Silicon Valley Bank: A Canary Appears, And Dies
Live Broadcast, Saturday 11A ET: Why It Matters To You
Silicon Valley Bank: A Canary Appears
The FDIC closed and seized Silicon Valley Bank today. After the live broadcast, only certain segments will be available.
What happened? How did this happen? Is it likely to happen to others? Does it matter?
Peace and calm has been shelved for the time being, and now a re-examination of portfolio construction is certainly warranted.
Even monthly employment figures (Non-farm payrolls) were almost irrelevant
Stocks for show, bonds for dough, indeed. At times, I will be speaking in Bondelero-ese, my native tongue, but I will do my very best to speak to those that aren’t fluent.
No Medicare & politics talk, that would take 10 hours.
Interest Rates Suddenly Lower
But This Time For The Wrong Reason
NPV (price) of bonds notably higher, and why? Because of fear, due to the issue that we will discuss tomorrow. While we have been noting that risky assets can be supported by lower interest rates, that is not the case if the cause is fear of risky assets themselves.
I have been comparing the entirety of 2022 as like a baseball game.
Recently, I have moved us to the top of the 7th, where I stated that we can very likely stay, so that we can observe the ripple effects of higher interest rates. Further, I stated that we haven’t seen some of them quite yet. We got a glimpse, and the Euro went to 1:1 with the US dollar, it was not pretty.
Tomorrow, I will discuss the effects on my favorite company, Jae’s Rib Shack. You’ll be able to relate.
Bottom line: you need have an understanding of ‘how it actually works,’ so that you can think about the ups and downs that may result. From there, you can determine whether or not your strategy fits your situation.
This is not the same as the past because the one at the controls (Federal Reserve) is not inclined to push down r as it has done for 20 years in an almost-unabated fashion.
Call Me Lucky
The other day, I made a call to a family friend, who is educated to the extent that when connecting the dots for him, he definitely has the background to ‘get it.’ Disclosure: he isn’t a client on these matters, he is a Medicare client. I don’t sleep enough as it is. NO THANKS.
I wasn’t making a prediction on price and direction. That’s a flip to some degree, on most days (not today). I may have said this once or one million times here.
What I Told My Family Friend