AFF Member Stock Discussion

[Mr_Orange]

A group of the big banks in the US have given support to another of the banks that was potentially going under.

US markets reacted well to that news.

It's worth noting that the reason why these banks are failing is not the same reason why banks failed in the run up to the GFC.

 

[MARTINE]

A group of the big banks in the US have given support to another of the banks that was potentially going under.

US markets reacted well to that news.

It's worth noting that the reason why these banks are failing is not the same reason why banks failed in the run up to the GFC.

… as in millions of bundles of over valued loans for eg trailer park residents in the Florida panhandle who had no hope of repaying were put together and onsold as ‘liquidity’ to do the same .. rinse … repeat. ..

 

[Kerrodt]

So the US has fixed the SVB problem by quarantining 100% of all deposits. As one person I read for finance news said all that it does is ensure that banks make even more risky investments as they are not on the hook.

It ain’t going to end well though it remains to be seen how far down the road the van has been kicked.

If the regulatory regime and supervisory oversight was appropriately structured and properly enforced there would be little to no room for banks to take on more risky investments. Whilst the SVB Board and executives have plenty of questions to answer here, the regulatory bodies should also have plenty of questions to answer.

 

[Mr_Orange]

If the regulatory regime and supervisory oversight was appropriately structured and properly enforced there would be little to no room for banks to take on more risky investments. Whilst the SVB Board and executives have plenty of questions to answer here, the regulatory bodies should also have plenty of questions to answer.

Ha, ha! What makes you think that regulatory bodies are there to regulate? They are mostly funded by the industry that they are supposed to be regulating. Take the TGA, for example, funded by Big Pharma to the tune of over 80%! The MHRA in the UK is no better and the FDA in the US is approx 60% funded by Big Pharma.

 

[drron]

The problem was that SVB had approved investments. They invested in long government bonds even though interest rates had been kept low for years. Instead of selling them off as soon as rates started rising they hung on. The more the rates rose the bigger the fall in prices of their bonds.
So which regulator was going to tell them not to invest in government bonds.
You overestimate the intelligence of many managers.

 

[Kerrodt]

Ha, ha! What makes you think that regulatory bodies are there to regulate? They are mostly funded by the industry that they are supposed to be regulating. Take the TGA, for example, funded by Big Pharma to the tune of over 80%! The MHRA in the UK is no better and the FDA in the US is approx 60% funded by Big Pharma.

The problem was that SVB had approved investments. They invested in long government bonds even though interest rates had been kept low for years. Instead of selling them off as soon as rates started rising they hung on. The more the rates rose the bigger the fall in prices of their bonds.
So which regulator was going to tell them not to invest in government bonds.
You overestimate the intelligence of many managers.

You both seem to have missed my words “appropriately structured and properly enforced”. Which it wasn’t on both counts. No bank should be allowed to structure the level of interest rate and duration mismatch that SVB had. It should not be allowed by regulation and should be monitored for compliance and appropriate enforcement for non compliance - all of which was missing.

 

[Mr_Orange]

should be monitored for compliance and appropriate enforcement for non compliance

Presumably, this is undertaken by the banking regulator.... who isn't motivated to do the above because..... see post above.

 

[Brissy1]

The problem was that SVB had approved investments. They invested in long government bonds even though interest rates had been kept low for years. Instead of selling them off as soon as rates started rising they hung on. The more the rates rose the bigger the fall in prices of their bonds.
So which regulator was going to tell them not to invest in government bonds.
You overestimate the intelligence of many managers.

I was staggered to read that SVB didn't mark-to-market the value of their gov bonds...in some ways like valuing losing shares at purchase price in the hope that you don't have to sell.

And I've been perplexed as to how "cash" option in aust super funds continue to report (very small) +ve returns... surely they must be making capital losses on the market value of their existing low yielding bonds? Or are they also using the SVB valuation "standards".

 

[lovestotravel]

The writing has been on the wall for 12 months, and it's all starting to come together now, slowly but surely. Dow Jones down nearly 10% over the past year, another 10-20% and I'd be happy as a great time to buy (DYOR and IMO)

Of course Russia could change everything with one silly weapon used in Ukraine.

Sad times - Just feels like we are plodding along waiting for the next big thing to happen

Prior to Corona it was very different.

 

[Mr_Orange]

The writing has been on the wall for 12 months, and it's all starting to come together now, slowly but surely.

I'll respectfully agree to disagree, although I'm not going to explain why on an open forum.

 

[lovestotravel]

And I've been perplexed as to how "cash" option in aust super funds continue to report (very small) +ve returns...

3.25% roughly at the moment

I'll respectfully agree to disagree, although I'm not going to explain why on an open forum.

Yeah that's the best way - No one can disagree with you then..........

 

[Mr_Orange]

Yeah that's the best way - No one can disagree with you then..........

No need to be sarcastic. Let's revisit the stae of play in a couple of months or so.

 

[SydneySwan]

I was staggered to read that SVB didn't mark-to-market the value of their gov bonds...in some ways like valuing losing shares at purchase price in the hope that you don't have to sell.

In some jurisdictions you only have to mark-to-market trading stock. Bonds that you expect to hold to maturity you only have to amortise the premium or discount.

 

[cove]

Gold is up probably because of the fear surrounding banks in the US and Europe.

 

[Happy Dude]

CMW having a rough trot. Looks like an opportunity though, amongst others.

 

[cove]

Am hoping to get CQE near their years low in the next few weeks.

 

[drron]

And a report on news.Com that 186 US banks are currently thought to be at increased susceptibility of bankruptcy. A long way to go in this present situation.

 

[TheRealTMA]

And a report on news.Com that 186 US banks are currently thought to be at increased susceptibility of bankruptcy. A long way to go in this present situation.

Yes but there’s some 4000+ left!

 

[drron]

Yes but there’s some 4000+ left!

But enough to put the wind up nervous nellies. And you only need ~ 5% or less to put the skids under the market.

 

[Dr Ralph]

SPP for WLE just announced.

SPP just cancelled!

They've blamed market conditions, but it was very clear that they never offered enough discount in the first place.