This is where what is going on reaches the level of INSANITY. Charles Schwab shares drop 12% even as the firm defends financial position https://www.cnbc.com/2023/03/13/cha...y-ever-as-fears-of-banking-crisis-deepen.html (BOLD is my opinion OR what I consider important content) "Key Points Charles Schwab shares cut steep losses on Monday as the financial institution defended its portfolio. Schwab was taking hits along with other financial firms with massive bond holdings of longer maturities. Schwab in its update sought to reiterate that it has plenty of access to liquidity and a low loan-to-deposit ratio. "Schwab shares fell on Monday even as the financial institution defended its portfolio, easing fears of a banking crisis in the aftermath of tech-focused Silicon Valley Bank’s and crypto-related Signature Bank’s collapses. The Westlake, Texas-based financial company closed the session 11.6% lower after dropping as much as 23.3% earlier. The stock was at one point on track for its worst one-day sell-off ever. Schwab was taking hits along with other financial firms with massive bond holdings of longer maturities. The fear is that these firms, like Silicon Valley Bank, would need to sell these holdings early at large losses in order to cover deposit withdrawals. But Schwab in its update sought to reiterate that it has plenty of access to liquidity and a low loan-to-deposit ratio. “Focusing attention on unrealized losses within HTM (Held-to-Maturity portfolio) has two logical flaws,” Schwab said. “First, those securities will mature at par, and given our significant access to other sources of liquidity there is very little chance that we’d need to sell them prior to maturity (as the name implies).” “Second, by looking at unrealized losses among HTM securities, but not doing the same for traditional banks’ loan portfolios, the analysis penalizes firms like Schwab that in fact have a higher quality, more liquid, and more transparent balance sheet,” the firm added. Schwab also noted that more than 80% of its total bank deposits fall within the insurance limits of the Federal Deposit Insurance Corp., adding it has “access to significant liquidity” and its business continues to “perform exceptionally well.” ‘Compelling entry point’? Schwab is the eighth-biggest U.S. bank by assets with $7.05 trillion in client assets and 33.8 million active brokerage accounts at the end of 2022. Because of its retail brokerage deposit model with ample liquidity, some Wall Street analysts think it won’t face a run like SVB did. “Due to robust supplemental liquidity sources, we think it is very unlikely that SCHW will ever need to sell HTM securities to meet deposit withdrawal requests,” Richard Repetto of Piper Sandler said in a note Monday. The analyst maintained his overweight rating. Meanwhile, Citi analyst Christopher Allen upgraded Schwab to buy from neutral, saying that the company’s shares have limited risk of deposit flight risk and current valuation levels present a “compelling entry point.” Schwab’s shares are down more than 37% in 2023, off 44% from their 52-week high. SVB’s collapse marked the largest U.S. banking failure since the 2008 financial crisis — and the second-biggest ever. Banking regulators rushed to backstop depositors with money at SVB and now shattered Signature Bank, seeking to ease systemic contagion fears. First Republic Bank saw a more severe sell-off on Monday, down more than 70%, after it said Sunday it had received additional liquidity from the Federal Reserve and JPMorgan Chase.' MY COMMENT Earlier today there was definately some nice buys to do short to medium term trades. For me......I dont invest in that way and am NOT a trader so it was not something I was interested in. For others....that are traders or have some small amount of their portfolio that they trade.........there are probably some great bargains out there right now......that with a HIGH level of analysis and evaluation......could be very profitable. I prefer to simply hold as usual during this sort of short term event.....and let the longer term erase that it even happened.
Oh, how quickly one can fall out of favor.... Silicon Valley Bank parent, CEO, CFO are sued by shareholders for fraud (Reuters) (Reuters) -SVB Financial Group ( SIVB ) and two top executives were sued on Monday by shareholders who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit, which failed last week, "particularly susceptible" to a bank run. The proposed class action against SVB, Chief Executive Greg Becker and Chief Financial Officer Daniel Beck was filed in the federal court in San Jose, California. It appeared to be the first of many likely lawsuits over the demise of Silicon Valley Bank, which U.S. regulators seized on March 10 following a surge of deposit withdrawals. SVB had surprised the market two days earlier by disclosing a $1.8 billion after-tax loss from investment sales and that it planned to raise capital, as it scrambled to meet redemption requests. Silicon Valley Bank had an estimated $209 billion of assets and $175.4 billion of deposits before its collapse, in the largest U.S. bank failure since the 2008 financial crisis. Its collapse has sparked fears of contagion among other lenders that also cater to wealthy clients, including technology start-ups and venture capital-backed companies, as well as large regional banks. In Monday's lawsuit, shareholders led by Chandra Vanipenta said Santa Clara, California-based SVB failed to disclose how rising interest rates would undermine its business model, and leave it worse off than banks with different client bases. The lawsuit seeks unspecified damages for SVB investors between June 16, 2021 and March 10, 2023. SVB said on Monday it will explore strategic alternatives for what remains of the company, now shorn of its main banking business. The case is Vanipenta v SVB Financial Group ( SIVB ) et al, U.S. District Court, Northern District of California, No. 23-01097.
Since the CPI is once again being chatted about. Here is a chart showing the inflation rate over a period of time. I find it a more simplified way of the big picture versus the microscopic view of small bits of time and the constant agonizing over small increments. Of course I realize the month to month is watched closely and some of the reasons for doing so, but sometimes stepping back with a wider view can offer some perspective. Inflation is still hanging around, like we didn't realize this already. I find it odd/comical that they make such a giant deal out of every report. Do they or anyone believe that one of these reports is just going to pop up and inflation is going to be dramatically lower? Inflationary environments simply do not work that way. DATE VALUE February 28, 2023 6.04% January 31, 2023 6.41% December 31, 2022 6.45% November 30, 2022 7.11% October 31, 2022 7.75% September 30, 2022 8.20% August 31, 2022 8.26% July 31, 2022 8.52% June 30, 2022 9.06% May 31, 2022 8.58% April 30, 2022 8.26% March 31, 2022 8.54% February 28, 2022 7.87% January 31, 2022 7.48%
Looks like a good day in the markets with inflation coming in right in line with expectations......6%. It is amazing that the FED has wasted SEVEN rate hikes with little to no impact on the rate of inflation. They really dont know what they are doing....in the current environment. They....the FED....constantly take every opportunity to TRASH the markets. Who they should be TRASHING is government spending. Everything they are doing is totally undermined by the constant government spending and stimulous being pumped into the economy.
I like this little article. Not just SVB. There have been 563 bank failures since 2000. https://yarn.pranshum.com/banks (BOLD is my opinion OR what I consider important content) One way to measure the magnitude of a bank's failure is by the amount of assets the bank held. By that measure, SVB's collapse is the second largest American bank failure of all time, and the largest since 2008. The vast majority of failures since 2000 have been smaller regional banks. Small banks can be more susceptible to failure. Their assets are usually more concentrated and they don't have the same access to funding as larger banks. When customers rush to withdraw their money en-masse, a bank needs to sell its assets or raise funding to enable the withdrawals. When a bank can't meet obligations, such as withdrawals by customers, regulators step in to shut down the bank. This sort of bank failure is reasonably common; SVB is the 562nd failure since Oct 2000. Periods of financial crises spark more bank failures, but banks fail even in "normal" times. Surprisingly, the Great Financial Crisis wasn't the worst of it. Bank failures were very common in the 1980s, with almost 30% of all banks failing. The Savings and Loans crisis of the 80s happened as the Fed aggressively raised interest rates. Rising rates lead to lower asset prices, and small banks were hit hard. After a bank failure in the US, the Federal Deposit Insurance Corporation (FDIC) steps in as the receiver of the failed bank's assets. The FDIC typically takes over the bank's operations, works to sell off its assets, and use the proceeds to repay creditors. Depositors, or account holders, are first in line amongst the creditors to get their money back. Most banks hold more assets than deposits. So in theory, depositors should always be made whole. Usually, the failed bank gets sold, assets and all, to a competitor. For account holders, when the process is smooth, nothing changes other than the logo on their local branch: even their account numbers remain the same. But for large banks, and at times of crises, the process isn't smooth. IndyMac's took 9 months. IndyMac collapsed in July 2008 during the Great Financial Crisis. At the time, it was the fourth largest bank failure of all time. FDIC Insurance kicked in immediately to protect account holders up to $100k. Account holders were able to withdraw those funds immediately. But the process of unwinding the rest of the assets, to recover funds for the accounts over $100k took time. It was hard to find willing buyers for IndyMac. Most other banks were suffering already due to the crisis. Account holders had to wait until March 2009, when the bank was sold to OneWest, to access their remaining savings. WaMu's happened overnight. Washington Mutual failed in Sept 2008, making it the largest bank failure of all time. Many had been anticipated the collapse for the months prior. The FDIC held a secret auction for the bank, before it was placed into receivership, which was won by JP Morgan Chase. After the auction, WaMu was immediately placed into receivership by the FDIC, and officially sold. Account holders didn't need to tap into the FDIC insurance, and were able to access their savings immediately. So what happens next with SVB? I'd guess that a larger bank comes in to acquire them, perhaps as soon as next week and the situation will be look like the WaMu case study. But are more banks are vulnerable to the effect of rising rates? Back in the 1980s, several banks failed during the Savings and Loans crisis, triggered by the Federal Reserve raising interest rates. SVB's collapse has echoes of the same period. MY COMMENT Just for historical context. There are some REALLY GOOD charts in this little article that I could not copy onto here.....be sure to look at them.
HERE is an investor that made a high probability trade and no doubt made some BIG BUCKS. Ron Baron bought Charles Schwab shares during Monday’s double-digit sell-off https://www.cnbc.com/2023/03/14/ron...res-during-mondays-double-digit-sell-off.html (BOLD is my opinion OR what I consider important content) "Longtime investor Ron Baron said he bought the dip in Charles Schwab during Monday’s double-digit sell-off, CNBC’s Becky Quick reported. The 79-year-old investor said he “modestly increased” his position in the financial name, seeing Monday’s pullback as a buying opportunity. He didn’t disclose how much he purchased. Baron Capital owned 7.8 million shares as of Dec. 31. The stock jumped 13% in premarket trading Tuesday. Schwab shares fell 11.6% on Monday as investors dumped the financial institution amid fears of a banking crisis in the aftermath of the collapses of tech-focused Silicon Valley Bank and crypto-related Signature Bank. The Westlake, Texas-based financial company defended its financial position, saying it has plenty of access to liquidity and a low loan-to-deposit ratio. Schwab was taking hits along with other financial firms with massive bond holdings of longer maturities." MY COMMENT A nice move for this investor. He is no doubt intimately familiar with the Schwab stock and he took advantage of a HUGE buying opportunity. BRAVO.
As we move on from the bank story.....we are back to jobs disappearing in the tech world. Meta to lay off 10,000 more workers after initial cuts in November https://www.cnbc.com/2023/03/14/meta-layoffs-10000-more-workers-to-be-cut-in-restructuring.html Google, Meta, Amazon and other tech companies have laid off more than 95,000 employees in the last year https://www.cnbc.com/2023/01/18/tec...zon-meta-others-have-cut-more-than-60000.html MY COMMENT Many of these jobs are gone for good. The tech business has been very sloppy with hiring way too many workers. In addition if some of these jobs are revived they will probably be filled outside the USA. My view is that workers in the tech business should not get complacent about having a big income and/or a job. the coming decades are not going to be pretty for white collar jobs in this country.
Of course this is the BIG STORY today. Inflation: Consumer prices rise 6% over last year in February, slowest since Sept. 2021 https://finance.yahoo.com/news/inflation-report-february-cpi-data-march-14-105141134.html (BOLD is my opinion OR what I consider important content) "Inflation showed continued signs of cooling off in February but remained stubbornly high and well above the Federal Reserve's 2% target in the year's second month, according to the latest data from the Bureau of Labor Statistics released Tuesday morning. The Consumer Price Index (CPI) revealed headline inflation rose 0.4% over last month and 6% over the prior year in February, a slowdown from January's 0.5% month-over-month increase and 6.4% annual gain. Both measures were in-line with economist expectations, according to data from Bloomberg. The 6% jump in inflation marks the slowest annual increase in consumer prices since September 2021. "Core" inflation, which strips out the more volatile costs of food and energy, rose 0.5% over the prior month in February and 5.5% over last year, marking the smallest 12-month increase since December 2021. Economists had estimated "core" inflation would rise 0.4% on a month-over-month basis and increase 5.5% compared to February 2022. "The 0.5% [month-over-month] rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely to have a bigger bearing on what happens at next week’s FOMC meeting," wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics, in a note on Tuesday. U.S. stock surged following the release of the data, and Treasury yields moved higher. Tuesday's inflation data also comes against the backdrop of the stunning collapse of Silicon Valley Bank last week, which had pared expectations for the Fed's next move with markets now pricing in a 25 basis point, or 0.25%, rate hike later this month. The energy index increased 5.2% for the 12 months ending February, while the food index increased 9.5% over the last year. The energy index dropped 0.6% from January to February, led by a 7.9% drop in the price of fuel oil. Gas prices rose 1.7% over last month in February but fell 2% from the same month last year." MY COMMENT Not that anyone cares. the banking stories have knocked a lot of the wind out of this story. I see the FED doing a 0.25% increase. I consider that a good thing and anticipate another 1-2 increases......also at 0.25%.....over the coming months. After that I expect they will just sit and wait and watch what in happening. In the end they will be between 5.5% and 6%. That is my prediction.
AND......here are the markets to start the day today. Stock market news today: Stocks, regional banks rally as CPI comes in as expected https://finance.yahoo.com/news/stock-market-news-today-live-updates-march-14-2023-112356261.html (BOLD is my opinion OR what I consider important content) "U.S. stocks rallied Tuesday morning, as crucial inflation data came in line with expectations. Regional bank stocks soared, clawing back some of their losses in the wake of the Silicon Valley Bank fallout. The S&P 500 (^GSPC) added 1.3%, while the Dow Jones Industrial Average (^DJI)advanced 1%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) increased 0.4%. Bond yields edged higher. The yield on the benchmark 10-year U.S. Treasury note ticked up to 3.6% Tuesday morning from 3.54% Monday. The front end of the yield curve, two-year yields rose 4.3%. February's Consumer Price Index (CPI) showed prices rose 6.0% in February over the last year, the smallest increase since September 2021, and in line with economist expectations. Meanwhile, core CPI, which strips out food and energy, grew 5.5%, also in-line with expectations. The data comes at a critical moment in the Federal Reserve's fight against inflation, as the collapse of Silicon Valley Bank and the ongoing ramifications have added a new wrinkle. On Wednesday, the Commerce Department will release February’s retail sales print revealing how much was spent at stores, online, and at restaurants. Meanwhile, February’s producer-price index, which measures what suppliers are charging businesses, will be out the same day. Investors continued to be glued to the latest headlines over the collapse of SVB Financial Group (SIVB) and the implications for the banking sector. Bank sentiment rebounded slightly for members of the KBW Bank index (^BKX), which had dropped nearly 12% on Tuesday. The index was up 6% in early trading Tuesday, while large-cap index members including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) all traded higher. Other regional bank stocks rallied, including First Republic Bank (FRC), which surged over 60% Tuesday morning following a record plunge on Monday. PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL), Zions Bancorporation (ZION), and Regions Financial (RF) all jumped on Tuesday. The question remains who will be a contender to scooping up SIVB’s remaining assets following the FDIC’s takeover. The FDIC was hoping to sell the bank’s assets on Sunday but instead created bank to store SVB’s deposits and announced that depositors would be made whole. Meanwhile, the market will likely be “wrestling” with the Fed’s path as it has to “weigh financial stability” vs. “inflation risks,” according to the US Market Intelligence team at JPMorgan. So far, market participants are quickly shifting their expectations over the Fed’s next move. Data from CME Group shows that over 75% of traders are expecting a 25-basis-point-rate hike at the Fed's March meeting, while nearly 25% anticipate rates unchanged, a dramatic shift from last week. Also, the Fed said it would conduct a review of the fallout of Silicon Valley Bank. The results will be publicly released by May 1, the central bank said on Monday. The review will be led by Michael Barr, the Fed vice chair for supervision. “The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” Fed Chair Jerome Powell said in a statement. In other single-stock moves, KeyCorp (KEY) advanced nearly 20% Tuesday after tumbling in the previous trading session. Credit Suisse Group AG (CS) shares remained down, while Charles Schwab (SCHW) stock moved higher. Shares of GitLab (GTLB) plummeted over 30% after the company reported a weaker revenue forecast for the fiscal first quarter and year, missing analysts’ expectations. On the earnings front, FedEx (FDX), Adobe (ADBE), Dollar General (DG), and Lennar (LEN) will report quarterly results this week." MY COMMENT One good thing about the SVB event.....it was a needed SLAP IN THE FACE for the markets. It quickly eliminated the OBSESSIVE focus that market had going on with the obscure and mostly irrelevant economic data and treasury rates that we have been seeing for a couple of weeks. The markets seem to be coming out of the banking event with a little more of a BIG PICTURE focus......at least for a day or two. It also helped to hammer down the 2 year and ten year Treasury rates.. Another good thing for the markets short term. Investors were getting way too OBSESSIVE over the short term data and a good dose of FEAR and PANIC was a nice distraction. SVB also took a lot of the wind out of the sails of the FED....another good thing since they will now be much more MUTE and reasonable moving into their last 2-3 rate hikes.
I see that we are STILL kicking ass today in the averages. No doubt there were probably a lot of people that BAILED out of the markets a day or two ago in PANIC. I doubt that many people on here did that.......since we are a self selected community of more informed investors. All in all around here.....the discussion was rational and educational.
Yes agree. I actually added some contributions yesterday, but only after a complete analysis and shaking the magic 8 ball until I got the answer I wanted.
A BIG gain for me today......in spite of having two stocks DOWN today.......HD and HON. The other eight were ALL nicely positive. I also got in a beat on the SP500 by 0.50%. Pretty good for an inflation report day today.
I just got back from Bastrop, Tx. A small town on the Colorado River about 25 miles SE from Austin. Elon Musk has bought a lot of acreage there about 15 miles from the TESLA plant at the intersection of highways 130 and 71. He has facilities for SpaceX and the Boring Co located in Bastrop and plans to add to both. He is locating all of his facilities within about 15 miles of each other and has apparently bought thousands of acres of land on the NW side (Austin side) of Bastrop. It is very rural out there. Bastrop is a small historic town. It appears that both SpaceX and Boring Co will be primarily located in Bastrop.......although the SpaceX launch site is located in South Texas. He is also adding another HUGE building at the TESLA site which is now under construction.
HERE is how the markets did today for anyone that was out of touch. Dow closes more than 300 points higher, snaps 5-day losing streak as bank shares rebound: Live updates https://www.cnbc.com/2023/03/13/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "U.S. stocks rose Tuesday as investors bet the risk of contagion following the closures of Silicon Valley Bank and Signature Bank has been contained. The Dow Jones Industrial Average ended up 336.26 points, or 1.06%, at 32,155.40, snapping a five-day losing streak. The S&P 500 added 1.68% to close at 3,920.56. The Nasdaq Composite climbed 2.14% to end at 11,428.15. Investors’ enthusiasm for buying bank stocks lost some steam in the afternoon. But many still notched gains, marking a turn from two sessions of deep selloffs as investors became increasingly confident that those names wouldn’t suffer the same fate as Silicon Valley and Signature. Regulators said Sunday that they created a plan to backstop all depositors in the two banks. The SPDR S&P Regional Banking ETF (KRE) closed the session up 2%, regaining some ground following a 12% decline the day prior. Shares of First Republic Bank popped nearly 27% after closing down nearly 62% on Monday. KeyCorp shares added almost 7% in a relief bounce following a 27% slide. Traders are looking ahead to what’s next for the banking sector in light of the recent turmoil. The backstop announcement “changed the sentiment, or shifted the tide, to some extent,” said Charlie Ripley, vice president of portfolio management at Allianz Investment Management. “It starts with the immediate knee-jerk reaction, and then it takes some time to kind to kind of dig into the details and understand the real risks and understand where the true exposures are.” The rally extended beyond financials, with all of the 11 S&P 500 sectors rising in Tuesday’s session. Stocks gave up some gains in the afternoon as investors responded to news of a Russian fighter jet downing a U.S. drone over the Black Sea. Traders also focused on the latest U.S. inflation data. The consumer price index rose 0.4% in February from January, matching the consensus estimate of economists polled by Dow Jones. The annualized increase of 6% was also in line with economists’ expectations. So-called “core” CPI, which removed volatile food and energy prices, grew from the prior month slightly more than economists expected at 0.5%, while the year-over-year increase of 5.5% came in line with what they anticipated. “It’s a sigh-of-relief rally, we’ll call it, given the lack of any major surprises in CPI and then just the lack of any surprises overnight in the banking space,” said Adam Turnquist, chief technical strategist at LPL Financial. “The market’s welcoming that.” MY COMMENT A killer day for investors in stocks and funds. We now move on to the rest of the week with some pretty good wind in our sails. THE SUN IS SHINING AGAIN.
Not much else to say at the moment since the media is STILL focused on banks, banks, banks, banks. They are determined to wring every single "click" out of this issue. In the end it has proved to be a BONEHEADED move by management at SVB in managing their investments. In other words simple human error.....causing an old fashioned bank run. This is OLD NEWS and I have moved on.
Here is some good info. ‘Very important for your cash.’ Here’s what accounts are, and are not, insured by the FDIC https://www.marketwatch.com/picks/v...ot-insured-by-the-fdic-3f2af098?siteid=yhoof2 (BOLD is my opinion OR what I consider important content) "Depositors at Silicon Valley Bank watched this week as their bank’s market value plummeted more than 60%, and it was later shuttered by regulators. Meanwhile, regional bank stocks from the likes of KeyCorp, Truist Financial, Fifth Third Bancorp, and Citizens Financial Group also tumbled. President Biden assured account holders and business owners in a statement that they were shielded. “All customers who had deposits in these banks can rest assured … they’ll be protected and they’ll have access to their money as of today.” But what happens if your bank shuts down? Are you protected? By now, it’s widely known that the Federal Deposit Insurance Corporation (FDIC) insures many bank accounts with balances of up to $250,000 (full details below). And with the average bank account sitting at around $41,600, according to Bankrate, it’s safe to say many Americans are covered in the event of a bank failure. “FDIC protection is very important for your cash,” says Nicholas Bunio, a certified financial planner with Retirement Wealth Advisors, adding that “principal protection is key in order to pay your bills. You want confidence knowing you can get to this money quickly when needed.” What’s insured by the FDIC? When it comes to banks insured by the FDIC, depositors with certain types of accounts are covered “dollar-for-dollar, including principal and any accrued interest, through the date of the insured bank’s closing, up to the insurance limit,” according to the FDIC. The FDIC adds that “the standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.” For instance, if one depositor had multiple accounts with one FDIC-insured institution totaling $275,000, and that bank were to go the way of SVB, the government would cover all of that amount aside from the excess $25,000. (Note that deposits up to $250,000 are protected at credit unions by the NCUA (see details here)). So what types of accounts are protected? Here’s what the FDIC lists as insurable accounts (it should be said that banks must fill out the proper application forms to become FDIC insured for this protection): Checking accounts Negotiable Order of Withdrawal (NOW) accounts Savings accounts Money market deposit accounts (MMDA) Time deposits such as certificates of deposit (CDs) Cashier’s checks, money orders, and other official items issued by a bank In addition, there is also coverage for what’s known as “ownership categories,” which include some retirement accounts and benefit plans: Single accounts Certain retirement accounts – IRAs, self-directed defined contribution plans — self-directed 401(k) plans, self-directed SIMPLE IRA plans held in the form of a 401(k) plan and self-directed defined contribution profit-sharing plans — self-directed Keogh plan accounts, and section 457 deferred compensation plan accounts Joint accounts Revocable trust accounts Irrevocable trust accounts Employee benefit plan accounts Corporation/partnership/unincorporated association accounts Government accounts What isn’t insured by the FDIC? While the FDIC does insure quite a bit, there are many investments that are not protected. Here’s what is not insured: Stock investments Bond investments Mutual funds Crypto Assets Life insurance policies Annuities Municipal securities Safe deposit boxes or their contents Treasury bills, bonds or notes, which are “backed by the full faith and credit of the U.S. government,” according to the FDIC. While stocks, bonds, mutual funds and crypto holdings (unsurprisingly), are not insured by the FDIC, those held at a broker or custodian are often still insured. When it comes to those entities, Bunio says it’s critical to make sure there is some kind of protection for your money. The Securities Investor Protection Corporation (SIPC), for instance, covers a broker in the event of bankruptcy and prevents money in cash or investments from being lost during the bankruptcy proceedings. “But make no mistake, these don’t protect from investment losses, but only if the broker goes bust,” says Bunio. Some private investments like real estate and private equity, he adds “might be held at companies not covered by SIPC.” Annuities and life insurance, meanwhile, may be covered by state governments. That said, all states are different and cover different limits. Some states might be $300,000 per insurance contract, while others like Louisiana and New York, for instance, have a max aggregate benefits for all lines of insurance of up to $500,000 per person total, according to Annuity Advantage. For more on this, “it’s important to speak with your carriers and financial advisor,” Bunio says, adding that in all cases, individuals should “choose insurance companies and investment companies that are profitable, and well capitalized.” Stable value funds, like what’s in your 401(k), are investments and “are usually backed by insurance companies,” says Bunio. “These are not FDIC insured but backed by an insurance company. Again, choose a stable insurance company.” Can you be insured by more? “Even though the deposit insurance limit is $250,000, you may be able to protect much more than that without switching banks,” says Greg McBride, senior analyst at Bankrate. For example, a couple is covered by $250,000 each at one FDIC-insured bank, adding up to a total of $500,000 of protection. That same married couple “could shield $1 million if each were insured up to $250,000 and had a joint account that insured each account holder for $250,000 for a total of $500,000” and that were spread “among different banks,” McBride adds. Some banks also participate in networks known as the Certificate of Deposit Account Registry Service, or CDARS, and the Incident Command System, or ICS, which effectively expand these insurance coverage limits by spreading the liability across multiple banks. While this indeed allows for higher insurance coverage, the strategy also does this with “the convenience of dealing with just one bank,” Bunio says." MY COMMENT Anyone that holds a large amount of cash or cash equivalent in a bank should make sure their accounts are structured to get FDIC coverage on all of them. Here is a simple way to get $1,000,000 in coverage: You and your spouse each can open individual accounts at a single bank, resulting in each of you having up to $250,000 FDIC-insured. You can then also open a joint account and each has $250,000 insured in that account. Between those three accounts, you could have up to $1 million FDIC-insured at one bank.
Aaaaaand… in comes the European banks financial meltdown… Credit Suisse has been At it for awhile. Looks like the whole world needs to hit the reset button
Seems like I remember something of swirling trouble with this one a month or so back, but I can't remember exactly what it was specifically. There are some others that also seem to be living dangerously close to the edge. Whether their lending/financial positions are shaky because of practices or they are just caught up in the current fear vacuum...I don't know. Then again, as you pointed out a day or so ago, this environment is going to be challenging for banks and much different than that of the past several years. Some of them got comfortable and over extended their stay at the party or at least did not adjust early enough to the impending environment. Also, some of the practices and how they went about it....appears to have been a powder keg to begin with.
I will start with my take on the FREAK OUT over Credit Suisse......since I dont plan to do much posting on banking in the EU today. This bank has been in trouble and slowly FAILING for 1-2 years now. The FEAR MONGERING about.......OMG....a 25% drop today is way overblown. This is a $2 stock.....by my definition....nearly a penny stock. Their shares have ranged from a little over $5 to a little over $2 for the past six months. Over the past year their stock price has been steadily FALLING from a high of a little over $8. their stock price over the past year is a STEADY DOWNWARD line. I do love to watch all the human behavior......but myself.....sorry.....I really dont care about Credit Suisse. If their home country or the EU is concerned they can do something. Somehow the markets did not seem to care as this bank slowly failed over the past year or the past two years till.....suddenly.....today. Banks fail....businesses fail. They need to go away and disappear. Propping up failing and incompetent and perhaps even fraudulent or criminal businesses....is a waste of resources and simply kicks the can down the road. I am.......really.....not concerned about this stuff and I......really.....dont care. It is just another little short term market freak out.....news driven of course......to sit through and ignore. Will it become more than that? Probably not....but who can say. If it does I will think about it when it happens.
Some small good news today. Wholesale prices post unexpected decline of 0.1% in February; retail sales fall https://www.cnbc.com/2023/03/15/ppi-february-2023-.html (BOLD is my opinion OR what I consider important content) "Key Points The producer price index fell 0.1% for February, below the estimate for a 0.3% increase. Retail sales declined 0.4% for the month, in line with expectations and pulled lower by drops in auto sales as well as bar and restaurant receipts. Finally, the Empire State Manufacturing survey for March, a gauge of activity in the New York region, posted a -24.6 reading, down 19 points from a month ago. Wholesale prices posted an unexpected decline in February, providing some encouraging news on inflation as the Federal Reserve weighs its next move on interest rates. The producer price index fell 0.1% for the month, against the Dow Jones estimate for a 0.3% increase and compared with a 0.3% gain in January, the Labor Department reported Wednesday. On a 12-month basis, the index increased 4.6%, well below the downwardly revised 5.7% level from the previous month. Excluding food, energy and trade, the index rose 0.2%, down from the 0.5% gain in January. On an annual basis, that reading was up 4.4%, the same as in January. Excluding food and energy, PPI was flat, vs. the estimate for a 0.4% gain. A 0.2% drop in goods prices helped fuel the headline decrease, representing a sharp pullback from the 1.2% surge in January. Final demand foods tumbled 2.2%, while energy declined 0.2%. Most of the drop in goods stemmed from a 36.1% plunge in chicken egg prices, which had soared over the past year. In a separate important data point Wednesday, the Commerce Department reported that retail sales fell 0.4% in February, according to data that is not adjusted for inflation. The total was in line with expectations and dragged down by a 1.8% slide in auto sales. Food services and drinking establishments, which had seen strong receipts over the past year, fell 2.2% for the month, though they were still up 15.3% on an annual basis. Furniture and home furnishing stores were off 2.5%, while miscellaneous retailers saw a 1.8% decline. Also, the Empire State Manufacturing survey for March, a gauge of activity in the New York region, posted a -24.6 reading, down 19 points from a month ago. The reading represents the percentage difference between companies reporting expansion versus contraction. The Dow Jones estimate was for a -7.8 level. The big drop came from precipitous decreases in new orders and shipments as well as inventories. Hiring edged lower as did the prices index. The news comes a day after the Labor Department said consumer prices rose another 0.4% in February, bringing the annual inflation rate to 6%. Though that’s well above the 2% level the Fed considers ideal, the 12-month CPI rate was the lowest since September 2021. Despite the downward drift in the annual inflation rate, and recent banking industry turmoil, financial markets still expect the Federal Reserve to increase interest rates when it meets next week. Market pricing is pointing to a 0.25 percentage point hike in the federal funds rate, taking the benchmark borrowing level to a target range of 4.75%-5%. However, futures contracts Wednesday morning also implied a peak, or terminal, rate of about 4.77%, indicating that the March increase would be the last before the Fed pivots away from a tightening regime that began a year ago." MY COMMENT This is all good data for the FED. More proof of the economy slowly cooling and inflation slowly improving. Another indicator for a small FED rate hike. This data is also a good indicator of the NORMALIZATION of the economy finally happening post pandemic.
