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FRC dropped 50ish percent in the morning, ended down 15%, and appears to be some lingering fear because it dropped another 4% AH. That might be gone by Monday, but there’s a lot of “end of the world” talk still floating around.Quote:
Originally Posted by Brock Landers
Thanks, secondingQuote:
Originally Posted by Brock Landers
Thanks.Quote:
Originally Posted by pepperdawg
Harvesting some March powder today. The beauty of a season pass is you don’t have to spend any money to ski (other than gas).
Attachment 451413
Decades of wearing cheap Old Navy T-shirts and cutting my own hair and my wife finally appreciates my cheap ass money saving skills. Lol
Am I wrong to think the uninsured depositors should lose money unless there is private offer for assets?
The ex-Boeing CEO was a serious cyclist. Good way to grind out the guilt with endorphins
“That was the last question Greg Becker, CEO of Silicon Valley Bank, fielded at an investor conference on Tuesday this week.
“Cycling is my advice,” he replied. “Living in Northern California and being on the peninsula. That’s just—I think it’s the best bike-riding cycling in the world, period.”
I don’t think they’re getting any public money (beyond FDIC). They’ll sell what they can now, pay a large chunk of dividend with that, and the rest they’ll probably hold and pay out over time via income/ maturities.Quote:
Originally Posted by 4matic
I forget which commentator was talking about the failure of Silicon Valley. Instead of all that creativity going for good it has been wasted on gamification and manipulation. So if this flush resets the tech startup market and quells the money for nothing mindset let it happen. It’s what the Fed wants I think.
Clamoring for a bailout is all over the placeQuote:
Originally Posted by JimmyCarter
They don’t need a bailout, the money is almost all still thereQuote:
Originally Posted by 4matic
welfare cunts gonna welfareQuote:
Originally Posted by 4matic
Uhhh, I don't think the money is still there.Quote:
Originally Posted by JimmyCarter
SVB bought long dated treasuries and MBS that have low rates. They were forced to start liquidating positions as depositors pulled money out. The instruments that they were invested in are down in the range of 25% because the Fed funds rate has increased pretty dramatically.
If you look at their filings everything looked dandy, but SVB (and other banks their size) are not required to mark their positions to market until they sell. Now that they have been forced to liquidate their positions they are going to be short by many billions of dollars.
TLDR- SVB was chasing yield and in a low rate environment and got caught with their pants down as rates went up.
Certain investments are down 25 percent but their problem was more cash flow timing mismatch. It’s not that they don’t have the “value”, it’s that they didn’t have enough of it liquid to meet client demands. As the longer dated assets mature and pay income, they should recover plenty over time, I’d guess maybe a 10 percent loss offset by FDIC insurance puts them in the single digit percentages (note: highly unscientific analysis that could end up being way off)Quote:
Originally Posted by Kevo
That's my read of the article. They either have it all, or almost all of it. The problem is it's tied up in bonds maturing over the next 6 years. So if everybody wants it now, and regulations are followed, it's not there. If everybody wants it when they normally would have withdrawn it, there would be no problem for the depositors. Technically they might be short a billion on 200B in deposits. They should have been able to raise capital to cover the deficit (presumably the institution has/had some value that would attract investors). Unfortunately for them the capital raise was badly timed, it failed, and the run accelerated.Quote:
Originally Posted by JimmyCarter
The stockholders were in a less good place, because the bank's investments turned out to be suboptimal, meaning SVB was making less money than they could have been. I.e. they are at a competitive disadvantage compared to other banks. With the run, SVB was forced to realize losses that made its finances worse. With the failure, whether the stockholders get anything depends on how much the receiver gets for selling the assets.
If someone doesn't understand bank runs and why a good bank never has all the money, watch "It's A Wonderful Life."
I'm not an expert, just summarizing the article.
Are any startups going to fail because of this? Maybe. One that was about to withdraw and spend most of its deposit may not be able to access their funds quickly enough (say to launch their product). That one company might be unable to secure other funds and lose out on its deal. Losing the deal may result in the business failing. My guess is 99% of SVBs clients don't need all their money right away, and by the time they need it, SVB's successor institution will have it. It'll be a headache for those companies' CFOs but will work out in the end.
Cono. That substack article by Rubinstein was really good...Thx.
Imo the mark to market rules hit SVB hard; as they should have. Am still in awe that they either didn't hedge or hedged poorly
I didn’t look at their balance sheet, but they probably aren’t so leveraged that the money isn’t there. At $200B I’m sure they had ~$10B to $15B in net worth that can be liquidated. Financial institution financial performance is ruled by the balance sheet, it is very different from most other businesses, and they got on the wrong side of it plus a few other perfect storm things happened.
Fascinating to watch it play out.
Read the earlier article. Their borrower base was probably not as diversified as necessary. But the depositors money is there. Liquidity issue. They didn’t hide the money under a rug.Quote:
Originally Posted by Kevo
The change in AFS HTM categorization and mtm rules whacked them. Not sure if it’s a hedging thing or just foresight at what the adjustment would cause 2-3 steps down the road (earnings loss/associated news/assoc withdrawals/combined with the obvious- higher rates causing “normal” withdrawals from higher growth VC/tech)Quote:
Originally Posted by LeeLau
Back of envelope scratching is that they didn't really need the capital raise just then. Possibly in the near term they may have needed it but they had time to look at other options and not try to float it right now. Quite the timing cockupQuote:
Originally Posted by Mustonen
2022 bonuses hit employees bank accounts the day the FDIC took over. Just a coincidence but pretty crazy timing.
Reading those articles -- or rather trying to read them -- is evidence that I should stick to simple investing.
Quote:
Originally Posted by Danno
Stick to simple investing, unless you’re a pro. Warren Buffett would tell you he’d do the same, but his overall worth is beyond legally being to invest in a traditional savings/investment strategies.Quote:
Originally Posted by 4matic
Tech stock over valued? I’m beyond shocked. Tesla had a higher share value then the big 3 and toyota combined. Any moron knew that wasn’t sustainable, but traders milked a crap load of money out of the fallacy. Same with most start ups. Everyone was afraid to miss out on the next best thing. If you’re an average Joe (I’m a fucking electrician) keep your money in a diversified account and just hope you don’t retire when the assholes (who will always come out rosy) decide it’s time for a correction.
Want to invest, high KVA transformers are a year plus out on delivery time. Nothing in our economy works without them. Absolutely nothing. Large scale electronic manufacturers are a great investment. Demand is already at peak and will only grow.
I’d invest in Ford or GM than most tech companies. Wall Street is casino. The shining object is always revered. But the truth and value is in the foundation
The issue with svb is that z lot of their customers, vc funded firms, have their cash tied up for possibly a long time.
These firms have typically only a years worth of cash on hand and are missing money.
So if the cash is tied up for 90 days or more, they can't make payroll and could go bankrupt. Their VCs could step up and fund them, but probably on tough terms.
I was ceo of two tech companies that borrowed money from svb so I'm somewhat familiar with the problems these vc funded companies have.
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https://media.tenor.com/Tc9eRn_vVfYA...h-coughing.gifQuote:
Originally Posted by rod9301
There's gonna be a run on Monday morning and the FDIC/Bufffet or someone better backstop a couple of these banks. Let's see what the FDIC does with SVB tonight. They need to get some good news out before 9am ET.
I wouldn't be shocked if a couple other banks have been working hard this weekend to raise cash.
Really nothing any bank can do if 25% of deposits get pulled in 24 hours...
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Seems like it's really easy for you to be a dick.Quote:
Originally Posted by Adolf Allerbush
Trying to help some people understand the situation.
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Thousands and thousands of small tech companies and thousands of them are run by complete morons. Not saying Rod is one, but I’m no longer surprised by the caliber of person wearing a “CEO” title. Mid level manager in a big company is often > CEO of a small company.
Well, i was also the founder of both companies.Quote:
Originally Posted by Mustonen
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Ah, sure…. Kind of a distinction without a difference in that world, eh? Anyways….
Thousands and thousands of small tech companies and thousands of them are founded by complete morons. Not saying Rod is one, but I’m no longer surprised by the caliber of person wearing a “Founder and CEO” title. Mid level manager in a big company is often > founder and CEO of a small company.
I'm curious about the timing specifics with SVB.
When were the $25b in bonds sold leading to the $2b loss (rough numbers)? Recently like in Q1 2023? If so the earliest the market would have found out about that would have been when they filed their quarterly report unless a loss that large triggered some sort of reporting requirement.
So assuming I'm correct and that would have showed up in quarterly earnings, everyone found out about this because they were trying to raise additional capital and disclosed it in the offering?
If so that seems like a horrible, horrible sequence of events. Regardless, should have gotten the equity raise closed first and liquidated the bonds afterwards. Stock probably still takes a shit but at least you've already got the capital in to offset the losses on the bond sale and maybe that way you avoid the VC panic and therefore the bank run. Hindsight 20/20 obviously.
I expected a stronger statement before now. People are talking and making preliminary decisions over the weekend. As it stands, probably quite a few companies and individuals with uninsured deposits are gonna be moving money tomorrow. And that creates a lot of uncertainty about other banks, and Wall St. hates uncertainty.Quote:
Originally Posted by VTeton
The current plan of insured deposits available Monday am, and half of uninsured sometime later in the week, and the rest tbd... No part of that says bank deposits are safe. Even a peon's gonna be thinking about splitting their insured deposit between multiple banks to preserve access to some cash.
It makes me laugh, as half that crowd are the hyper libertarian techbros that argue against regulating tech or past bailouts.Quote:
Originally Posted by 4matic
Get fucked techbros
It’s not just the cliche tech bros tho. Somethjng like 50% of startups had there money in svb. If they go under that will set back a lot of tech innovation which will domino into economic set backs
Peter Thiel tho has just cemented his rep as pos if that wasn’t clear before now
What are the people in line outside the bank even doing? Are these people with >FDIC limits hoping to take home a briefcase full of cash? I thought the actual cash on hand was tiny at a branch. Can't do a wire online or is the website down? They have no other bank accounts anywhere and can't survive cashless for a week or two? Or is it worst case scenario the account is frozen and FDIC insurance takes months?
Check out alldataQuote:
Originally Posted by Mustonen
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I figured First Republic might dip into a real cheap buy this week, now I’m wondering whether they’ll survive MondayQuote:
Originally Posted by LongShortLong
Thiel is ruthless but at least he’s not bullshitting about it. I find the virtue signaling dipshits on LinkedIn with the “VC Statement of Support for SVB” to be more despicable.Quote:
Originally Posted by mcski
Last yr was the biggest bond market crash I’ve ever seen. Not sure if there has ever been worse.
People will begin talking about it. China probably isn’t happy either. Not sure how much money was lost in it but it rivals any stock mkt crash.
Anybody concerned with their accounts at Ally Bank?Quote:
Originally Posted by Kevo
https://www.morningstar.com/news/mar...ssesas-was-svb
Ally Financial Inc. (ALLY) -- the third largest bank on the list by Dec. 31 total assets -- stands out as having the largest percentage of negative accumulated comprehensive income relative to total equity capital as of Dec. 31.