Money is still rushing out of bank deposits into money market fund where they can earn much higher interests.
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I would think Schwab would be benefiting from the bank deposit to money fund movement.
WTF is this? Deutsche BankāS CDS ripping now? The market is sniffing something here?
I think there is pretty decent chance this last rate hike is the last one this cycle. The whole global banking system is getting wobbly and if things got from bad to worse the Fed will be forced to do emergency cuts. We are at the edge of the cliff right nowā¦
@manch Tried to read up on CDS. Itās a bit confusing. In this case are they sold or purchased by the bank? What does the price going up mean?
CDS - Credit Default Swap, is an insurance policy against an entity defaulting on their debt. In this case, the price of insurance contracts against DB defaulting is spiking. That means market is pricing in a higher probability of DB going into default.
I donāt follow banks that closely and I didnāt even realize DB is having trouble. Market is smelling something.
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Both Credit Suisse and DB have been weak for years. They never really recovered from 2009.
That said bank stocks generally were still down today despite lots of calming noises from many quarters.
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After 2008 issue, I do not think US CDS issue will recur any more (guess work).
IMO, FED wonāt hike any more, but will only cut when there is another break in the system which will come in 4-6 month timeframe, esp after next FED meeting (when FED declares no rate) May 2-3.
Market is at its low turning point now and must turn bullish from here !
S&P must go above 4200, preferably range 4300-4350 level before any change.
DB not looking well.
Itās the weekend and time to play āWhich bank is going to zeroā bingo! Exciting!
Naaah, this is the time to analyze which bank can I get into as investment.
What is happening with banks is exactly like 2008-2011 real estate correction!
This is the right time to choose best banks, deeply corrected, buy any dividend payer more than 4.5% (payout 70% or less) and hold for life.
We will get nice 4.5% for life, like rent payment, and also growth of such banks.
I took almost 80% of cash into KRE now (avg cost is $44) and will get 3.25% return over holding period. Since the amount is high, I choose ETFs, otherwise I will go for aggressive banks.
You are counting too much on your eggs before they hatchā¦ Yields will go down if there is a fundamental issue. If it is FUD, then stock & yield will recover. At this time hard to conclude ā some of the players who made wrong decisions will have to fail.
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This is more bad news. If commercial loans start to have issues, then itāll put more pressure on regional banks.
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I agree to some part ( At this time hard to conclude ā some of the players who made wrong decisions will have to failā¦), buying mainly KRE/DPST as ETF to avoid some issues with some banks.
As a common retailer, lot of extreme negative stories are floating as if entire banking industry dies and USA is at the verge of irrecoverable recession like thatā¦
Truth is: Market has dropped those banks which did not hedge their HTM unlike big banks which hedged for drop in price.
But for me, the edge is coming from my own algorithm.
Here you go, I see similar pattern for SMH (SOXL) Oct 14th, deep drop and then SOXL jumped 97%, same way TSLA went down and down with deep negative and then jumped 100%.
Now, banks are beaten down like this, it will take DPST double (Today bottom $6.5 will be at least $12-$14 soon) in 45 days.
I strongly believe in my algorithm (the crystal magic) than any stories floating around the globe.
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I tried this back in 2008. Bought a company called AIG assuming the government would step in because they were too big to fail. Didnāt end well. Professional investors understand the balance sheets of these big financial institutions far better than any of us.
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Here is my primary concern: let us say you had an asset valued X last year, and is now only worth X/2. You have a liquidity crisis and your big bro says, it is okay I will consider this asset as X, and can loan you full value until you recover. All good, nothing to worry. Everything is good, while the big bro is also doing something that can make this asset X/4 in the next year. How does this all end?
This is the story of SVB / other bank stake-up plan. Honestly, I donāt have a solution for how this can work. Unless, big bro prints more, and makes the asset 1.5X. For this you need a heavy recession and wealth erosion.