool off long-term, which would make them less of a factor when it comes to rising inflation. Likewise, volatile food and energy prices are excluded.

    “In the housing services sector we expect inflation to continue moving up for a while but then to come down, assuming that new leases continue to be lower,” Fed chair Jerome Powell said in an early February statement.

    1. “Package delivery: 14.4%
      Pet-related services: 10.5%
      Hotels and motels: 7.4%
      Trash collection: 6.9%
      Laundry: 6.8%
      Dental services: 6.6%
      Haircuts: 4.8%”

      It’s pretty interesting math where individual price changes that are almost all well above 6% average out to a combined 6% rate. I wonder what the offsetting unmentioned consumption categories whose prices increased at a rate below 6% were?

      1. consumption categories whose prices increased at a rate below 6%

        Let’s call them “Ultra-Core”.

        Making up new words and redefining old ones is always the most effective solution to any problem. Always.

      2. What’s going down in price? Rolls Royce’s, super yacht, Rolex watches and modern art. It’s right there on the BLS webpage, see it? Right there

  12. SVB donated $73M to Black Lives Matter movement, social justice causes

    By Bradford Betz, Fox Business
    March 15, 2023

    Silicon Valley Bank, which collapsed on Friday after a classic bank run, donated more than $73 million to groups related to the Black Lives Matter movement, online records show.

    A database from the conservative Claremont Institute shows the bank donated around $73,450,000 to the BLM movement and other social justice-related causes.

    As first reported by the Federalist, the now-defunct bank pledged in the summer of 2020 — when the nation was gripped by racial unrest after the police custody death of George Floyd — to increase its commitment to “diversity, equipment, and inclusion (DEI)” in the workplace.

    A report from August 2020 highlighted the fact that around two-thirds of the bank’s workforce met the “diversity” criteria.

    Another report that year touted SVB’s achievements in supporting minorities.

  13. Now that Governor Newsom got his Silicon Valley Bank bailout, is it safe to assume the bank balance sheet panic is over, and no further bailouts are forthcoming?

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