JPMC holding strong at ~ -2%
JPMC will be absorbing quite a bit from this mess. We'll see if more banks fail. JPMC will no doubt be taking on new depositors and taking over existing deposits.I bet they get the corpse of SVB for $1. Not per share, $1.
What kind of idiot would buy bank stocks when interest rates are rising? This happens over and over again throughout history. Banks fail during rising interest rates. Not only do they have fewer customers for their products, but their assets decline in value since investors would rather buy the new higher yielding bonds and mortgages than the low yield ones that the banks still have on their books. You want to buy bank stocks during the times of falling interest rates. In times of falling rates, banks have a boom of customers with refinances and new mortgages. Think of all the bank fees which are pure profit on each refinance. Plus, all the high interest rate loans they still have skyrocket in value as investors want them over new low interest rate loans.
I know KB was trying to argue here that banks would do well, with the assumption that they will give banking customers low interest rates on savings and then lend out at high interest rates. But that just isn't how most banks work. Most banks can't keep on to the higher interest rate loans. They sell them off to Freddy Mac and Fanny Mae. That is even if they do have any loans to sell as there are so few customers wanting the higher rate loans.
Usually you would store large amounts of money in bonds or stocks.Ok yes normal people don't have to fret much about the $250K guarantee limit. But there may be a few people here who have say 10%-20% or whatever over that amount in just a few banks? First of all we (or they) don't really want to admit that we (they) have that much money even in one bank due to security reasons. Like the whole forum and the net could read it and know what you have.
And second of all I (or they) can just open up a few more accounts at a few more different banks to lower the total cash in each bank to the $250K.
And for the record I don't have enough cash to make the CDARS method or similar methods practical. That's for several multi Smillions or at least a few multi Smillions. They spread out the cash into dozens or hundreds of different banks so you get the $250K FDIC guarantee for all of them. And they can shift the cash from one bank to another on a daily or whenever basis if there's any doubt about the stability of any of the banks.
That would be the norm. Except SVB had low liquidity and was forced to sell bonds at a loss to cover it. Word got out, chaos ensued, and a bank run was a result.Usually you would store large amounts of money in bonds or stocks.
I meant as a private person with more than $250k in cashThat would be the norm. Except SVB had low liquidity and was forced to sell bonds at a loss to cover it. Word got out, chaos ensued, and a bank run was a result.
All banks should have enough to cover deposits without having to sell assets at a loss. That's how SVB failed.
Bought 35 FRC @ 30
CPI numbers were in line I think with the estimate (0.4 and 0.5 for Core CPI)... which is still a pretty big month on month increase. But Wall Street doesn't seem to mind.
But why is Schwab dropping???Currently down 19% this morning.
I did buy a brokered CD from them, 18 mo at 5.4%. Says accepted so we'll see what happens.
In light of continued banking jitters and a pullback in consumer spending my guess is no rate increase next meeting.
Speaking of rate increases I just realized my mortgage renewal is in September. That's probably going to hurt. On the flip side, my TFSA is yielding me $2/mo in interest now! Probably going to use that money on a new water heater though, I really need to bite the bullet and replace my old gas one that's costing me a lot to run and is on it's last legs. Will probably get a heat pump one so they are going for like 3 grand. I see that as an investment as it will save me a lot in utility bills.
FRC continues to crash and burn.