Silicon Valley Bank Collapses, Causes Concern Within Tech Industry, Roku Divulges its SVB Investments

[dragontamer5788]

It's funny how it's rumours that tend to make runs worse. What appears consistent is exposure to substantial digital (crypto) assets. I think it said Signature had 8 billion?

Silicon Valley Bank had USDC / Circle. Silvergate bank (currently undergoing collapse for the past month) was #1 bank of crypto. Signature Bank was #2 bank of crypto (but remained diversified in mortgages and normal savings accounts as well).

Given the current set of banks in hot water, I think everyone should sell any stocks in a bank beginning with the letter "S". (But maybe the cryptocoin rumor is also true, who knows?)

 

[lemonadesoda]

Dump bank stock. Dump crypto. Just done it.

 

[the54thvoid]

The one rule of autocracies/theocracies/democracies ~ you don't touch the political rulers' money!

Every economy with great wealth seeks to service and protect that wealth.

When it comes to the large scale, of nations and capital, the individual doesn't matter - they never did. Nothing has changed since we settled down thousands of years ago and started making pretty things and called them 'valuable'.

 

[erek]

Dump bank stock. Dump crypto. Just done it.

how much did you divest ?

 

[lemonadesoda]

how much did you divest ?

100% of what I'd got. Better to invest in a "volatility index" than to gamble on individual names. There is too much unknown about the activities and exposures of individual banks, it's a crapshot. There are times when the banking sector is a good investment - and times when there are other industries or markets to put your savings.

Sure, there will be insiders, or people who will luck out, but I'm not one of them. I don't have a magic 8 ball.

 

[WonkoTheSaneUK]

HSBC has bought the UK arm of SVB

HSBC swoops in to rescue UK arm of Silicon Valley Bank

The Bank of England and government worked all night to secure a deal involving no taxpayer money.

www.bbc.co.uk

 

[dragontamer5788]

The one rule of autocracies/theocracies/democracies ~ you don't touch the political rulers' money!

You have to remember that it was the Fed that destroyed all this money in the first place. Through rate hikes and quantitative tightening this past year. We're in a situation where the US Treasury / FDIC is on one side (trying to protect banks and their depositors), while the Fed is on the other side (trying to stop this rampant inflation we've been having).

So of course, the two sides had to talk and come to an agreement. Inflation is still rampant, additional rate hikes are needed, meaning even more long-term treasuries will be devalued, meaning even more banks will get into trouble.

We're no where close to solving the inflation problem. We've come down from 9% down to 6%, but its still a long way to go to get to 2%. The US Treasury shoring up banks + extending new forms of loans + trying to give more confidence today is obviously trying to set up the Fed to continue the rate hikes / continue the monetary destruction to get inflation back in place. Before this whole event, the market expectation was +50BPS of more raises come March 22nd, but the Fed may slowdown to 25BPS, or even 0BPS to give banks more time to figure this crap out.

 

[erek]

You have to remember that it was the Fed that destroyed all this money in the first place. Through rate hikes and quantitative tightening this past year. We're in a situation where the US Treasury / FDIC is on one side (trying to protect banks and their depositors), while the Fed is on the other side (trying to stop this rampant inflation we've been having).

So of course, the two sides had to talk and come to an agreement. Inflation is still rampant, additional rate hikes are needed, meaning even more long-term treasuries will be devalued, meaning even more banks will get into trouble.

We're no where close to solving the inflation problem. We've come down from 9% down to 6%, but its still a long way to go to get to 2%. The US Treasury shoring up banks + extending new forms of loans + trying to give more confidence today is obviously trying to set up the Fed to continue the rate hikes / continue the monetary destruction to get inflation back in place. Before this whole event, the market expectation was +50BPS of more raises come March 22nd, but the Fed may slowdown to 25BPS, or even 0BPS to give banks more time to figure this crap out.

First Horizon Plunges 38% Below TD Bid in Regional Bank Nightmare

 

[trparky]

First Horizon Plunges 38% Below TD Bid in Regional Bank Nightmare

That might be the fourth bank that I was talking about earlier.

 

[TumbleGeorge]

That might be the fourth bank that I was talking about earlier.

Oops! There rise pandemic.

 

[dragontamer5788]

I'm going to plug my topic in The Lounge: https://www.techpowerup.com/forums/...s-bonds-stocks-options-and-more.298118/page-5 . Its not really "Tech Related", but is instead a general Financial topic. I started it last year a few months after the interest rate hikes.

This "SIVB" issue is larger than just SIVB, so additional discussion points are probably going to drift off topic / less newsworthy. The other topic might be a better environment for further discussion (as we'd be more open to talk more about other issues that may be related).

 

[erek]

Oops! There rise pandemic.

Signature Bank is officially failed

 

[TumbleGeorge]

I'm going to plug my topic in The Lounge: https://www.techpowerup.com/forums/...s-bonds-stocks-options-and-more.298118/page-5 . Its not really "Tech Related", but is instead a general Financial topic. I started it last year a few months after the interest rate hikes.

This "SIVB" issue is larger than just SIVB, so additional discussion points are probably going to drift off topic / less newsworthy. The other topic might be a better environment for further discussion (as we'd be more open to talk more about other issues that may be related).

Technology companies are extremely dependent on the purchasing power of both ordinary people and corporate customers (for example, the automotive, cinema and other industries) who buy hardware and software. Even the purchasing power of governments is important, since money is needed to pay for the equipment of the administration (officials) for the electronic medical equipment for public hospitals (public health care) to pay for supercomputers and other types of equipment containing digital electronics for civilian and/or military purposes.

 

[Solaris17]

Ok kittens, lets play nice

 

[dragontamer5788]

That might be the fourth bank that I was talking about earlier.

With the new Fed loan mechanism in place, I don't think its possible for other banks to suffer the same fate as Silicon Valley bank anymore. Well, at least for one year.

If any bank has a mark-to-market loss with its long term holdings, the Fed is offering a loan to cover those banks for up to a year. That means that any bank run won't cause a collapse until that new loan from the Fed fails. (The loan means that the bank still loses money to the Fed, but at least has enough short-term cash to pay out depositors in the case of a bank-run).

Fed, not Treasury btw. In these cases, its important to remember that the Fed and Treasury are completely different entities with different motivations / charters.

 

[trparky]

I don't think its possible for other banks to suffer the same fate as Silicon Valley bank anymore.

I hope for all of our sakes that you're right because if you're not, things are going to get really ugly really fast.

 

[dragontamer5788]

I hope for all of our sakes that you're right because if you're not, things are going to get really ugly really fast.

Well, the new loan mechanism has been... active for one day?

So its a bit too soon to call this a "Certainty". I'm just trying to understand the news right now. I may have misread / misunderstood the terms of this loan.

 

[trparky]

I've always said that we have a deeper hole to fall into than we had back in the 1930s during The Great Depression so when we do hit rock bottom, it's going to be damned ugly and it's going to hurt.

I just hope that we don't hit rock bottom.

 

[Solaris17]

Well, the new loan mechanism has been... active for one day?

So its a bit too soon to call this a "Certainty". I'm just trying to understand the news right now. I may have misread / misunderstood the terms of this loan.

Well lets not forget, that a bank run is causing uncertainty. Of course there will be valuation falls and bad stock performance as the ripple spreads. Not responding directly to you, but agreeing, it will take time. Of course performance will be poor as these other banks, other customers get cold feet, or they onboard new clients from this and lose capitol in loans as they absorb the shock.

 

[trparky]

Well lets not forget, that a bank run is causing uncertainty.

Which, if things get worse, it'll cause even more uncertainty. It's not called the domino effect for nothing.

Suffice it to say, the next few weeks are going to be very interesting to say the least. I wonder how many more banks are going to fail.

 

[Solaris17]

Which, if things get worse, it'll cause even more uncertainty. It's not called the domino effect for nothing.

Suffice it to say, the next few weeks are going to be very interesting to say the least. I wonder how many more banks are going to fail.

Eh, it was a niche bank. I think better known clients like idk Roku I guess will get hit bad for not diversifying like they should have, but while I think this is super bad for those clients, I don't think this is a very big issue.

 

[trparky]

You don't think it's going to trickle on down to the everyday man on the street? You don't think that it's going to cause ripple effects across the board effecting everything from individual lines of credit be it for home loans, car loans, etc.? I think it will and that's the part that scares me. This is not going to stay isolated to the top of society, it's going to start coming down the chain.

Then let's factor in how the cost of living for the average American is spiraling out of control. We've got something nasty brewing here.

 

[Why_Me]

Which, if things get worse, it'll cause even more uncertainty. It's not called the domino effect for nothing.

Suffice it to say, the next few weeks are going to be very interesting to say the least. I wonder how many more banks are going to fail.

I'm curious myself as to how this all plays out.

Credit Suisse shares fall to new record low after collapse of SVB and Signature Bank

Credit Suisse shares on Monday reached an all-time low, falling as much as 9% as investors continued to hammer away at the stock of the Swiss banking giant...

www.marketwatch.com

https://twitter.com/i/web/status/1635287297200648192

https://twitter.com/i/web/status/1635283737821999107

 

[trsttte]

Eh, it was a niche bank. I think better known clients like idk Roku I guess will get hit bad for not diversifying like they should have, but while I think this is super bad for those clients, I don't think this is a very big issue.

It wasn't niche within the Silicon Valley startup scene (and as an anecdote let's remember California is the 5th largest economy in the world). Neither are the other regionals within their specific region. The problem with something like this is that the contagion potential is hard to track and predict.

Of course if you use Bank of America or one of the other big guys you're unlikely to have such problems... but then again, the same was thought of Lehman Brothers

For now the problems seem to be of the "simple" variaty, money tied up puts the bank at risk of a run. Tbd if worse things come up

 

[Solaris17]

You don't think it's going to trickle on down to the everyday man on the street? You don't think that it's going to cause ripple effects across the board effecting everything from individual lines of credit be it for home loans, car loans, etc.? I think it will and that's the part that scares me. This is not going to stay isolated to the top of society, it's going to start coming down the chain.

Then let's factor in how the cost of living for the average American is spiraling out of control. We've got something nasty brewing here.

I don't think the doomsday hype is warranted no.