Talking Stocks 2.0

[enjoythemusic]

If I'm reading your post correctly, you're saying US taxpayers are on the hook paying banks ~4.5% interest to keep 'reserves' at the Fed instead of loaning it out? Seems a bit unfair imho. The Fed should immediately give currency back to banks and let them do their business (or stop giving reserves any interest).

[SDGT3]

A broken Rolex is right twice a day.... Cramer, not much... Those inverse Cramer ETFs must be killing it!

[SDGT3]

B, last I checked SPY had support between 3900-3940. We've breached that range today. Does your crystal ball say where the support is at this time?

[enjoythemusic]

Originally Posted by SDGT3

A broken Rolex is right twice a day.... Cramer, not much... Those inverse Cramer ETFs must be killing it!

See it on video...

https://twitter.com/i/status/1634131029735751681

Of course the below video is pure gold.



So, which bank stocks to short next?

[Kliminator]

4 days ago

https://twitter.com/SVB_Financial/st...18336391213059

[enjoythemusic]

To be fair, no bank is 'fully capitalized' since they use upwards of 20:1 leverage. We're simply seeing the mathematics play out behind MMT / banking system as it exists today.

In a related note, we all know there's been an increase in countries / companies reducing (or stopping) using the US Dollar for trade, this is something to pay close attention to imho.

[RidingDonkeys]

Originally Posted by huncho

silvergate yes, but SVB fell because they were heavily invested in long term bonds and needed cash. they took massive losses after dumping them because the rates on their bonds were much lower due to the aggressive hiking (someone correct me if i'm wrong)

Completely accurate. However, they were massively invested there after a pandemic-fueled surge in deposits from tech and crypto firms. Those inflows turned to outflows as those firms needed their cash this year, and SVB was forced to sell those bonds at a loss because they needed the liquidity to fund withdrawals.

Neither of us are wrong here. I was just looking a little beyond the bond issue as to why they were dumping them at a loss.

[superdog]

Originally Posted by enjoythemusic

To be fair, no bank is 'fully capitalized' since they use upwards of 20:1 leverage. We're simply seeing the mathematics play out behind MMT / banking system as it exists today.

In a related note, we all know there's been an increase in countries / companies reducing (or stopping) using the US Dollar for trade, this is something to pay close attention to imho.

Would love your perspective on the decline of the dollar.

I’m not overly concerned, but wonder if I should be. And if I should be taking appropriate steps to protect myself. Not sure I even could. But gotta start with an education.

And you tend to have really good insights on this stuff.

[enjoythemusic]

Originally Posted by superdog

Would love your perspective on the decline of the dollar.

That's a long and multi-faceted answer. Simply said, facts are pointing to less use of the Dollar for trade. That's something to keep an eye on and understand its impact on your financial plans. BTW just my perspective, really don't think it's anything insightful or such. The information is out there.

Added: My big fear is the failure of the USA education system. A very well-educated 'free society' globally would be positive for humanity. Imagine the resources wasted today being put to good use furthering space exploration, for example. If you have young children and the ability to relocate, I can highly recommend Singapore's education system.

[superdog]

Originally Posted by enjoythemusic

That's a long and multi-faceted answer. Simply said, facts are pointing to less use of the Dollar for trade. That's something to keep an eye on and understand its impact on your financial plans. BTW just my perspective, really don't think it's anything insightful or such. The information is out there.

Added: My big fear is the failure of the USA education system. A very well-educated 'free society' globally would be positive for humanity. Imagine the resources wasted today being put to good use furthering space exploration, for example. If you have young children and the ability to relocate, I can highly recommend Singapore's education system.

Appreciate that. Lots to think about.

[huncho]

Originally Posted by SDGT3

A broken Rolex is right twice a day.... Cramer, not much... Those inverse Cramer ETFs must be killing it!

Cramer is a walking curse but it's hilarious that wall street was upgrading the stock to buy with high price targets in the last 2 months. really makes you wonder...these guys on wall street are all incredibly smart people and i find it hard to believe they didn't see any red flags lol

[EEpro]

https://www.forbes.com/lists/america...nkId=204267055

Posted Valentine's Day. #20. $213B assets.

[SDGT3]

The celebrity heavy hitters are already out and whining about the Fed and the collapse of this bank. Mark Cuban says that it's the Fed's fault SVB collapsed and they should buy back their low yielding bonds at par.

Cuban has no personal money at the bank but has portfolio companies that have deposits with SVB. Cuban says he has a loss exposure of $8-10m.

https://www.thestreet.com/technology...on-valley-bank

[EEpro]

Crazy. The privatizing of profit and socializing of losses has to stop. We need to return to actual capitalism and let it work. Risk has consequences and that's what forces prudent investments. So sick of this nanny mentality.

[huncho]

Originally Posted by SDGT3

The celebrity heavy hitters are already out and whining about the Fed and the collapse of this bank. Mark Cuban says that it's the Fed's fault SVB collapsed and they should buy back their low yielding bonds at par.

Cuban has no personal money at the bank but has portfolio companies that have deposits with SVB. Cuban says he has a loss exposure of $8-10m.

https://www.thestreet.com/technology...on-valley-bank

it's definitely partly the fed's fault but for sure also mismanagement on SVBs side. i saw a pretty good thread on twitter about how SVB didn't manage their risk properly and didn't hedge against rising rates. at some point they apparently had money set aside as a hedge but moved it out eventually

i don't think it should have ever been all up to the fed to bring down inflation primarily caused by supply chain issues because their only way of fixing the problem was to basically make everyone poorer on paper. by summer of last year their rate hikes already eliminated a lot of the demand that was coming from all the free money from crypto/stocks/etc and now what's left is high rent, groceries and other necessities. the people buying groceries at inflated prices don't care that mortgage rates are above 6%+ or that loans/credit card rates are high. they're just trying to put food on the table and i don't think continuing to raise rates will help that. the rates definitely helped slow down the real estate market but rent is still out of control due to employment and real estate wasn't exactly affordable before inflation either. the car market is still ridiculous and people are just taking out more in loans because they need cars anyway

at this point it feels like every rate hike is gonna have less effects on inflation and more on people's lives blowing up in a few years from all the debt they need to incur to survive today

[EEpro]

Originally Posted by huncho

it's definitely partly the fed's fault but for sure also mismanagement on SVBs side. i saw a pretty good thread on twitter about how SVB didn't manage their risk properly and didn't hedge against rising rates. at some point they apparently had money set aside as a hedge but moved it out eventually

i don't think it should have ever been all up to the fed to bring down inflation primarily caused by supply chain issues because their only way of fixing the problem was to basically make everyone poorer on paper. by summer of last year their rate hikes already eliminated a lot of the demand that was coming from all the free money from crypto/stocks/etc and now what's left is high rent, groceries and other necessities. the people buying groceries at inflated prices don't care that mortgage rates are above 6%+ or that loans/credit card rates are high. they're just trying to put food on the table and i don't think continuing to raise rates will help that. the rates definitely helped slow down the real estate market but rent is still out of control due to employment and real estate wasn't exactly affordable before inflation either. the car market is still ridiculous and people are just taking out more in loans because they need cars anyway

at this point it feels like every rate hike is gonna have less effects on inflation and more on people's lives blowing up in a few years from all the debt they need to incur to survive today

Spot on.

Read up on their corporate culture. Seems they were very busy with initiatives not related to risk management.

[GB-man]

Originally Posted by EEpro

Crazy. The privatizing of profit and socializing of losses has to stop. We need to return to actual capitalism and let it work. Risk has consequences and that's what forces prudent investments. So sick of this nanny mentality.

[enjoythemusic]

Originally Posted by SDGT3

Mark Cuban says that it's the Fed's fault SVB collapsed and they should buy back their low yielding bonds at par.

Nope, they chose their 'investment'. The below applies.

Originally Posted by EEpro

Crazy. The privatizing of profit and socializing of losses has to stop. We need to return to actual capitalism and let it work. Risk has consequences and that's what forces prudent investments. So sick of this nanny mentality.

Agreed, and adds to my point of where the currency 'comes from' for bailouts... and the Fed paying ~4.75% to their member bank deposits / reserves. Who is 'paying', or shall we say 'on the hook' for all this?

[7sins]

Originally Posted by huncho

it's definitely partly the fed's fault but for sure also mismanagement on SVBs side. i saw a pretty good thread on twitter about how SVB didn't manage their risk properly and didn't hedge against rising rates. at some point they apparently had money set aside as a hedge but moved it out eventually

What's crazy is SVB has not had a chief risk officer for the last 8 months, that to me is incomprehensible.

Futures on the rise, the Federal Reserve to make sure all depositors are paid in full, a bailout in disguise IMO.

https://www.cnbc.com/2023/03/12/regu...-collapse.html

[7sins]

Originally Posted by SDGT3

B, last I checked SPY had support between 3900-3940. We've breached that range today. Does your crystal ball say where the support is at this time?

Technical analysis says 3790.



My personal belief is ~3500, looking to the October 2022 lows for guidance. The puts I posted about when we were at 4200, I will start to unwind at 3900 and a large portion at 3700 then start reallocating.

[VictorGMT]

Best link where we can discuss our trades tomorrow?

[m j b]

Originally Posted by VictorGMT

Best link where we can discuss our trades tomorrow?

Right here.

Late Friday I bought JPM and SOFI. The former is a high quality bank and the latter is one of them new-fangled online financial companies that recently became a bank. Natch one is riskier...

Speaking of, this morning I bought FRC (down about 60% pre-market). It's a real LOL to look at in my portfolio, as E*Trade shows the market value based on Friday's close, and so I've already doubled my money!!! LOL

Wish me luck.

[huncho]

Originally Posted by m j b

Right here.

Late Friday I bought JPM and SOFI. The former is a high quality bank and the latter is one of them new-fangled online financial companies that recently became a bank. Natch one is riskier...

Speaking of, this morning I bought FRC (down about 60% pre-market). It's a real LOL to look at in my portfolio, as E*Trade shows the market value based on Friday's close, and so I've already doubled my money!!! LOL

Wish me luck.

you're brave buying FRC lol

[m j b]

Originally Posted by huncho

you're brave buying FRC lol

Yeah, so far this morning, this is not looking like a good trade.

Neither is SOFI right now.

[beshannon]

Originally Posted by m j b

Yeah, so far this morning, this is not looking like a good trade.

Neither is SOFI right now.

SOFI never was a good investment

[m j b]

Originally Posted by beshannon

SOFI never was a good investment

Oh, I'm with you 100% on that, I was just looking for a trade.

[beshannon]

Originally Posted by m j b

Oh, I'm with you 100% on that, I was just looking for a trade.

This morning I am looking at the KBW banking index and beaten down names in that sector.

This is the kind of selloff to make trades on as companies are being sold that make no sense. Typical knee jerk over reaction

[superdog]

Originally Posted by m j b

Oh, I'm with you 100% on that, I was just looking for a trade.

Wait. What?

You never thought it was a good investment? You just wanted to make a trade, and you picked an investment that you knew to be a loser?

Is that right? Am I reading that right?

[m j b]

Originally Posted by superdog

Wait. What?

You never thought it was a good investment? You just wanted to make a trade, and you picked an investment that you knew to be a loser?

Is that right? Am I reading that right?

Yes.

See Brian's comment above - these knee jerk reactions are overblown and unwarranted. So I bought stock in a company that I know, long-term, is not good, but short-term, I expect a bump.

And sure 'nuf, a couple of hours later, now that the imbalances have settled out and trading resumes, all the markets are up, I'm green on all of these trades. It's no great "I can buy a new PM Rolex now" profit, but at least I'm up!

[SDGT3]

Originally Posted by enjoythemusic

Nope, they chose their 'investment'. The below applies.

I agree, the Fed has 2 mandates and SVB appears to be an outlier in the way they mismanaged their bank. There may be a few more similar banks out there, but the fact remains that inflation is still at a 40 year high and employment is at historic lows.

The emergency meeting the Fed had today leads me to believe the .5% hike is off the table and .25% may or may not be on the table. I don't think there is a pivot to lower rates but raising clearly opens up more institutions to liquidity risk so the Fed has to tread lightly moving forward.