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I understood what you are saying about all these the first time. I just don’t understand why you said the twitter is missing the point. Somehow I don’t see the connection.
It accuses the bank of improper accounting or not following the regulations. It’s just ignorant garbage designed to create an emotional reaction.
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The entire banking sector is in very poor shape. I share a graphics showing huge loss in their bond portfolio. That’s not any single bank. It’s all of their holding as a whole.
Many bank stocks collapsed today despite the Fed backstop. It shows if nothing were done in the weekend we would be staring at the abyss today and rampant bank runs everywhere.
SVB may be particularly poorly run. But it’s definitely not the only one under stress. Schwab stock fell more than 10% today. Market is smelling blood there. Schwab is one of the Top 3 brokers? Fact is when the Fed hiked 450bps from 0 in less than 12 months of course something is gonna break. We are just starting to find out.
I said months ago that we’re in unprecedented territory and the fed is making it up as they go along. We kept rates at records lows for a record amount of time. Then we increased them at a record rate.
This is a good visualization tool to see what market is expecting:
CME FedWatch Tool
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
What is the likelihood that the Fed will change the Federal target rate at upcoming FOMC meetings, according to interest rate traders? Analyze the probabilities of changes to the Fed rate and U.S. monetary policy, as implied by 30-Day Fed Funds futures pricing data.
Currently it shows 60% of 25bps hike, 40% of no hike. Nobody expects 50bps.
And market now expects the Fed to cut rate in July!
This Fed is garbage.
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Don’t know about “record rate.” In 1980 they were increased by almost 10%, from 10% to nearly 20%, in just 4 months. It didn’t cause this kind of carnage.
The real mistake was, as in the early 2000’s, keeping rates far too LOW for far too long.
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Gold closed at $1911 today but the going price for gold eagles that you can actually hold in your hand as opposed to the contract is $2070. That’s an insane premium. People want the physical stuff.
Apart from systemic risk there is the possibility that inflation soars as the Fed now has its hands tied.
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Future vs past 
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Be a bit more sophisticated.
Fed policies have long time lag. Even with the bit of high rate already digested, inflation dropped from 12% to 4.5%. As more of the tight monetary policy filtering thru to the economy, inflation will continue to drop further even if the Fed stopped hiking today.
Inflation is driven by psychology and emotions more than reality. Fed has practically given green signal to inflation to run amok again.
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The economy is slowing fast for housing related stuff. I’m replacing my furnace. I’m getting two discounts for doing the work now, because they aren’t that busy. I want to update my kitchen. It used to be near impossible to get anyone to quote projects. They were too busy and didn’t need the work. Now I can get multiple quotes the same week. I’m seeing ads for discounts on windows, roofing, and flooring. A year ago, there were no discounts.
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There seems to be excess supply meaning prices will drop further unless everyone removes excess capacity. This explains all the buy 1 get 1 free sales in grocery stores. It seems all discounting is tied to buying increased quantities. That works short-term, but then people don’t have to buy as much the following weeks.
The fed is literally insane if they keep raising rates.
Volcker destroyed the economy in 1981 and was proud of it. I lost my job. 10% unemployment. I lived in the basement and rented the rest of the house out. Powell seems determined to make that kind of pain again.
We now have 30 trillion in debt to roll over and it’s continuing to rise at about 2 trillion a year. If we don’t at least appear to try to keep a lid on inflation and compensate lenders for it the whole system collapses. We can’t let that happen - even if it means everyone lives in a basement and eats dog food.
When things went south in Mexico in the early 90’s they had rates of 80% on government debt. AND - they never defaulted. Mexicans holding a basket of Mexican stocks were eventually made whole; those who were holding cash - likely a majority who had any wealth at all beyond maybe their homes - were never made whole. 90% devaluation of the currency to this day. This is what happens when things get out of control. You can’t “extend and pretend” forever.
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I might add, the Reagan/Volker combo ushered in the longest peacetime expansion in US history right when I as coming of age. Career opportunities everywhere and the DJ going from 700 to 10,000 in 20 years. I owe much of my success in life and my retirement at age 50 to that fortunate timing. Brains and a work ethic go a long way but you still need the opportunities.
Today’s Truflation. Pretty wild we may actually see a 3 handle before April.
