Charles Schwab Should Have Enough Equity and Liquidity To Ride Out Current Storm | Morningstar Charles Schwab’s SCHW stock price decreased 12.77% on March 9, as concerns rippled across a large swath of the financial sector due to an announcement from Silicon Valley Bank. Silicon Valley Bank announced that it sold substantially all of its available-for-sale securities portfolio, was booking a $1.8 billion after-tax loss related to the sale, and that it was raising equity capital. Many banks and companies with related banking entities, such as Charles Schwab, also have a material amount of fixed income securities on their balance sheet with unrealized losses, as recently rising interest rates have decreased the value of fixed income securities. Based on our initial analysis, we don’t have concerns over wide-moat Charles Schwab’s liquidity or capital levels, don’t plan to make a material change to our $87 fair value estimate, and assess shares are undervalued. At the end of 2022, Charles Schwab had $36.6 billion of shareholders’ equity and a tier 1 leverage ratio of 7.2%, which are fairly good. The company has an internal target of 6.5% to 6.75% for its tier 1 leverage ratio and the regulatory minimum is 4%. Included in the company’s shareholders’ equity is about $28 billion of unrealized losses, so shareholders’ equity would be upward of $60 billion without the unrealized losses. Based on how bank regulatory capital ratios are calculated for Schwab, the 7.2% tier 1 leverage ratio currently excludes the unrealized losses. Schwab will continue to be able to exclude these losses until its balance sheet is consistently above $700 billion, and its balance sheet was around $550 billion at the end of the fourth quarter. The value of Schwab’s securities portfolio should increase over the medium term with the unrealized losses significantly reducing. As long as Schwab holds the securities until they mature, it will realize the full value of the securities. The unrealized losses from rising interest rates are different from losses related to credit issues.
Looks like yesterday and today were simply "priming" for next week. I don't feel like the market really cares about what's going to happen with the next rate increase--it doesn't matter whether it's .25, .50 or even .75. It's all "priced in" [I'm referring to just the next upcoming one]. But I'm not an expert on that. Just on feeling, it feels like the price is simply jumping between SPX 3800 to 4100. The decision as to which it wants to go to break out of that "range" is not set...yet. Yesterday and today were simply getting the price to be at a nice cheaper rate for a bounce for next week. It could test 3800 next week, early on, but I don't know about that. But, I'm thinking, even if that were to happen, the price shall rally next week. This is simply saying things aloud from a gut level. I am not referring to my price action theory, etc.---too lazy right now to want to do that.
FLASHBACK: Cramer PUMPS Silicon Valley Bank Stock 1 Month Before FAILURE | Breaking Points - YouTube Just found this, looks like Jim Cramer was bullish on SIVB not too long ago
https://finance.yahoo.com/news/york-state-regulators-close-signature-223852687.html Regulators close Signature bank, announce plan to make depositors whole
Gold and Silver strong up days, Bitcoin too. In light of banks being liquidated due to holding crypto, investors are seeking haven in crypto. /s
Most of those banks referenced yesterday that had continuous halts on the way down....same this morning, but in the opposite direction...up. Looks like they are recovering nicely, so far anyway.
The funny thing about yesterday is the VIX hit 30 and in that environment of fear, the ARK funds were up big. That is what people were buying up, along with biotech stocks which traditionally have 0 revenues. Semiconductors continue to have a strong month.
Yep too bad I was a little scared to play them Some people made some serious money on names like WAL and FRC for sure
So, 3810 last week to 3940+ this week and now at 3850. So, the range bound behavior continues. But, I don't mind entering some long here at 3850
I'd actually like it if the SPX could collapse non-above 3800...for entering long...but we'll see what happens--as I said, I believe it's still range bound and I prefer to manage risk and profit take in this environment
