Silicon Valley Bank scrambles to reassure clients after 60% stock wipe-out

[catfish1957]

<snipit>

https://www.cnn.com/2023/03/09/investing/silicon-valley-bank/index.html

SVB Financial Group scrambled on Thursday to reassure its venture capital clients their money was safe after a capital raise led to its stock collapsing 60% and contributed to wiping out over $80 billion in value from bank shares.

SVB, which does business as Silicon Valley Bank, launched a $1.75 billion share sale on Wednesday to shore up its balance sheet. It said in an investor prospectus it needed the proceeds to plug a $1.8 billion hole caused by the sale of a $21 billion loss-making bond portfolio consisting mostly of US Treasuries. The portfolio was yielding it an average 1.79% return, far below the current 10-year Treasury yield of around 3.9%.

Investors in SVB’s stock fretted over whether the capital raise would be sufficient given the deteriorating fortunes of many technology startups that the bank serves. The company’s stock collapsed to its lowest level since 2016, and after the market closed shares slid another 26% in extended trade.

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This story is being so incredibly under-reported.  When any bank loses in one day 60% of its evaluation, that is basically a bank run on the bank's tanglible assests.  Also lost was the fact that almost all banks as a whole lost at least 5-10% of their market cap yesterday  What we are possibly seeing unfolding is basically a Biden self inflicted unintended consequence of his pro-inflation policies.  Banks, S&L's, Credit Unions etc. have huge amounts of capital invested in low interest loans, that will be become increasily tough to cover when saver rates (CD's, Sound Bonds are runing nicely in the 3-6% range).

This rate squeeeze just may be the tip of the iceberg.  Panics in banking sometimes spread like wildfire, and into other sectors.  Yesterday's 540 DJIA drop may be child's play, as it will be an interesting day today.

Numbers to watch in the near future:

1.  VIX was up 20% yesterday (22 and change).  If it reaches 30, I am going to start watching closer, especially if it accompanies a rapid drop.

2. DJIA, S&P, and KBE (Banking ETF index)-  KBE was down 7+% yesterday, and it is also down almost another 2% in pre-market trading futures.

3. Metals- If we see some large upticks in silver and gold pricing, it may be a harbringer of some loss of confidence in the $USD.

4. Tech Sector-  I use this because, maybe the best and most accuarte representation of where speculative investments go. When the speculation wanes, this is the first victim.  And it has certainly been beat up lately. 

[catfish1957]

One thing I'll be watching too, is whether this particular bank will file under FDIC protection. And any other ripple effects to other banks.

[catfish1957]

1.  VIX was up 20% yesterday (22 and change).  If it reaches 30, I am going to start watching closer, especially if it accompanies a rapid drop.

2. DJIA, S&P, and KBE (Banking ETF index)-  KBE was down 7+% yesterday, and it is also down almost another 2% in pre-market trading futures.

3. Metals- If we see some large upticks in silver and gold pricing, it may be a harbringer of some loss of confidence in the $USD.

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12:50 CDT UPDATE

1. VIX Up to 27, another 22%

2. DJIA- Down 450 point, S & P- down 68, both approaching 2%. KBE- down 6.42%.

3. Gold and Silver both up 1-2%.

[catfish1957]

Maria guest speculating an up to 30% correction within 60 days


http://www.youtube.com/watch?v=IwHjl9iGgiQ

[mountaineer]

Who the hell was in charge of risk management at SVB and what the hell were they focused on???

https://twitter.com/ComfortablySmug/status/1634586269807149062

[mountaineer]

The Kobeissi Letter
@KobeissiLetter
BREAKING: Records show that Silicon Valley Bank, $SIVB, employees received large bonuses on Friday.
These bonuses were paid just hours before regulators seized the bank.
Just 2 weeks ago, executives at SVB sold over $5 million in stock.
This is very concerning.
5:31 PM · Mar 11, 2023