Dow Drops 500 Points As Bank Fears Reignite
Fears of financial instability sent stocks around the world plummeting on Wednesday.
The Dow Jones Industrial Average fell by as much as 500 points, or 1.7 percent, in early trading. The Nasdaq Composite fell 1.2 percent. The S&P 500 dropped by 1.6 percent. The small-cap Rusell 2000 lost 2.3 percent.
U.S. banks and consumer finance companies were under renewed pressure as worries about Swiss banking giant Credit Suisse reignited fears of financial instability. The KBW Bank Index, which tracks large U.S. banks, fell 3.1 percent… (Continue to full article)
Credit Suisse Shares Crash as Banking Crisis Goes Global
Shares of Swiss banking giant Credit Suisse fell by more than 20 percent and the cost of insuring its bonds against default soared on Wednesday after its biggest shareholder said it would “absolutely not” provide additional support.
The decline brought shares to an all-time low. Concerns about the bank’s health and stability have been weighing on the stock for three months.
The most recent sell-off appeared to be triggered by remarks from the chairman of Saudi National Bank, the biggest shareholder of Credit Suisse, when asked if the Saudi bank was open to further capital injections.
“The answer is absolutely not, for many reasons outside the simplest reason… (Continue to full article)
First Republic is cut to junk status by S&P
Shares of Big Four US banks wipe out yesterday’s gains and Credit Suisse stock plunges over 25% to record low after SVB collapse
Wall Street’s main stock indexes opened lower on Wednesday, as turmoil at Credit Suisse renewed fears of a banking crisis and sent shares of major US banks lower.
At the opening bell, the Dow Jones Industrial Average fell 396 points, or 1.23 percent, while the S&P 500 opened 1.09 percent lower and the Nasdaq Composite dropped 1.20 percent.
Shares of First Republic, one of the regional banks swept up in contagion fears after the collapse of Silicon Valley Bank, dropped up to 11 percent after the bank’s bond rating was downgraded to junk status by S&P. The Big Four trillion-dollar US banks suffered in early trading after yesterday’s rally. Wells Fargo slid 3.9 percent, Citigroup dropped 4.3 percent, Bank of America was down 2.2 percent and JP Morgan saw a 3.5 percent dip… (Continue to full article)
Assets of US banks are worth massive $2TRILLION less than their accounts report and 200 banks could be at risk if customers rush to withdraw
Assets held by America’s banks are worth a staggering $2 trillion less than stated in their accounts because of ‘unrealized losses’ like those which triggered the collapse of Silicon Valley Bank, a study suggests.
And a run on the banks would leave customers at nearly 200 institutions facing losses of up to $300 billion, according to the paper by leading finance academics.
The paper said the value of assets across the U.S. banking system is ‘$2 trillion lower than suggested by their book value’. Those assets include Treasury bonds whose value has decreased significantly across the past 12 months because of an aggressive campaign of interest hikes by the Federal Reserve.
SVB’s collapse was partly because executives used its burgeoning customer deposits to buy these bonds, then lost money as it rushed to sell them at a loss amid a run on the bank… (Continue to full article)
Signature’s Seizure Tied to a Loss of Faith
Silicon Valley Bank’s lack of a chief risk officer for much of last year is being examined by the Federal Reserve as part of its probe of the bank’s failure. SVB revealed in a 2023 proxy statement that Chief Risk Officer Laura Izurieta left the company in October but stopped performing the role in April. The company said Kim Olson took over the job in December. Olson is based in New York, across the country from most of the rest of SVB’s top brass.
The San Francisco Fed was the chief regulator for SVB before it fell into Federal Deposit Insurance Corp. receivership on Friday in the biggest bank failure in more than a decade. The Fed has said that it will also conduct an internal investigation of its own oversight, and release the results on May 1.
By now most people know why SVB tanked. But why Signature Bank? It turns out the answer is simple: The favorite of law firms and crypto was seized by the government Sunday after regulators lost faith in management. “The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership.”
Moody’s Investors Service placed First Republic Bank and five other US lenders on review for downgrade, the latest sign of concern over the health of regional financial firms following the failure of SVB. Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp. and Comerica Inc. were the other lenders put on review… (Continue to full article)
Home Depot co-founder torches ‘woke’ Silicon Valley Bank collapse, warns recession may be here already
Banks are more concerned with ‘global warming’ than shareholder returns.
During an appearance on “Cavuto Live,” Marcus discussed the devastating collapse of Silicon Valley Bank, urging Americans to “wake up” and understand that the U.S. economy is in “tough times.”
“I can’t wait for Biden to get on the speech again and talk about how great the economy is and how it’s moving forward and getting stronger by the day. And this is an indication that whatever he says is not true. And maybe the American people will finally wake up and understand that we’re living in very tough times, that, in fact, that a recession may have already started. Who knows? But it doesn’t look good,” Marcus argued, Saturday… (Continue to full article)
Moody’s sees harder times ahead for all US banks and puts six on ‘downgrade’ watch
Moody’s Investors Service cut its outlook for the entire US banking sector and placed six US banks on review for potential credit rating downgrades, in the wake of last week’s collapse of Silicon Valley Bank.
The credit ratings firm said it expects more banks will come under pressure after SVB’s failure — particularly those with large hoards of uninsured deposits and long-term Treasury bonds that have crumbled in value. Moody’s said it expects pressure on the banking sector to persist as the Fed continues to hike interest rates to combat inflation.
Another concern: US banks are raising the interest rates they pay on savings accounts. Although they hope the higher rates will retain customers worried by the collapse of SVB, that could also eat into profits… (Continue to full article)
Moody’s cuts outlook on U.S. banking system to negative, citing ‘rapidly deteriorating operating environment’
The move followed action late Monday, when Moody’s warned it either was downgrading or placing on review for downgrade seven individual institutions.
The moves are important because they could impact credit ratings and thus borrowing costs for the sector.
In its downgrade of the entire sector, the rating agency noted the extraordinary actions taken to shore up impacted banks. But it said other institutions with unrealized losses or uninsured depositors still could be at risk… (Continue to full article)
As long as we are getting SCREWED…
Key recession indicator sends investors sharpest warning in 42 years
The Treasury market is sending its sharpest warning about recession risks since 1981.
On Tuesday, the difference in the yield on 2-year and 10-year Treasury notes further inverted, with the yield on the 10-year falling 103 basis points, or 1.03 percentage points, below the yield on the 2-year yield. This dynamic has preceded each of the last eight U.S. recessions.
In an appearance before the Senate Banking Committee on Tuesday, Fed Chair Jerome Powell signaled the central bank will likely be more aggressive than it previously forecast in raising interest rates this year as inflation proves stubborn and the labor market remains strong.
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell told the Senate Banking Committee in prepared remarks. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes… (Continue to full article)
Stock market will crash in 60 days, best-selling author on Lehman collapse warns
After Federal Reserve Chair Jerome Powell indicated the bank isn’t finished raising rates, one market expert has warned a crash could come in a matter of days.
“They’re playing catch up, and while they were doing quantitative easing in 2021, inflation started to rage and now they’re trying to catch up,” The Bear Traps Report founder Larry McDonald said Wednesday on “Mornings with Maria.”
“Our 21 Lehman systemic risk indicators that look at equity and credit point to one of the highest probabilities of a crash in the stock market looking out 60 days,” McDonald, who is also known for writing a best-selling book on the Lehman Brothers collapse, cautioned.
The withdrawal of capital from middle-class families has been “spectacular,” McDonald argued, as the Fed continues its most aggressive rate hike campaign since the 1980s to crush decades-high inflation. Although the consumer price index has slowly fallen from a high of 9.1% notched last June, it remains about three times higher than the pre-pandemic average… (Continue to full article)
Credit Card Nation: How we went from record savings to record debt in just two years
Millennials like Roth have seen their debt rise by nearly 30% since before the pandemic, to about $3.8 trillion. What’s so strange about this is that back in 2021, that debt had fallen to near-record lows.
“We saw Americans across the income stream save a lot of money. I mean a lot of money,” says Jill Schlesinger, CBS news business analyst and author of The Great Money Reset.
Schlesinger says stimulus checks, lockdown and pay raises had people in really strong financial shape, with the highest personal savings rate on record. “But then 2022 starts and inflation doesn’t go down,” says Schlesinger. “And then we saw many people plow through those pandemic era savings, left with nothing… (Continue to full article)
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