NexusFi: Find Your Edge


Home Menu

 





2023 Bank Crisis and Meltdown: Silicon Valley Bank, Signature Bank, Credit Suisse ...


Discussion in Stocks and ETFs

Updated
      Top Posters
    1. looks_one Big Mike with 8 posts (22 thanks)
    2. looks_two SunTrader with 8 posts (3 thanks)
    3. looks_3 phantomtrader with 6 posts (15 thanks)
    4. looks_4 SMCJB with 6 posts (8 thanks)
      Best Posters
    1. looks_one bobwest with 7 thanks per post
    2. looks_two Big Mike with 2.8 thanks per post
    3. looks_3 AllSeeker with 2.7 thanks per post
    4. looks_4 phantomtrader with 2.5 thanks per post
    1. trending_up 10,910 views
    2. thumb_up 122 thanks given
    3. group 572 followers
    1. forum 65 posts
    2. attach_file 6 attachments




 
Search this Thread

2023 Bank Crisis and Meltdown: Silicon Valley Bank, Signature Bank, Credit Suisse ...

  #41 (permalink)
 ghman101 
Daphne
 
Experience: Intermediate
Platform: TradeStation, TOS, Infinity, NT7
Broker: As above
Trading: ES, 6E, 6B, 6J
Posts: 144 since Apr 2010
Thanks Given: 224
Thanks Received: 84

Ed Dowd - look him up! Wall Street guru/statistician...pay attention.

Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
Help re translation of ninjascript to EL
NinjaTrader
Quantum physics & Trading dynamics
The Elite Circle
static margin on the right side of a chart
NinjaTrader
MC PL editor upgrade
MultiCharts
What You Know vs How much you know about it
Traders Hideout
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Vinny E-Mini & Algobox Review TRADE ROOM
73 thanks
GFIs1 1 DAX trade per day journal
17 thanks
ApexTraderFunding.com experience and review
12 thanks
Trading with Intuition
9 thanks
jlabtrades apex prop firm and personal trading journal
9 thanks
  #42 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,052 since Dec 2013
Thanks Given: 4,394
Thanks Received: 10,209


Harveys View Post
Hi everyone HarveyS here.
Can anyone please enlighten me as to the reason why all these very savvy intelligent banks and pension funds would invest funds in government 10,20 and 30 year bonds at zero interest rates,when even blind Freddy new that interest rates had only one way to go after reaching zero.This absolutely guaranteed that all these investments were guaranteed to be anything but safe.Who in their right mind would loan their money to someone for 30 years for nothing in return?These are the people who are in charge of the world.It doesnít send a very good message to the average investor.So buckle up as I feel we are in for a very shaky ride,until we get more able and responsible people running the show.This is just my take on our world at this point in time.Am I being to critical.What are your thoughts?

With the exception of Covid, 30yr Treasury yields have been between 2 and 3.5% for most of the last 10 years. They were borrowing at zero and lending at those rates. "Free Money"! The ridiculous thing is they could have hedged a lot of this risk but most didn't.

Reply With Quote
Thanked by:
  #43 (permalink)
artisanpro
montreal, qc, canada
 
Posts: 28 since May 2021
Thanks Given: 28
Thanks Received: 18


>>@harveys<<
> Who in their right mind would loan their money to someone for 30 years for nothing in return? <

Well, I agree with you but there is the possibility that the fund manager wouldn't have a choice because of the so called mix of capital risk investment they have to offer (risky, safe, etc). So with the government 10,20 and 30 year bonds at zero interest rates the capital is still safe ... at maturity. So an investor that waits it out will get his capital back. Will that investor get the same purchasing power at maturity - at the current rate of inflation the answer is obviously no. The faulty thinking in my view lies with the investors that wanted / wants "safe" capital at maturity and saying it doesn't matter what the markets do in the interim. I guess, they haven't thought that inflation would skyrocket but who did? The funds, banks, etc. are somewhat screwed as soon as they have the obligation to do "mark to market" such as when they have to sell.

Reply With Quote
Thanked by:
  #44 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,052 since Dec 2013
Thanks Given: 4,394
Thanks Received: 10,209


artisanpro View Post
The funds, banks, etc. are somewhat screwed as soon as they have the obligation to do "mark to market" such as when they have to sell.

Not an expert on this, but I gather that the Banks do not have to mark to market treasury securities that they plan to hold to maturity. I also gather that the problem at SIB & SVB was caused by the fact that due to a loss of deposits, they had to reduce assets/sell treasuries, hence realizing the loss (that they could previously hide/ignore) which then adversely effected their capital base.

Reply With Quote
Thanked by:
  #45 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,052 since Dec 2013
Thanks Given: 4,394
Thanks Received: 10,209

Credit Suisse Bonds... with embedded put option/CDS/bomb!


Reply With Quote
Thanked by:
  #46 (permalink)
artisanpro
montreal, qc, canada
 
Posts: 28 since May 2021
Thanks Given: 28
Thanks Received: 18


SMCJB View Post
Not an expert on this, but I gather that the Banks do not have to mark to market treasury securities that they plan to hold to maturity. I also gather that the problem at SIB & SVB was caused by the fact that due to a loss of deposits, they had to reduce assets/sell treasuries, hence realizing the loss (that they could previously hide/ignore) which then adversely effected their capital base.

I have the same understanding and having to sell forces "mark to market" with consequences to their capital base as you mentioned.

Reply With Quote
Thanked by:
  #47 (permalink)
 chasepatrol 
Bremen, Germany
 
Experience: Intermediate
Platform: Sierra Chart
Broker: AMP/CQG
Trading: ES, FDAX
Posts: 35 since Jan 2023
Thanks Given: 37
Thanks Received: 39


SMCJB View Post
Credit Suisse Bonds... with embedded put option/CDS/bomb!

A "embedded bomb"? That is no bomb that is a bond placement. No one was forced to buy these kind of papers.

As Jeffrey Gundlach said: "Put on your big boy pants and look into the mirror".
Everyone was aware of the risks they were taking at all times. Now the risks are materializing they start to cry.
Maybe they only saw the high coupon. Look at CS's 9.75% (!) Perpetual Tier 1 bond. But that is now their problem.
The magic words are: "Risk Management".

AT1 write-down bonds cleary flagged the risk of a write-down event from day one of the bonds' issuance.


Source: Credit Suisse issuance document via BBG

Reply With Quote
Thanked by:
  #48 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,052 since Dec 2013
Thanks Given: 4,394
Thanks Received: 10,209

@chasepatrol don't get me wrong, I'm not making excuses for anybody, I was highlighting the embedded option in the bond. 'Contingent Write-Down' is even in the Bond's Title!

Reply With Quote
Thanked by:
  #49 (permalink)
trend train
Riyadh, Saudi Arabia
 
Posts: 36 since Dec 2021
Thanks Given: 5
Thanks Received: 14

😉


https://www.bloomberg.com/news/articles/2023-03-21/svb-s-loans-to-insiders-tripled-to-219-million-before-it-failed

Reply With Quote
  #50 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,052 since Dec 2013
Thanks Given: 4,394
Thanks Received: 10,209


From the Bloomberg Evening Briefing Email...

Pacific Investment Management and Invesco are among the largest holders of Credit Suisseís so-called Additional Tier 1 bonds that were wiped out after the bankís takeover by UBS. Inside Credit Suisse, things arenít much better: The Swiss government said itís temporarily suspending some bonus payments.

Currently the focus of a few investigations, it turns out now-deceased Silicon Valley Bank got very generous in its final months. As the lender deteriorated and regulators began detecting flaws in its risk management, SVB nevertheless opened up credit to one group: insiders. Loans to officers, directors and principal shareholders, and their related interests, more than tripled from the third quarter last year to $219 million in the final three months of 2022. Thatís a record dollar amount of loans issued to insiders, going back at least two decades.

Reply With Quote
Thanked by:




Last Updated on March 28, 2023


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts