Got a credit card? use our Credit Card & Finance Calculators
Thanks to niord,gvonge,Shelford,GrahamPlatt,gpadsa, for Donating to support the site
Silicon Valley bank bust, after insiders sell
-
- Lemon Half
- Posts: 6477
- Joined: November 8th, 2016, 11:33 pm
- Has thanked: 1572 times
- Been thanked: 983 times
Silicon Valley bank bust, after insiders sell
The collapse of Silicon Valley bank, just after insiders sold:
https://twitter.com/smartertrader/statu ... 93858?s=21
has reversed the expectations from a 50 basis points raise at the next Fed meeting, to a 25 basis point raise.
Difficult to know if this is the beginning of a series of US bank collapses or just a one off, but it will likely make predicting Fed interest rate policy more difficult. If other banks go down, the Fed may have to cut rates despite inflation being still high.
Regards,
https://twitter.com/smartertrader/statu ... 93858?s=21
has reversed the expectations from a 50 basis points raise at the next Fed meeting, to a 25 basis point raise.
Difficult to know if this is the beginning of a series of US bank collapses or just a one off, but it will likely make predicting Fed interest rate policy more difficult. If other banks go down, the Fed may have to cut rates despite inflation being still high.
Regards,
-
- Lemon Half
- Posts: 5897
- Joined: November 4th, 2016, 11:22 am
- Has thanked: 4245 times
- Been thanked: 2628 times
Re: Silicon Valley bank bust, after insiders sell
odysseus2000 wrote:The collapse of Silicon Valley bank, just after insiders sold:
If other banks go down, the Fed may have to cut rates despite inflation being still high.
Higher rates should be good for banks as it increases the spread and thus their profitability. Assuming they are well managed of course.
V8
-
- Lemon Half
- Posts: 6477
- Joined: November 8th, 2016, 11:33 pm
- Has thanked: 1572 times
- Been thanked: 983 times
Re: Silicon Valley bank bust, after insiders sell
88V8 wrote:odysseus2000 wrote:The collapse of Silicon Valley bank, just after insiders sold:
If other banks go down, the Fed may have to cut rates despite inflation being still high.
Higher rates should be good for banks as it increases the spread and thus their profitability. Assuming they are well managed of course.
V8
Yes, it helps banks, but only if their loans are to solid business and in many cases they are not. Once business get in trouble banks start to see loans go bad trumping any advantages from higher interest rates. Silicon Valley bank is a classic example of how higher rates kill banks.
Regards,
-
- Lemon Quarter
- Posts: 2131
- Joined: November 5th, 2016, 9:37 am
- Has thanked: 477 times
- Been thanked: 1479 times
Re: Silicon Valley bank bust, after insiders sell
88V8 wrote:odysseus2000 wrote:The collapse of Silicon Valley bank, just after insiders sold:
If other banks go down, the Fed may have to cut rates despite inflation being still high.
Higher rates should be good for banks as it increases the spread and thus their profitability. Assuming they are well managed of course.
V8
But this is not about profitability, which is irrelevant in the short term. It’s only liquidity that matters in cases such as this when the psychology of depositors turns and they start a run on the bank.
-
- Lemon Half
- Posts: 7383
- Joined: February 7th, 2017, 9:36 pm
- Has thanked: 10514 times
- Been thanked: 4659 times
Re: Silicon Valley bank bust, after insiders sell
It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
AiY(D)
-
- Lemon Quarter
- Posts: 2131
- Joined: November 5th, 2016, 9:37 am
- Has thanked: 477 times
- Been thanked: 1479 times
Re: Silicon Valley bank bust, after insiders sell
AsleepInYorkshire wrote:It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
Yes, unlikely to be systemic, but still very bad news for any company that banks with SVB. I saw someone had listed some UK companies with exposure elsewhere yesterday, however, my understanding is that the UK bank is ring-fenced from the US parent.
-
- Lemon Quarter
- Posts: 2075
- Joined: December 14th, 2022, 10:59 am
- Has thanked: 1849 times
- Been thanked: 1490 times
Re: Silicon Valley bank bust, after insiders sell
AsleepInYorkshire wrote:It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
Didnt they say something similar in 2008......?
Oooh look at RBS. What a magnificent bank.
-
- Lemon Quarter
- Posts: 4561
- Joined: May 31st, 2019, 7:55 pm
- Has thanked: 725 times
- Been thanked: 1443 times
-
- Lemon Quarter
- Posts: 2019
- Joined: November 4th, 2016, 10:25 am
- Has thanked: 227 times
- Been thanked: 481 times
Re: Silicon Valley bank bust, after insiders sell
Moderator Message:
In the interests of simplicity, can we keep all discussion in one place on this (unless the points are clearly off-topic for a particular board). The topic linked above seems as good a place as any. I won't lock this but please bear this in mind. (chas49)
In the interests of simplicity, can we keep all discussion in one place on this (unless the points are clearly off-topic for a particular board). The topic linked above seems as good a place as any. I won't lock this but please bear this in mind. (chas49)
-
- Lemon Slice
- Posts: 424
- Joined: November 5th, 2016, 10:12 am
- Has thanked: 297 times
- Been thanked: 118 times
Re: Silicon Valley bank bust, after insiders sell
I hold HSBC & StanChart on the basis they're deposit heavy institutions, the raising of rates should therefore in theory provide both HSBC & StanChart with significant tailwinds. If it turns out they're exposed via converting deposits into fixed interest a la Silicon Valley Bank that would be both surprising and the basis of a fundamental total reappraisal of the investment case for both banks as I see it. Opinions/re-assurance gratefully received!88V8 wrote:[Higher rates should be good for banks as it increases the spread and thus their profitability. Assuming they are well managed of course. V8
-
- Lemon Quarter
- Posts: 2131
- Joined: November 5th, 2016, 9:37 am
- Has thanked: 477 times
- Been thanked: 1479 times
Re: Silicon Valley bank bust, after insiders sell
Tedx wrote:AsleepInYorkshire wrote:It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
Didnt they say something similar in 2008......?
Oooh look at RBS. What a magnificent bank.
It’s easy to forget what caused the GFC but this is nothing like that. Unless you equate mortgage backed securities such as CDO’s and their derivatives with US Government bonds. Frankly, that would be absurd.
-
- Lemon Quarter
- Posts: 2075
- Joined: December 14th, 2022, 10:59 am
- Has thanked: 1849 times
- Been thanked: 1490 times
Re: Silicon Valley bank bust, after insiders sell
simoan wrote:Tedx wrote:AsleepInYorkshire wrote:It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
Didnt they say something similar in 2008......?
Oooh look at RBS. What a magnificent bank.
It’s easy to forget what caused the GFC but this is nothing like that. Unless you equate mortgage backed securities such as CDO’s and their derivatives with US Government bonds. Frankly, that would be absurd.
I'm not. And to think that I am is absurd.
-
- Lemon Quarter
- Posts: 2131
- Joined: November 5th, 2016, 9:37 am
- Has thanked: 477 times
- Been thanked: 1479 times
Re: Silicon Valley bank bust, after insiders sell
Tedx wrote:simoan wrote:Tedx wrote:AsleepInYorkshire wrote:It's the second largest bank failure in US history. However, it doesn't appear to be systemic and other banks are well capitalised.
AiY(D)
Didnt they say something similar in 2008......?
Oooh look at RBS. What a magnificent bank.
It’s easy to forget what caused the GFC but this is nothing like that. Unless you equate mortgage backed securities such as CDO’s and their derivatives with US Government bonds. Frankly, that would be absurd.
I'm not. And to think that I am is absurd.
Not sure why you mentioned RBS and 2008 then? This is a liquidity problem at a bank heavily exposed to a single industry with a very high level of unsecured deposits, which had a liquidity problem. Like the LDI crisis here last autumn, this will be stamped on by the US authorities and forgotten about in due course.
-
- Lemon Half
- Posts: 6477
- Joined: November 8th, 2016, 11:33 pm
- Has thanked: 1572 times
- Been thanked: 983 times
Re: Silicon Valley bank bust, after insiders sell
Small bank run at competitor to svb:
https://twitter.com/jeetsidhu_/status/1 ... DCpgdbFBxg
Etsy delays sellers payouts:
https://twitter.com/mukund/status/16346 ... DCpgdbFBxg
How the Fed reacted to previous bank crisis:
https://twitter.com/nicktimiraos/status ... DCpgdbFBxg
Kind of interesting to see what the Fed will do.
If they let the svb customers take a haircut there could be runs on other banks & who then knows where this contagion stops. The stresses to the system in going from essentially zero interest rates to what we have now are the largest shocks to the system ever.
Regards,
https://twitter.com/jeetsidhu_/status/1 ... DCpgdbFBxg
Etsy delays sellers payouts:
https://twitter.com/mukund/status/16346 ... DCpgdbFBxg
How the Fed reacted to previous bank crisis:
https://twitter.com/nicktimiraos/status ... DCpgdbFBxg
Kind of interesting to see what the Fed will do.
If they let the svb customers take a haircut there could be runs on other banks & who then knows where this contagion stops. The stresses to the system in going from essentially zero interest rates to what we have now are the largest shocks to the system ever.
Regards,
-
- Lemon Quarter
- Posts: 2131
- Joined: November 5th, 2016, 9:37 am
- Has thanked: 477 times
- Been thanked: 1479 times
Re: Silicon Valley bank bust, after insiders sell
odysseus2000 wrote:If they let the svb customers take a haircut there could be runs on other banks & who then knows where this contagion stops. The stresses to the system in going from essentially zero interest rates to what we have now are the largest shocks to the system ever.
The thing is, a well run bank with less flighty and profitable depositors would never get into this situation in the first place. It seems SVB was almost run like a Ponzi scheme that relied on money coming in from the VC industry. When that dried up, they then needed to generate cash by selling off assets on the balance sheet because most of their customers are rubbish companies with no cashflow themselves.
It really is one big lesson in cashflow management and what goes wrong when it dries up and you’re left having to sell assets at a loss.
-
- Lemon Quarter
- Posts: 4891
- Joined: November 4th, 2016, 10:15 am
- Has thanked: 620 times
- Been thanked: 2725 times
Re: Silicon Valley bank bust, after insiders sell
Incredibly stupid of so many tech companies putting all their corporate funds into one relatively small bank and so not able to pay next week's wages!
These clever tech guys seem to have little common sense!
These clever tech guys seem to have little common sense!
-
- Lemon Half
- Posts: 6477
- Joined: November 8th, 2016, 11:33 pm
- Has thanked: 1572 times
- Been thanked: 983 times
-
- Lemon Half
- Posts: 8471
- Joined: January 7th, 2017, 9:56 am
- Has thanked: 1554 times
- Been thanked: 3454 times
Re: Silicon Valley bank bust, after insiders sell
scrumpyjack wrote:Incredibly stupid of so many tech companies putting all their corporate funds into one relatively small bank and so not able to pay next week's wages!
These clever tech guys seem to have little common sense!
The "deal" with SVB seems to be that if they lend your startup company money they insist that you bank 100% with them. I suppose they want to ensure the accounts if a startup is successful.
-
- Lemon Quarter
- Posts: 2123
- Joined: September 2nd, 2019, 10:23 am
- Has thanked: 184 times
- Been thanked: 593 times
Re: Silicon Valley bank bust, after insiders sell
scrumpyjack wrote:Incredibly stupid of so many tech companies putting all their corporate funds into one relatively small bank and so not able to pay next week's wages!
These clever tech guys seem to have little common sense!
If you have ever met some of them you would know that they don't have any common sense. They are probably wandering around with odd socks on and lots of everyday tasks just don't get into their brain space.
Most are on another level and highly focus on an issue, probably very complex so putting on matching socks is just beneath them.
"He can tell you the square root of the surface area of a jar of coffee! Just don't ask him to take it off" Was a description of a new chap that started work for me.
-
- Lemon Half
- Posts: 6477
- Joined: November 8th, 2016, 11:33 pm
- Has thanked: 1572 times
- Been thanked: 983 times
Re: Silicon Valley bank bust, after insiders sell
Gerry557 wrote:scrumpyjack wrote:Incredibly stupid of so many tech companies putting all their corporate funds into one relatively small bank and so not able to pay next week's wages!
These clever tech guys seem to have little common sense!
If you have ever met some of them you would know that they don't have any common sense. They are probably wandering around with odd socks on and lots of everyday tasks just don't get into their brain space.
Most are on another level and highly focus on an issue, probably very complex so putting on matching socks is just beneath them.
"He can tell you the square root of the surface area of a jar of coffee! Just don't ask him to take it off" Was a description of a new chap that started work for me.
And yet in the by & by one occasionally gets a Steve Jobs.
Regards,
Return to “Macro and Global Topics”
Who is online
Users browsing this forum: No registered users and 6 guests