Regional Banks, Kremlin Explosions, World Changing Ideas, Fly Qatar QSuites Free

Another TBB post featuring the most eclectic links around the web such as how the regional bank crisis continues, Kremlin explosions, world changing ideas, how to fly Qatar QSuites free, we elaborate on banks in the US, the lack of retirement savings, amazing account of a shipwreck in the Pacific, Uber’s lost and found index, biking in Australia, most beautiful hikes, lots of soccer stuff and a lot more…

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This blog publishes every Friday and Tuesday…for now.

Trying to make my posts shorter.

This blog plays around with the SECTIONS always…

 

BANKING

This section is back you guys…

There are some weird things going on in our banking system lately. I thought it was going to blow over after the surgical strikes by FDIC and CEO Jamie Dimon over at JP Morgan Chase swallowing First Republic Bank in the past weekend. But it appears the regional banks continue to be under pressure. It does not make sense and here is Matt Levine of Bloomberg: Nobody Trusts The Banks Now.

At least read towards the bottom of the post where he tries to explain why this MAY be happening and it is, well, interesting: Such as the internet and how much faster information is spreading these days and, this is very important, how much faster with a few clicks of your mouse or on your phone you can take your cash out of a bank and send it almost instantly to another bank that pays you a lot more interest. Maybe it is also happening because of the end of relationships with, you know, your friendly banker? And maybe the mark to market regime has finally arrived in banking too? Of course, no doubt the ten rapid increases of interest rates by the Fed was the catalyst. Which would not have happened if the mother of all pandemics did not enter our lives…which is a theme explaining everything as it changed, well, everything.

Anyway, we knew something would break…if someone tells you they knew all along the regional banks will start falling they are almost certainly lying. At the same time, if you have less than $250,000 of cash in the bank you should not be worried. If you do have more, well, when was the last time a depositor actually lost money? Or is there some type of sustained short selling conspiracy going on? #developing

Well, maybe there is! Regional bank ‘crisis’ shifting from deposit runs driving equity declines to speculators engineering equity declines to increase the risk of deposit runs. This new phase divorced from fundamentals risks creating a metastasizing crisis rewarding speculative attacks. Thread.

This may be already obsolete by the time you read this: Visualizing the Assets and Liabilities of U.S. Banks.

Actually, I always thought we had too many banks in the US! Chart of the Week – We’ve Got Shrinkage (In Banks). I liked this analogy of what is going on:

A useful analogy in understanding the risks of all of this is the piping of your home. Banks are the plumbing in our financial system. They control and direct the flow of funds in the system. The Fed influences the pressure in the water main and when they sent rates to 5% quickly they broke the water main to many people’s homes (the small pipes couldn’t handle the pressure change). So now the regional plumbers are scrambling to seal the leaks. And some of them are realizing that the leaks are too much for them to contain. The process of fixing all these leaks causes disruptions across the flow of water in the house. This is being seen in the economy through the tightening of lending standards which is reducing credit issuance. How much does the flow of water slow here? We don’t know quite yet because it’s really only just beginning to be seen in the real economy.

Never forget, over the short term, everything is possible. Stick with your plan and stop looking at the markets and go play outside! And also:

In the long-run these problems always sort themselves out. Some banks fail, the water main gets fixed and life goes on. But in the meantime these leaks can cause big disruptions and we’re all in the process of discovering how much damage was caused to the pipes AND whether those leaks will cause damage in other parts of the house like commercial real estate, residential, consumer credit, etc.  Like all of investing, it’s a temporal conundrum. If you’re patient and have a long time horizon then none of this really matters. But if you’re sensitive to volatility and need liquidity then this is consistent with the sort of environment where you need to be more cognizant of the potential short-term risks because they’re elevated.

I did intend to make my posts shorter and looking at everything above, you know, I could stop here and move on…

 

PERSONAL FINANCE

These are grim statistics indeed. You can see where you stand and I hope you are nowhere near some of the averages! Half of American households have no retirement savings.

And this tweet by Morgan Housel is timeless:

Reminder that no matter how the economy is performing there will always be a loud group of people saying:

– Big recession around the corner

– Hyperinflation imminent

– The dollar is doomed

– The Fed broke everything

– Stocks are overvalued

Been like that for 100+ years.