In this breaking news video, we dive into the latest updates on the government's response to the Silicon Valley Bank collapse and how the Federal Reserve is reacting to the situation. Get in-depth analysis on the impact this event has on the stock market, interest rates, and the future of the finance industry.
We'll cover all the essential developments, including how the government is handling the bailout, the actions taken by the FED, and what this means for major players like First Republic Bank and JPMorgan Chase. Stay informed with the latest business news and world news related to this unprecedented event.
Don't miss out on any updates! Subscribe to our channel for more news on the stock market, business, and finance. Turn on notifications to be the first to know when we release new content.
We'll cover all the essential developments, including how the government is handling the bailout, the actions taken by the FED, and what this means for major players like First Republic Bank and JPMorgan Chase. Stay informed with the latest business news and world news related to this unprecedented event.
Don't miss out on any updates! Subscribe to our channel for more news on the stock market, business, and finance. Turn on notifications to be the first to know when we release new content.
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00:00 Banks remain in incredible turmoil.
00:04 Could this be a repeat of 2008?
00:07 We're here to give you all the details on major names like First Republic, Credit Suisse
00:11 and many others.
00:12 I'm Gav Blacksburg.
00:13 I'm here with Evan from Stock Market News.
00:16 If you enjoy these videos, make sure to subscribe to the channel.
00:19 We've got further updates coming on a regular basis.
00:21 And like this video, let's get right into it.
00:24 Off the bat here, let me turn it over to you, Evan, to show what are we looking at here
00:28 on screen?
00:29 Yeah, so what we are looking at here is the latest news about Silicon Valley Bank, kind
00:34 of where this entire thing started.
00:36 So they did file for Chapter 11 bankruptcy today.
00:39 Now, of course, all the depositors in the bank are safe.
00:42 We've been hearing a lot about that.
00:44 But SVB Financial still believe there is some value at the bank.
00:48 They're saying there's about $2.2 billion of liquidity and any sale process will be
00:53 conducted through Chapter 11.
00:55 We did hear a lot of stuff over the last couple of days about them trying to do a sale, obviously
01:00 unsuccessfully.
01:01 So we'll see if this bid works.
01:04 But looking at this article right here from Bloomberg, and I hope you guys have had a
01:07 second to read it while it was on the screen, but some of these concerns might have been
01:12 going on for a little bit.
01:13 The San Francisco Fed actually changed the people who were watching over the bank.
01:18 They increased the severity of the team and they noticed that a lot of stuff was going
01:23 wrong.
01:24 And in that last paragraph, and I'm just going to quote it, "Then late last year, they
01:28 flagged a critical problem.
01:29 The bank needed to improve how it tracked interest rate risks," one of the people said.
01:34 So that's kind of, we wish we did that a little bit earlier, but we are hearing about that
01:38 now and I imagine we're going to hear a lot more updates like this about how we actually
01:43 got to this point in the coming weeks.
01:45 So stay tuned on that.
01:48 The more kind of updates we are seeing, we're seeing around First Republic Bank, ticker
01:52 FRC, that's been going, create nothing but craziness over the last couple of days.
01:57 Last night, they suspended their dividend and they said that they had $34 billion of
02:03 cash before the funds that they received from the other banks, which are on the next slide.
02:09 Getting rid of your dividend probably isn't the best thing you want to do for the stock
02:12 and we'll see how it's performing after that.
02:15 But you want to talk us through this, Will?
02:17 Yeah, as you can see here, this is where the money that came into Backstop FRC came from.
02:21 We got $20 billion from the big boys, JP Morgan, Bank of America, Citigroup and Wells Fargo.
02:28 Another $5 billion coming from Goldman Sachs and Morgan Stanley commutatively.
02:32 And then $1 billion each from BNY Mellon, State Street, PNC, Truist and US Bank.
02:37 It's a little bit of a wash though, as the money is basically moving from the Fed to
02:41 the big banks, to the regional banks and back through the system, right?
02:45 It's kind of just a circle of money that's happening here.
02:47 I also wanted to real quick comment on just that interest rate risk going completely unnoticed.
02:53 I think that is the biggest part of this story, which is how could you not see interest rate
02:58 rises coming?
03:00 What could possibly make you buy $80 billion of treasury bonds when we knew that interest
03:06 rates rises were coming and we knew that they were going to be coming quick?
03:10 So clearly the risk department was just completely asleep over there at the wheel.
03:14 But yeah, there's some thoughts as well on the money that's been kind of coming and
03:17 going.
03:18 Speaking of money movement and big names, Credit Suisse, basically a penny stock now,
03:24 had some news this weekend.
03:25 Do you want to cover that, Evan?
03:26 Yeah.
03:27 So this is the latest update around Credit Suisse.
03:30 This just came out.
03:31 We're filming this video around 1 p.m. Eastern on Friday, March 17th.
03:35 And this came out right before this.
03:37 The CFO is saying that teams will be working over the weekend and kind of working on different
03:42 scenarios for the banks.
03:44 That's definitely something to watch there.
03:47 Credit Suisse did say they received a borrowing from the Swiss National Bank.
03:53 It was about $50 billion in Swiss francs.
03:57 And when you convert it, that's about $53 billion of loan facility to kind of protect
04:03 them in the short term.
04:05 So that will definitely be interesting to watch.
04:09 Credit Suisse has been the big name recently.
04:11 I feel like it's kind of taken over front and center stage.
04:13 It's very different than the Silicon Valley Bank and the First Republic, regional U.S.
04:18 banks.
04:19 This is a systemically important European bank.
04:22 So definitely one to watch.
04:24 And the price moves have been nothing but crazy and ridiculous over the last couple
04:28 days.
04:29 Right, Wolf?
04:30 Yeah, price action kind of speaks for itself.
04:31 First Republic has been one of the craziest movers.
04:33 You can see here on top the one day and the one week charts.
04:36 Reminder, we are recording this, like you said, at 1 p.m.
04:38 Eastern on Friday.
04:39 So we'll see how they finish out the weeks.
04:41 But on the one day right now, First Republic is down 25 percent and it's still down several
04:47 percent on the week as well after having significant moves in both directions.
04:51 If you remember last Friday, the stock fell by 50 percent, then went back up 100 percent,
04:58 then fell by another 25 percent.
04:59 So it's no stranger to big moves and those continue to happen.
05:03 Credit Suisse is seeing those as well, down over 15 percent on the week at this point,
05:07 several percent of that coming today, where banks are getting hit today and suffering
05:13 as we hear more updates on this rescue plan and how it's going to go into effect.
05:18 One more slide here to just touch on how is this affected the big names, right?
05:22 Charles Schwab, JP Morgan and others.
05:24 Well, Schwab has been a beneficiary and of course, they're seeing massive inflows into
05:28 their money market funds.
05:30 They have acquired TD, of course, they're going to be transferring over those funds
05:33 into Schwab accounts in the coming months.
05:36 So they are actually up several percent on the week, even though they're down four point
05:41 seven two percent as of the time recording this on the day to day.
05:44 They're still up several percent on the week.
05:46 There's a lot of confidence.
05:48 You don't often see things happen like we did last Friday, where Charles Schwab dropped
05:51 20 percent in a day.
05:53 Right.
05:54 That is just a nuts movement.
05:56 And it was rightfully brought back up.
05:58 Really the trigger here is, you know, CEOs coming out themselves saying, hey, I'm taking
06:02 a minute.
06:03 I'm just trading my stock, inspiring confidence in the public.
06:05 And then in JP Morgan's case, they are down on the week.
06:08 But most that did come today, they held up pretty well up till today.
06:10 They were basically flat.
06:12 So a little bit on the price action there and turning it back to you, Evan, for some
06:16 of this news from Nick Timmeros.
06:18 Yeah, so this is kind of going around a lot more of the major news from the week regarding
06:25 this whole situation.
06:26 So we are talking about the Fed's balance sheet.
06:29 For a long time, it was going down and down pretty slowly.
06:32 And we'll talk about that in a second.
06:33 But over the last week, it has shot up.
06:36 It increased by about 300 billion dollars.
06:39 And you can kind of see the breakdown from Nick Timmeros here.
06:42 He works for The Wall Street Journal.
06:43 And if there's ever a leak from the Fed, they want to say something and it's going to go
06:46 through him.
06:47 But you can see the numbers there.
06:49 And on the next side, you can really kind of see and put that into perspective of 2008
06:53 and how it is much, much larger.
06:56 This is the largest increase in overtime of the week.
06:59 Banks come 152 billion dollars at the discount window last week.
07:05 And if you look back in times before 2003, it wasn't anything like this as well.
07:11 And that was inflation, a big part of it, yes.
07:13 But still, the point is that banks are rushing to the Fed to protect themselves.
07:18 And this also goes back to that cycle you were talking about earlier, Wolf, where it
07:22 really is the deposits are going from the small banks to the big banks.
07:26 The big banks are then putting money at the Fed to protect the Fed.
07:29 And the Fed is putting the money back into the small banks to protect the small banks.
07:33 So we really do have a cycle that is interesting.
07:36 It feels like it is benefiting the big banks in the end.
07:39 We'll see on that one.
07:40 But this goes back to the balance sheet a little bit, Powell.
07:43 It increased by 300 billion dollars last week to 8.69 trillion.
07:48 Now if you look at how the Fed has been moving, they are removing stuff from the balance sheet
07:53 at less than 100 billion dollars per month or more.
07:56 And they just increased it by 300 billion dollars on the chart above.
08:01 That's definitely not the checkmark that you want to come in and see on your stuff.
08:05 That's quite the pickup right there.
08:07 Some other stuff that were happening, we did have CPI came out.
08:11 So now that was for February, which is still important data, but we got nothing of the
08:15 March banking crisis in it.
08:17 So we'll have to wait how CPI affects that.
08:20 It came in line with expectations.
08:22 And you can kind of see the categories as well.
08:25 Airlines were up about 27 percent.
08:29 And we had at the bottom there, used vehicles down 13.6 percent.
08:34 And everything in between.
08:36 Wolf, anything on this chart standing out to you?
08:39 Food at home of 10.2 percent.
08:41 Food at restaurants up less than that at 8.4 percent.
08:44 That feels a little bit weird.
08:46 Anything else on there?
08:47 Yeah, it's strange, right?
08:48 To see food at home even higher.
08:50 But you can feel it when you go to these grocery stores.
08:53 You are seeing massive increases across the board and still a pretty big increase there
08:57 in food at restaurants as well.
09:00 To see used vehicles on the bottom, if you go back several months, we had that crazy
09:04 rush of used car prices just soaring.
09:08 So it is nice to see those coming down a little bit.
09:12 The one thing that we're not seeing on here, which I'm sure is in everybody's mind, is
09:15 eggs.
09:17 What's going on with eggs, Evan?
09:18 Are those built into food at home?
09:20 Yeah, it is built into those numbers.
09:24 Eggs are up about 55 percent, 50 percent, somewhere in there.
09:27 The peak was about 70 percent year over year.
09:29 So they are starting to come down a little bit in the egg front.
09:34 But we also did have PPI came out this week, and it does definitely tell a little bit of
09:38 a different story.
09:39 It shows the producer side of it a little bit more forward looking.
09:43 But that came in at 4.6 percent.
09:46 Washer was expecting 5.4 percent.
09:47 So that's definitely something to watch as well.
09:51 And everything we are seeing here is really culminating to Jerome Powell and the Fed's
09:55 FOMC meeting next Wednesday.
09:58 Well, actually, this upcoming Wednesday, 2 p.m. Eastern, that rate hike decision will
10:03 be announced.
10:04 25 basis points or zero basis point rate hike are really kind of what's going in there and
10:09 will set the market.
10:10 And I also, with these events, you really have to wait and listen for Jerome Powell's
10:14 speech at 2.30 p.m. Eastern.
10:16 Either way, whatever he says, if we get 25 basis points, I feel like he might come in
10:21 and walk us back a little bit.
10:22 If we get zero basis point rate hike, he might do the same, but the opposite way, saying
10:27 we still have more work to do.
10:29 But that is definitely something to watch.
10:32 Everything in all these decisions, I feel like the market is waiting for Powell's decision
10:36 on rate hikes.
10:37 But yeah, I would just say on that, I do not believe that we're going to get a zero percent.
10:43 I think that they still believe that there is work to be done based on the way that the
10:47 market went this week.
10:48 I think that they are confident they could get away with at least a 25 point basis hike.
10:53 I'm not sure if you take a look at FedWatch recently, but I still think that a 50 point
10:57 basis hike is in play as well, just based on comments that Powell has made over the
11:01 past week or so, even though they weren't supposed to be making comments in a blackout
11:04 period.
11:05 But it is what it is.
11:07 At this point, I would disagree.
11:09 I think 50 basis points is off the table.
11:11 And I would say 25 is mine.
11:13 I just took a quick look at CME FedWatch tool and about 72 percent says 25 basis points.
11:19 Now also keep in mind last week it got up like 90 percent saying 50 basis points.
11:24 A lot has happened since then, but the point being this can move really quickly.
11:27 Did I cut you off?
11:28 No, you're good.
11:29 I would continue to keep an eye on all that.
11:30 I think that all makes sense.
11:31 We've summed it up pretty well.
11:33 And then just to end it off for all of our friends watching at home, we wanted to hit
11:37 you with a fun little meme here at the end from the Babylon Bee.
11:42 And I think we mean to hide the tears.
11:45 Yeah, I think they made a little bit of a fun point here, which was everybody went crazy
11:49 this weekend over so much stuff that was happening.
11:52 But the majority of retail consumers were not actually affected.
11:56 Right there, for the most part, protected by the 250,000 FDIC insurance.
12:01 And so, you know, you kind of have retail just sit on the sideline watching this all
12:05 melt down.
12:06 But, you know, not having to worry because they don't have money there in the first place.
12:10 So just a little fun to be had.
12:12 With that being said, one more time, I just want to remind everybody, if you did enjoy
12:15 this video and we tried to just keep this to the point, hit the important news, cut
12:20 through it.
12:21 You know, we didn't slash in any ads or sponsorships or anything like that.
12:24 We just appreciate anybody who watched it to go ahead and hit subscribe on the channel
12:29 that you're watching it.
12:30 Give a like to the video, maybe drop a comment.
12:32 Let us know if you have any questions.
12:34 If you thought any parts were really interesting.
12:36 Give us your prediction as well for if you think we're going to get zero, 25 or 50 basis
12:40 point rate hike.
12:41 I'm Gav Blacksburg from Wolf Financial.
12:43 That's pretty much everything that I have.
12:45 Stock Market News, you got anything else?
12:47 Nope.
12:48 Everything you said right there, agree with.
12:49 Make sure to like and subscribe and we'll catch you on the next one.