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With a banking crisis here in the US, and European banks being forced to eat each other, investors seek clarity and safe havens to ride out the turbulence.
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BANKING CRISIS: DAY 12 🏧
Bitcoin's 90 Day Gambit (Reddit)
Balaji S. Srinivasan, ex Coinbase CTO, is publicly betting that Bitcoin prices will rise to 1m over the course of the next 90 as a reaction to the US banking crisis and sudden hyperinflation.
I'm currently writing a deep-dive on the likelihood of this happening (low but not zero) and what the world would look like if it were to happen (for all you dystopian-fiction fans out there).
If you want a fun Twitter thread on this check out Lumida CEO, Rahm Ahluwalia, CFA's take on the bet.
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Ratings Agencies & Analyst Ratings (CNBC)
Moody's, S&P, a securities rating agency, recently lowered their outlooks for several banks as well as the US banking system at-large.
Historically, ratings agencies help make markets more efficient by providing investors with an unbiased assessment of companies, debt, markets, risks and more. Independent ratings agencies, like Moody's and S&P, have often been criticized for padding ratings to keep big customers around (as opposed to going to another agency for said rating).
Others, (me) criticize them for being reactive as opposed to proactive. For example, it would have been more useful to get a downgrade rating on US regional banks before the SVB crisis began, not a week after.
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"Deposits are stabilizing across Regional Banks" (RT)
This comments comes from an anonymous "US government official."
We also heard reassuring language from Treasury Secretary Janet Yelen and members of the Federal Reserve. These pseudo-desperate reaffirmations seem to make a lot of investors more nervous than calm in the midsts of high-inflation and failing regional banks.
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Gold is on track for its largest one-week rally since March 2020 (TV)
I love goOoOoold, especially physical gold in my direct possession.
As faith in the financial system dwindles gold always rises in price. It is also classically considered to be an inflation hedge.
Over the past few years I view it as an inflation hedge and first step towards hedging government and financial system stability.
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SVB employees blame remote work for bank failure (AX)
Interesting take here. Worth a read.
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Lender New York Community Bancorp is planning to buy “substantially all deposits and certain loan portfolios” from US regional bank Signature Bank (BBG)
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Swiss bank UBS agreed to buy rival Credit Suisse in a government-brokered $3.25B all-stock deal (FT)
At the onset of these talks UBS said they explicitly were not interested in acquiring Credit Suisse. Now it would seem that they were forced to eat their vegetables by the Swiss government.
This merger makes UBS once of largest asset managers in the world with $5 Trillion in assets under management.
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MACRO: BIG PICTURE 🌍
Peace in the European East:
Putin declares diplomatic solution possible re: Ukraine.
As Chinese leader Xi Jingping heads to Russia for a diplomatic meeting with Russian President Vladimir Putin, there are hints at a potential diplomatic close to the war in Ukraine.
Quote from Putin, "Russia is open to a political and diplomatic settlement of the Ukrainian crisis. However, peace talks were halted back in April 2022, and we were not the ones to terminate them. The future of the peace process depends solely on commitment to a serious conversation which takes into account the current geopolitical reality.
Unfortunately, any ultimatums aimed at Russia only show how [those who make such ultimatums] are detached from this reality and uninterested in finding a solution to the current situation." (via Yahoo News)
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Rumor Mill: Trump to be arrested tomorrow (AX)
Whether this is true or not, whether you like Trump or hate Trump-- I don't think this would be good for markets or economic stability. The cohorts of radicalized Trump supporters will likely exacerbate tension across the judicial and financial systems already overburdened with chaos.
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SpaceX, Netflix and Boeing will join 'biggest-ever' US business mission to Vietnam (RT)
As US-China tensions rise, US corporations seek new manufacturing partners. First Apple entered India and Vietnam, now other players are sending envoys to states in the Chinese periphery after watching a large pioneering peer achieve some success.
Companies do this to hedge political risk and make their supply-chains more robust for their customers.
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DIGITAL ASSETS ⚡️
Signature Bank’s $4B in crypto-related deposits will be returned to customers directly, rather than being taken over by a unit of New York Community Bancorp (BBG)
This all but confirms the rumors that Signature was ordered to release all crypto deposits and divest from any crypto assets before being permitted to continue with the sale/bailout.
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Venezuela names new crypto-czar (CT)
Given how things tend to work in Venezuela (negligence, corruption, greed) my takeaway here is that the highest echelons of government have started to pay closer attention to crypto and is now a department of high interest to President Maduro & co.
We will continue to monitor this situation closely.
------fin------
Chart(s) Du Jour 👨🏻🍳
Meme Digestif ☕️
Thanks y’all. Have a wonderful day and keep your head on a swivel with this banking stuff, it affects all of us.
