by Robert Holman | www.DefensiveAdvisor.com
STOCK MARKET RATING … 3.5 (0-4 bearish, 5 neutral, 6-10 bullish). I do not foresee a financial crisis at this time.
I think Wall Street has it wrong in believing that we are near the end of the Fed cycle of hiking interest rates. There is a long way to go to get to 2% inflation (Core PCE deflator at 4.6% currently versus a peak of 5.3% in 2022). So as you can see, very little progress has been made, and Fed Chairman Powell speaks constantly about the Fed’s determination to get to 2% and the need to slow down the labor market.
I heard an interesting factoid reported by David Faber on CNBC that I would like to share with you all. When WAMU (Washington Mutual) failed in 2008, the deposit outflow was $8 Billion in 4 days. When SVB failed, the deposit outflow was $42 Billion in 4 hours. SVB was the second largest US bank failure, and was 2/3 the size of WAMU, the nation’s largest bank failure, so that’s just incredible.
Wednesday, March 8, 2023: Concerns Begin: SVB said it would book a $1.8 billion after-tax loss on sales of investments and seek to raise $2.25 billion by selling a mix of common and preferred stock. Source: The Wall Street Journal.
Thursday March 9, 2023: Initial Fall: Silicon Valley Bank’s stock (SIVB) falls 60% after investors react to the firm’s March 8 financial plan to cover financial losses.
Thursday March 9, 2023: VCs Tell Startups to Withdraw Money: Multiple venture capital firms tell their startups to pull money out of Silicon Valley Bank. Source: Multiple Reports.
Are bad commercial real estate loans the next banking event?
PORTFOLIOS … After reading this report, if you are unsure how to position your portfolio to take advantage of these conditions, call me to discuss your circumstances, I’ll do a complimentary portfolio evaluation, and I’ll explain what ought to be done to help your situation. If you want to get started right now, just click here and input your portfolio holdings and I’ll call you.
TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018 and are doing better than the market return since that time period.
Excelsior Divitiae. Learn from the Bible: Deuteronomy 10:14 and Psalm 24:1 (taken together), Genesis 12:2-3, Proverbs 15:22, 21:5, 22:3 and 27:12, Ecclesiastes 8:7, Joshua 1:9, Proverbs 3:5-6, Ephesians 1:17, Jeremiah 29:11, 1Chronicles 29:11-13, and 1 Chronicles 12:32. I recommend you read them in this order.
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Opinions in this post are for general information only and are not intended to provide specific advice to, or recommendations for any individual, without our complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.