Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. In this column, JWR also covers hedges, derivatives, and various obscura. Most of these items are from JWR’s “tangibles heavy” contrarian perspective. Today, some more details on the Silicon Valley Bank (SVB) collapse, and the closure of Signature Bank. (See the Economy & Finance section, the Derivatives section, and the Forex & Cryptos section.)
Important Note: If you have any exposure to a regional bank or one that is heavily into CDS derivatives or tied to a crypto exchange, then withdraw the majority of your funds, ASAP! – JWR
Precious Metals:
Perth Mint sold diluted gold to China, got caught, and tried to cover it up [1].
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A piece by Dr. Ron Paul, posted by Gold-Eagle.com: The Federal Reserve’s Magic Trick: Big Tech [2].
Economy & Finance:
Silicon Valley Bank imploded in a single day. It could be just the tip of the iceberg [3]. Here is a pericope:
“Commercial real estate should be a a top worry for investors because there is more than $60 billion in fixed rate loans that will soon require refinancing at higher interest rates. Additionally, there is more than $140 billion in floating rate commercial mortgage backed securities that will mature in the next two years, according to Goldman Sachs.”
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Regulators have two massive problems to sort out with the Silicon Valley Bank collapse [4].
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Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates [5]. JWR’s Comments: This is a great example of the folly of “Borrowing short and lending long.” A lot of the blame for this fiasco should go to Janet Yellen, who kept rates artificially low throughout her entire term, leading the Federal Reserve banking cartel.
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Linked over at the Whatfinger.com [6]news aggregation site: Larry Summers warns Silicon Valley Bank collapse has ‘substantial consequences’ for America’s innovation system [7].
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CNBC: Auction process is reportedly underway to find a buyer for Silicon Valley Bank [8].
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At Seeking Alpha: SVB Financial Group: Simply Scary [9].
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Yellen rules out bailout for Silicon Valley Bank: “We’re not going to do that again” [10].
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Larry McDonald (of Bear Traps Report) warns stock market crash could come within 60 days [11].
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Update (Monday AM): A headline at Yahoo Finance: US Regional Banks Remain Under Pressure as First Republic Sinks [12]. Here is an excerpt:
“Regional lenders dominated the leader board for most-sold stocks in the US premarket:
First Republic Bank sank 65%
Western Alliance Bancorp lost 60%
PacWest Bancorp was down 46%
Finwise Bancorp tumbled 40%
Zions Bancorp. slid 24%
Metropolitan Bank dropped 23%
BankUnited Inc. was off 21%
The selling starting to seep into S&P 500 futures, which spiked overnight before turning lower 45 minutes before the cash open.”
Blackstone Defaults on Nordic CMBS as Property Values Wobble [13]. JWR’s Comments: Just imagine if we were to hear a similar story in a few months about Blackrock, with a much higher dollar figure. In 2022, Blackrock lost $1.7 trillion in just six months [14]. It is noteworthy that Blackrock controls $10 trillion dollars in assets! [15] If this real estate giant defaulted, then we’d be looking at the grandmother of all bailouts.
Commodities:
Will B. sent us this: Analysts see short-term strength, long-term ‘generational shift’ in copper prices [16].
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G20 watchdog says commodity market concentration poses threat to wider economy [17].
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From OilPrice News: Oil Prices Are Set To Rise Throughout 2023 [18].
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The Commodities Feed: China’s 2023 growth target underwhelms markets [19].
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USDA Forecasts Bigger Crops, Lower Prices for 2023-24 Crops [20].
Derivatives:
SVB debacle sparks rush to defensive options on fears of contagion [21]. Here is an excerpt:
“Though SVB’s troubles for now appear idiosyncratic to the firm, traders appeared on guard for the possibility that they could bode poorly for the broader sector as a campaign by the Federal Reserve to fight inflation by ending the era of cheap money is exposing vulnerabilities in the market.
“With fear of contagion in the regional banking sector, there was a slew of put buying in financials mostly using the options to protect against an about 10% decline in the underlying (shares),” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group.”
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Credit Investors See Potential Risk in Bank Bonds After SVB Collapse [22]. JWR’s Comment: The CDS overhang is potentially huge. When a counterparty ceases to exist, derivatives can implode, dramatically.
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Reuters: Exclusive: Wall Street examines risks around short-dated options as warnings rise-sources [23].
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Reported back on March 9th: Bank Bonds Weaken After SVB Says It’s Shoring Up Capital [24].
Forex & Cryptos:
Dollar’s renewed strength temporary, weakness ahead, FX analysts say: Reuters poll [25].
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Larry Greenberg, at Currency Thoughts: Powell’s Hawkish Message Received Along With Some Data Surprises [26].
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Linked over at the Whatfinger.com [6]news aggregation site: Fed Chairman Jerome Powell says don’t expect a CBDC soon: ‘We’re not at the stage of making any real decisions’ [27].
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As reported by CNBC: Regulators close crypto-focused Signature Bank, citing systemic risk [28]. JWR’s Comments: This is the first bank run and closure that I’ve ever heard of that started and ended over a weekend! That does not bode well. (Read: Contagion!)
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CFTC continues to explore digital asset policy considerations in MRAC meeting [29].
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More than $70 billion wiped off crypto market in 24 hours as bitcoin drops 8% below $20,000 [30].
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Over at Zero Hedge: USDC ‘Stablecoin’ Breaks Peg As Circle Admits Billions Stuck With SVB [31].
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Circle, BlockFi may have exposure to Silicon Valley Bank; other firms deny exposure [32].
Tangibles Investing:
Video: The US Housing Market Just Imploded (Worse Than 2008) [33].
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Why vintage furniture is getting more expensive and harder to find [34].
Provisos:
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos [35] page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR [36]. (Either via e-mail or via our Contact form [37].) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. Thanks!