Tema: PPCC-Pisitófilos Creditófagos-Invierno 2022

[el malo]

Y hablando de moral hazard, responsabilidades y consecuencias ¿qué hacemos con KPMG, que pasó la auditoría de SVB con nota? ¿por qué siguen teniendo licencia para operar? ¿qué credibilidad tienen?
Porque un banco que es sólido hoy no puede irse al garete en menos de 2 meses.

[senslev]

https://www.linkedin.com/comm/pulse/what-i-think-silicon-valley-bank-situation-ray-dalio

What I Think About the Silicon Valley Bank Situation

Ray DalioHaz clic aquí para ver el perfil de Ray Dalio
Ray Dalio
Founder, CIO Mentor, and Member of the Bridgewater Board
Fecha de publicación: 14 de mar de 2023

I've been doing an AMA on social media and getting a lot of great questions I've been sharing here. Here are some thoughts I had in response to a question about Silicon Valley Bank.

I think that it is a very classic event in the very classic bubble-bursting part of the short-term debt cycle (which lasts about seven years, give or take about three) in which the tight money to curtail credit growth and inflation leads to a self-reinforcing debt-credit contraction that takes place via a domino-falling-like contagion process that continues until central banks create easy money that negates the debt-credit contraction, thus producing more new credit and debt, which creates the seeds for the next big debt problem until these short-term cycles build up the debt assets and liabilities to the point that they are unsustainable and the whole thing collapses in a debt restructuring and debt monetization (which typically happens about once every 75 years, give or take about 25 years).

While in different cycles the sectors that are in bubbles are different (i.e., in 2008 it was heavily in residential real estate and now it’s in negative-cash-flow venture and private equity companies as well as commercial real estate companies that can’t take the hit of higher interest rates and tighter money), the self-reinforcing contraction dynamic is the same. Based on my understanding of this dynamic and what is now happening (which line up), this bank failure is a “canary in the coal mine” early-sign dynamic that will have knock-on effects in the venture world and well beyond it.

To put this in context and think about how this will likely play out, I find it useful to go to my archetypical debt cycles dynamic that I cover more comprehensively in my book Principles for Navigating Big Debt Crises than I can cover here. I am linking to the PDF version available for free here and will summarize in this Observations.

How the Machine Works

Because one man’s debts are another man’s assets and most people are levered long (i.e., they are holding assets financed by debt), when interest rates rise and money becomes tight, assets fall in value, which hurts debtors, creditors, asset holders, and financial intermediaries, which causes a self-reinforcing contraction and contagion because when money is needed, other assets are sold and when creditors are hurt, they curtail lending. Those financial intermediaries (most importantly banks) that are most leveraged long to the asset bubble that is bursting are particularly affected. It is classic that coming out of an extended period of very low real interest rates and abundant credit, there is an enormous amount of leveraged long holding of assets that are going down due to higher interest rates and tighter money, which is producing this classic dynamic of dominos falling.

Because a) we are in the early stage of the contraction phase of this cycle and b) the amount of leveraged long holding of assets is large, it is likely that this bank failure will be followed by many more problems before the contraction phase of the cycle runs its course. Before the contraction phase of the cycle ends, history and logic have shown that there will be 1) forced sales of assets at very low prices that require big losses to be reported and cause further contractions in lending, 2) equity dilution, i.e., selling at prices that are at significant discounts to conservative estimates of the present values of their future cash flows, 3) attractive acquisition prices for strong synergistic companies to buy distressed ones, 4) credit problems being a negative for markets and the economy, and eventually 5) the Fed easing and bank regulators providing money, credit, and guarantees because the problem becomes system-threatening. At this turning point into the contraction, it is too early for the Fed to ease, but I will be watching closely what it does as the trade-offs become tough. Looking backward rather than ahead, tightening rather than easing seems appropriate. Looking ahead, it’s likely that it won’t be long before the problems pick up, which will eventually lead the Fed and bank regulators to act in a protective way. So I think we are approaching the turning point from the strong tightening phase into the contraction phase of the short-term credit/debt cycle.

Now that we’ve looked at the archetypical cycle and what will likely happen, let’s look beyond the immediate problem to what I believe will eventually be the much bigger longer-term problem.

How do these cycles go? When debts are in a country’s own currency, debt crises and the debt contagions that result from them can and will eventually be contained by central banks creating enough money and credit to fill in the funding gaps. For example, in this case, with the Fed guaranteeing all depositors against loss and indicating that it will go beyond that to protect others, not only did it come up with more credit, but it also signaled that it would probably act similarly in other cases.

That begs the question: at what cost is money and credit being created?

That brings us to the much bigger longer-term problem, which is that the US central government has large outstanding debts and is selling more debt than there is demand for, and central banks are monetizing the debt. Controlling the problems is financed by the central bank printing money and buying the debt. With debt assets and debt liabilities so large, it is very difficult to keep real interest rates high enough for the lender-creditors without making them too high for the borrower-debtors.

The really big problem will come when there is too much of this money printing to provide creditors with adequate real returns, which will lead them to start selling their debt assets, which will substantially worsen the supply/demand balance. With the enormous size of US debt assets and liabilities outstanding, plus lots more to come, there is a high risk that the supply of government debt will be much larger than the demand for it, which will cause too-high real interest rates for the markets and the economy, leading to debt and economic pain that will eventually lead the Federal Reserve to switch from raising interest rates and selling debt (QT) to lowering interest rates and buying debt (QE). This will lead real rates to fall, which will lead to a high risk that there will be more selling of debt assets because of the bad real returns that these debt assets are providing. While people are now not thinking about the next interest rate cut and QE of the Fed, we should because the timing of these is probably less than about a year away and that will have big effects. I think that there is a good chance that it will produce a big decline in the value of money. So, it looks likely to me that the financial/economic picture over the next year or two will be tough. 

While in this Observations I have been focusing on the money/credit/debt/market/economic dynamic, let’s remember that it is being accompanied by the internal conflict dynamic (most importantly the 2024 US elections that are coming up) and the external conflict dynamic (most importantly the US-China conflict and the US-NATO-Russia conflict, though others like that with Iran are notable). All of these conflicts affect each other. This setup implies to me that there is a significant risk that there will be 1) bad financial and economic conditions at a time of 2) bad internal conflict and 3) bad international conflicts—with the world being leveraged long. In a nutshell, it looks to me like the next two years will be a very risky time.

Please understand that I’m not sure of anything. That’s why I believe that the key to good investing lies in achieving balance of uncorrelated good return streams so that one’s portfolio has little or no bias to go up and down as conditions get better and worse. As I have stated repeatedly, this risk reduction can be done without reducing expected returns. So that’s what I think and what I recommend doing.

[Derby]

https://www.reuters.com/markets/record-fdic-cash-draw-svb-may-affect-debt-ceiling-x-date-2023-03-14/

Record FDIC cash draw for SVB may affect debt ceiling 'X date'

March 14 (Reuters) - The Federal Deposit Insurance Corp made a record withdrawal of $40 billion on Friday as it scrambled for resources to take over failing Silicon Valley Bank that same day, government data shows, a development that could have implications for how soon the Treasury runs out of operating room under the debt ceiling.

The FDIC withdrawal from the Treasury General Account was many times larger than any previous largest draws, according to data from the Daily Treasury Statement for March 10 released late on Monday.

Combined with about $13 billion of other federal agency withdrawals on Friday, that left Treasury with just over $208 billion in operating funds at the TGA, which is held at the Federal Reserve. That was down by more than $100 billion from Wednesday's TGA balance, reported by the Fed on Thursday.

"The big news ... was a $40 billion cash withdrawal by the FDIC, which dragged the Treasury’s cash balance far below our day-ahead forecast," analysts at Wrightson ICAP said Tuesday.

Should the Treasury not be able to replace that, the "outflow would significantly increase the risk that the 'X-date' might arrive in June rather than July," they said.

The so-called "X-date" is the point at which the Treasury exhausts the "extraordinary measures" it has been taking recently to keep paying federal government obligations while Congress and the White House wrangle over whether to lift the $31.4 trillion limit on the U.S. debt.(...)

[Derby]

https://www.marketwatch.com/story/mark-zuckerberg-warns-that-new-economic-reality-could-continue-for-years-as-meta-makes-more-layoffs-5cc8eb3b

Mark Zuckerberg warns that ‘new economic reality’ could continue for years as Meta makes more layoffs

Higher interest rates, geopolitical unrest and increased regulation could all continue to drive tough climate for companies, Meta CEO says

‘At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years.’ — Meta Chief Executive Mark Zuckerberg

[muyuu]

SVB está pidiendo a sus clientes que metan pasta en sus cuentas 

[Derby]

https://www.ft.com/content/2b580939-a4b6-48d2-8eb6-629b4cb1e06c

Large US banks inundated with new depositors as smaller lenders face turmoil

Failure of Silicon Valley Bank prompts flight to likes of JPMorgan and Citi

(...) However depositors are still attempting to move balances into larger banks such as JPMorgan, Citi and Bank of America, as well as money market funds, the people said. That is especially the case when balances exceed the $250,000 threshold that is guaranteed by federal insurance.

[Benzino Napaloni]

https://www.marketwatch.com/story/mark-zuckerberg-warns-that-new-economic-reality-could-continue-for-years-as-meta-makes-more-layoffs-5cc8eb3b

Mark Zuckerberg warns that ‘new economic reality’ could continue for years as Meta makes more layoffs

Higher interest rates, geopolitical unrest and increased regulation could all continue to drive tough climate for companies, Meta CEO says

‘At this point, I think we should prepare ourselves for the possibility that this new economic reality will continue for many years.’ — Meta Chief Executive Mark Zuckerberg

Buena parte de los despedidos de las tech, especialmente los técnicos, en un mes o menos ya tenían otra cosa.

A medida que el invierno demográfico avance, y que los técnicos vean que hay vida más allá de las FAANG y sus toboganes en las oficinas, verán qué risa cuando intenten contratar otra vez y no puedan.

[Vipamo]

https://cincodias.elpais.com/mercados-financieros/2023-03-14/el-euribor-gira-bruscamente-a-la-baja-por-el-posible-volantazo-en-los-tipos-de-interes.html

[newclo]

https://www.ft.com/content/2b580939-a4b6-48d2-8eb6-629b4cb1e06c

Large US banks inundated with new depositors as smaller lenders face turmoil

Failure of Silicon Valley Bank prompts flight to likes of JPMorgan and Citi

(...) However depositors are still attempting to move balances into larger banks such as JPMorgan, Citi and Bank of America, as well as money market funds, the people said. That is especially the case when balances exceed the $250,000 threshold that is guaranteed by federal insurance.

Pez grande come al chico y ya. Si a caso ya le da una ayuda la FED para hacer la digestión.

Genial resumen Senslev; ahora han añadido lo de controlar la ignición de las bolsas fabricando News ( o eventos...); las balas y los periódicos como una herramienta más:

Último minuto - Financial Markets
El mercado recorta las ganancias tras el incidente entre el dron de EEUU y el avión de combate ruso.

El S&P cae 30 puntos en pocos minutos.

[siempretarde]

Esto no hay cuerpo que pueda aguantarlo, de echo no los llamariamos bancos, sino almohadas colchones, pero en fin, son los "tiempos modernos" online ...

https://www.youtube.com/watch?v=byS1r7_52fc
Muy bueno en la wikipedia (Argumento)
https://es.wikipedia.org/wiki/Tiempos_modernos

Y los BC´s desde hace muchos años diciendo que habia que hacer una mayor concentracion bancaria, ya que los medianos podrian tener dificultades.

@ PastorMesetario casi seguro que le meten un segundo impulso bajista. La de destrozos que tienen que haber hecho.

https://www.reuters.com/markets/record-fdic-cash-draw-svb-may-affect-debt-ceiling-x-date-2023-03-14/

Record FDIC cash draw for SVB may affect debt ceiling 'X date'

March 14 (Reuters) - The Federal Deposit Insurance Corp made a record withdrawal of $40 billion on Friday as it scrambled for resources to take over failing Silicon Valley Bank that same day, government data shows, a development that could have implications for how soon the Treasury runs out of operating room under the debt ceiling.

The FDIC withdrawal from the Treasury General Account was many times larger than any previous largest draws, according to data from the Daily Treasury Statement for March 10 released late on Monday.

Combined with about $13 billion of other federal agency withdrawals on Friday, that left Treasury with just over $208 billion in operating funds at the TGA, which is held at the Federal Reserve. That was down by more than $100 billion from Wednesday's TGA balance, reported by the Fed on Thursday.

"The big news ... was a $40 billion cash withdrawal by the FDIC, which dragged the Treasury’s cash balance far below our day-ahead forecast," analysts at Wrightson ICAP said Tuesday.

Should the Treasury not be able to replace that, the "outflow would significantly increase the risk that the 'X-date' might arrive in June rather than July," they said.

The so-called "X-date" is the point at which the Treasury exhausts the "extraordinary measures" it has been taking recently to keep paying federal government obligations while Congress and the White House wrangle over whether to lift the $31.4 trillion limit on the U.S. debt.(...)

[siempretarde]

Este Wanderer, es realmente bueno, casi te perdono lo de facha

https://www.eldiario.es/opinion/zona-critica/jovenes-pasa_129_10026777.html

Jóvenes, ¿qué os pasa?

¿Sois el canario en la mina, estáis tirando de la palanca de emergencia y no terminamos de tomárnoslo en serio aunque la alarma sea cada vez más estridente? ¿Quizás deberíamos preguntaros y escucharos más?

Vomitivo. ¿Cómo que qué les pasa?

Perdón si se ha contestado ya. Voy por orden de lectura.

Les pasa que les caen hostias por todos lados y los que se supone que están ahí para ayudarles o para abrirles el camino son los que más les putean.

No tienen casa, no tienen trabajo, el que tiene trabajo tiene un sueldo de mierda, la educación que reciben es una basura, tienen cero tolerancia a la frustración porque tanto sus familias como el sistema educativo tiraron la toalla hace tiempo. Encima ven como sus impuestos van para pagar pensiones y ayudas a jubilados que no lo necesitan, o a inmigrantes que nada más llegar tienen más derechos que ellos.

Los jóvenes que son recordados a diario que no van a tener pension porque el sistema está quebrado, mientras ven cómo a los actuales pensionistas les meten una subida que ellos ni sueñan en sus sueldos.

Los jóvenes que fueron encerrados y culpabilizados durante el covid, y a los que se les señalaba por insolidarios y por la muerte del abuelo.

Los jóvenes que son bombardeados desde los medios y las redes sociales con una nueva amenaza cada día, que si la guerra, que si el desastre ecológico, que si un nuevo virus, que si escasez de alimentos, que si van a tener que comer grillos, que si van a tener que implantarse un chip, que si les van a quitar el dinero, que si.. que si.. que si.. normal que vean el mundo como un lugar hostil y sin salida, cuando les están repitiendo todo el día que miedo, miedo, miedo.

Y encima tener que aguantar que "ej que los jóvenes lo queréis todo" "ej que sólo queréis viajar, y Netflix, y móvil nuevo", "ej que no queréis trabajar" (mientras les ofrecen trabajos y sueldos de mierda).

Si algún día los jóvenes reaccionan de verdad esto va a ser una guerra civil.

Edito después de releerme el artículo: el tono condescendiente del articulista me cabrea. Ese ofrecimiento de ayuda al final (que parece más una bofetada en la cara de los jóvenes que otra cosa..) me irrita. Los jóvenes NO necesitan ayuda, necesitan que los tapones se quiten de enmedio y dejen de acaparar la riqueza. Miren los gráficos en el artículo de abajo:

https://www.65ymas.com/economia/economia-familiar/poderio-senior-ricos-en-espana-tienen-mas-75-anos_42301_102.html

¿Que qué les pasa a los jóvenes? Esto:

Y añadiría que si encima son varones, son todos unos potenciales violadores y/o maltratadores de mujeres y que tienen la culpa de lo que hicieron todos sus antepasados.
Y si son chicas, tienen que tener muchísimo miedo de los anteriores, y que no se fíen de nadie.

Deshumaniza, que algo queda, es un lema que llevan grabado a fuego los woke, que además se creen que la educación es su coto privado particular (por desgracia, muy a menudo es cierto, pero ni mucho menos tanto como desearían).

Y deshumanizar es un recurso que no se debe usar, y menos a la ligera (de eso, los nazis sabían un rato), y por ello en mi anterior mensaje insistía en desligar los comportamientos colectivos de los individuales.

[Benzino Napaloni]

El supertitular 

Advertencia muy seria: los economistas alertan de qué pasará si el Euríbor llega al 5%

Miles de hogares españoles pueden verse con el agua al cuello para llegar a fin de mes

Si ya con la previsión de alcance el 4% el centro de estudios y análisis Funcas cree que 260.000 hogares españoles tendrían muchos problemas para afrontar la cuota mensual de sus préstamos y, del mismo modo, para llegar a fin de mes, un punto más en ese porcentaje dejaría a muchos ciudadanos con el agua al cuello.

Ni una palabra acerca del riesgo que tenía meterse en hipotecas de ese calibre. Y ahora vienen las "advertencias muy serias". Pues ahora, o se pincha el banano de una vez, o antes de 20 años volverá a pasar lo mismo.

[senslev]

De momento y aunque las sensaciones sean otras, no estrés.

[Derby]

https://www.bloomberg.com/news/articles/2023-03-14/silicon-valley-bank-collapse-chills-san-francisco-area-s-housing-market

SVB Is a ‘Nail in the Coffin’ for Bay Area Housing Market’s Gold Rush

Agents in the San Francisco Bay Area were optimistic about a sales turnaround. The banking crisis threatens to upend that

The collapse of Silicon Valley Bank has dealt yet another blow to San Francisco’s depressed housing market, dashing agents’ optimism that conditions would finally start to improve.

After months of weak buyer interest, agents began seeing larger crowds at open houses in January and getting multiple offers above asking price on their listings. By early March, though, climbing mortgage rates, plunging stock prices and mushrooming Big Tech layoffs tempered hopes for a spring rebound. Then came last week’s run on the bank that was intricately tied to the region’s massive explosion in wealth.

“Not a single buyer has expressed interest in going out,” Nina Hatvany of Compass said on Saturday, before it was clear that Silicon Valley’s depositors would be able to access all their assets. “Sellers are like, ‘I better sell before it gets worse and buyers are not engaging.’”

People across the Bay Area were afraid of what would come next, likening it to the Great Recession of 15 years ago, this time with SVB’s troubles spreading to other banks and potentially tanking startups. “It’s scary,” Hatvany said. “People are worried about whether or not we’ll have another 2008.”

The outlook has improved some in the past few days — and one side effect of the banking industry turmoil has been a welcome cooling in mortgage rates. But buyers, sellers and agents are shaken, and more pessimistic than they were a week ago.

“When people get in a panic mode, it’s bad for consumer spending, particularly the housing market,” said Selma Hepp, chief economist of real estate analytics firm CoreLogic.

The uncertainty SVB’s collapse adds will be especially acute in the Bay Area, where home prices skyrocketed out of reach, only to start slipping last year when borrowing costs nearly doubled and remote-workers left for parts of the country with cheaper housing. The median sale price in the nine-county Bay Area was $1 million in January, down 35% from the peak of $1.54 million in April 2022, (...)

[Benzino Napaloni]

https://www.bloomberg.com/news/articles/2023-03-14/silicon-valley-bank-collapse-chills-san-francisco-area-s-housing-market

SVB Is a ‘Nail in the Coffin’ for Bay Area Housing Market’s Gold Rush

Agents in the San Francisco Bay Area were optimistic about a sales turnaround. The banking crisis threatens to upend that

The collapse of Silicon Valley Bank has dealt yet another blow to San Francisco’s depressed housing market, dashing agents’ optimism that conditions would finally start to improve.

After months of weak buyer interest, agents began seeing larger crowds at open houses in January and getting multiple offers above asking price on their listings. By early March, though, climbing mortgage rates, plunging stock prices and mushrooming Big Tech layoffs tempered hopes for a spring rebound. Then came last week’s run on the bank that was intricately tied to the region’s massive explosion in wealth.

“Not a single buyer has expressed interest in going out,” Nina Hatvany of Compass said on Saturday, before it was clear that Silicon Valley’s depositors would be able to access all their assets. “Sellers are like, ‘I better sell before it gets worse and buyers are not engaging.’”

People across the Bay Area were afraid of what would come next, likening it to the Great Recession of 15 years ago, this time with SVB’s troubles spreading to other banks and potentially tanking startups. “It’s scary,” Hatvany said. “People are worried about whether or not we’ll have another 2008.”

The outlook has improved some in the past few days — and one side effect of the banking industry turmoil has been a welcome cooling in mortgage rates. But buyers, sellers and agents are shaken, and more pessimistic than they were a week ago.

“When people get in a panic mode, it’s bad for consumer spending, particularly the housing market,” said Selma Hepp, chief economist of real estate analytics firm CoreLogic.

The uncertainty SVB’s collapse adds will be especially acute in the Bay Area, where home prices skyrocketed out of reach, only to start slipping last year when borrowing costs nearly doubled and remote-workers left for parts of the country with cheaper housing. The median sale price in the nine-county Bay Area was $1 million in January, down 35% from the peak of $1.54 million in April 2022, (...)

Así que las empresas mandan de vuelta a la oficina a los curritos, los rentistas vuelven a poner el cazo... y con el petardazo del SVB y la subida de tipos vuelve a haber una estampida a estados más baratos.

Conmovedor.