The US stock market is gonna go pop
Discussion
Its starting to look all very similar to 2008. Just this time rather than toxic property debt being the issue it looks like debt within smaller banks might be an issue.
Personally the way things are set up now I just cant see any upside.
Today is likely to be make or break and it already looks rather red in Europe so we will know soon what the US market is going to do.
Jobs data out today.
The main issue right now, in my eyes, is rates need to go up quite a bit more. The market was expecting a 0.25% rise but in reality it needs a 0.5%... that would be bad, but it needs to happen.
Personally the way things are set up now I just cant see any upside.
Today is likely to be make or break and it already looks rather red in Europe so we will know soon what the US market is going to do.
Jobs data out today.
The main issue right now, in my eyes, is rates need to go up quite a bit more. The market was expecting a 0.25% rise but in reality it needs a 0.5%... that would be bad, but it needs to happen.
gotoPzero said:
Its starting to look all very similar to 2008. Just this time rather than toxic property debt being the issue it looks like debt within smaller banks might be an issue.
If you've got access to ft.com, today's unhedged has an excellent analysis of SVB's situation. It looks pretty unique to SVB.Joey Deacon said:
American bank shares look like they are in a lot of trouble, is this the start of the whole thing unravelling?
Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
The talk was that the big 6 and next biggest 25 are all stress tested to 3 time the gfc of 2008. However that has to be actually true and them not lying about it...Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
Mr Whippy said:
Exciting times, watching hubris, herd mentality, law of unintended consequences, all play out.
The macro back drop does seem a bit off to me.
Every month rates rise to quell inflation, while businesses margins make them less appealing… seeing them engage in buy-backs… and gov debts give a solid yield… hmmm, just hmmm… when the selling starts, and the tide goes out, I fear lots of naked swimmers will be evident
Are you describing the government or investors?The macro back drop does seem a bit off to me.
Every month rates rise to quell inflation, while businesses margins make them less appealing… seeing them engage in buy-backs… and gov debts give a solid yield… hmmm, just hmmm… when the selling starts, and the tide goes out, I fear lots of naked swimmers will be evident
Things have been out of whack since the GFC. People are wealthier than ever, but have lower quality of life. The new master is debt and for some reason, people are supposed to be happy with their credit fuelled wealth?
The US stock market is in correction territory. If we see something fall further than correction, it will probably be the property market. I'm just not sure if it will be residential or commercial. There are too many drivers of growth propping up residential though.
The S&P is in a trading range and like last week and again today, it held its 200 day moving average. Last week held due to Salesforce strength, today it just didn’t seem to want to breach it.
As for SVB, all the commentary seems to suggest it’s isolated but the knock on will be tech Co’s refinancing.
Based on fundamentals, the S&P should be 10% below where it is but the price is where it is.
As for SVB, all the commentary seems to suggest it’s isolated but the knock on will be tech Co’s refinancing.
Based on fundamentals, the S&P should be 10% below where it is but the price is where it is.
vulture1 said:
Joey Deacon said:
American bank shares look like they are in a lot of trouble, is this the start of the whole thing unravelling?
Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
The talk was that the big 6 and next biggest 25 are all stress tested to 3 time the gfc of 2008. However that has to be actually true and them not lying about it...Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
Stress ‘test’… if the test criteria is flawed the test is meaningless.
Mr Whippy said:
vulture1 said:
Joey Deacon said:
American bank shares look like they are in a lot of trouble, is this the start of the whole thing unravelling?
Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
The talk was that the big 6 and next biggest 25 are all stress tested to 3 time the gfc of 2008. However that has to be actually true and them not lying about it...Or will it be another example of "too big to fail" and countless billions of dollars will be created to shore them up?
Stress ‘test’… if the test criteria is flawed the test is meaningless.
However nothing stopping someone getting a mortgage pass the test then load up on a personal loan a few store cards a car on finance. Suddenly they are in trouble.
Not really. SBV is a very specific and poorly managed example. Rather than holding cash theyd decided to use £90bn of deposits which were held as excess, to buy long dated mortgage backed securities at the top of the market. When those are worth £15bn less than when purchased and need to suddenly be redeemed, there’s a problem. Then the proper outflows began to make the bank illiquid. Supposedly £42bn out on Friday.
Imo the press have an awful lot to answer for.
Imo the press have an awful lot to answer for.
Bowser87 said:
Not really. SBV is a very specific and poorly managed example. Rather than holding cash theyd decided to use £90bn of deposits which were held as excess, to buy long dated mortgage backed securities at the top of the market. When those are worth £15bn less than when purchased and need to suddenly be redeemed, there’s a problem. Then the proper outflows began to make the bank illiquid. Supposedly £42bn out on Friday.
Imo the press have an awful lot to answer for.
Or the regulators?Imo the press have an awful lot to answer for.
I don’t get how SVB UK is in trouble unless UK regulators have let them get so exposed?
And if one bank can be, then what’s to stop others? Clearly the regulators and stress tests haven’t done a thing?
It’s going to be an interesting 24hrs.
I do just wish that governments would stop interfering and ‘helping’
By bailing out they’re creating a moral hazard.
Again and again people are stopping being responsible and just look to government and regulators to act as their compass.
If these businesses had brains, they’d spend some money on independent DD and not be banking with these dodgy banks.
Why didn’t all these uk tech companies buy short dated gilts for example?
And now the tax payer is on the hook again. Amazing levels of hubris and incompetence from our government, surprise sur-flipping-prise!
And if one bank can be, then what’s to stop others? Clearly the regulators and stress tests haven’t done a thing?
It’s going to be an interesting 24hrs.
I do just wish that governments would stop interfering and ‘helping’
By bailing out they’re creating a moral hazard.
Again and again people are stopping being responsible and just look to government and regulators to act as their compass.
If these businesses had brains, they’d spend some money on independent DD and not be banking with these dodgy banks.
Why didn’t all these uk tech companies buy short dated gilts for example?
And now the tax payer is on the hook again. Amazing levels of hubris and incompetence from our government, surprise sur-flipping-prise!
vulture1 said:
Looks for now to be ok. Tax payers not on the hook, depositors bailed out but shareholders not.
Technically the money is there.And it’ll all be there in up to 10yrs when treasuries mature.
Just right now it’s worth less.
I can see the logic of covering the gap so to speak.
But moral hazard inducing isn’t it? Covering the difference in bonds/treasuries?
Basically unwinds a chunk of the tightening effects of interest rate rises on bond holders.
Unintended consequences ahead, as false sense of security means seeing risks is increasingly “irrelevant”
Edited by Mr Whippy on Monday 13th March 07:58
Bowser87 said:
US hours are going to be interesting. Would have thought an awful lot of US depositors over the FDIC limit will be reviewing holdings at anything other than the biggest of banks.
Possibly. Depends what options they have for moving their cash to. If it's just people rebalanced as opposed to all running from a specific bank it's less of an issue. But given how much is driven by social media bulls
t anything is possible. One problem that seems very US specific is the sheer number of small to medium banks they have so there's so many chances for one to go wrong. Don't think anywhere else has quite so many thousands of the things.
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