Bankopad, bankopad...

A little commentary on the past two weeks and the situation that has taken place with the big U.S. banks Silvergate and Silicon Valley Bank.

The story is quite interesting. The $209 billion (SVB) and $11.3 billion (Silvergate) banks, ranked 16th and 128th, respectively, in consolidated assets at the end of December 2022, announced almost simultaneously that liquidity was at zero and it was time to "wind down.

The market reacted accordingly. At first, cryptocurrencies collapsed on the background of the Silvergate collapse. After all, the bank was a "cryptocurrency bank," i.e. it worked with cryptocurrency companies and served as a kind of "bridge" between fiat and crypto.

Next came the collapse of SVB, and then the market remembered that cryptocurrencies were originally created as a safe haven, designed to protect against this kind of failures, which led to the rise of crypto-assets on exchanges again.

Classic assets reacted quite understandably:

Then the market "thought a little" and remembered that now the Fed will not really look at inflation and a new liquidity pumping will begin. The rate will either remain at the same level (4.75%) or be raised, but the "hawkish" mood will diminish. For the CME futures the expectation of keeping the rate at the same level rose to 38%, though a month ago the probability of it was zero. Now the probability of a 50 bp. rate hike is zero. (to 5.25%). As a consequence, the bulls tried to correct the situation: the S&P "jumped" to 3900 points on Thursday 16.03 and corrected slightly on Friday.

The official version of the collapse of Silvergate and SVB has been voiced everywhere, so there is no point in parsing it. It is clear that, as in any other credit institution, the system is built on the simple principle that the depositors will not come running at once to withdraw their money, putting the liquidity of the bank at risk. It makes more sense to talk about what most information sources either did not voice, or said about it rather in passing.

Secondly, the rather logical version of some economists is that the bank collapsed forcibly. The main beneficiaries were JP Morgan Chase and Peter Thiel and his "The Founders". Anyone not familiar with the name is advised to google it, the personality is legendary. And this means that the bankruptcy of SVB is no harbinger of the collapse of the American financial system, much less the collapse of capitalism. SVB simply fell victim to the corporate war, nothing more.

Everyone benefits from this story, except, of course, investors and bank employees who did not have time to escape in time (but who pays attention to such little things, right?):

First of all, the dust will settle, of course. I still remain a supporter of the opinion that the global trend in the American market will continue to be bearish and I do not expect a significant recovery of stock indices, although they may try to rise again

Secondly, the Fed is likely to raise the rate. Although I agree with the market - it is unlikely now much. It is hard to guess further, but the feeling is that it will be 5.25-5.5% by the end of the year. The FOMC is meeting this week. The show will be worse than Oprah, however, as Americans like it.

Third, the price of gold could also correct slightly. For the metal, my expectations are still bullish for quite a long time. It seems to me that the most interesting price is ahead and most likely, this most interesting thing will be strongly connected not even with the economy, but with geopolitics.

If SVB and Silvergate do not fit into the well-known concept of Too big to fail, then Credit Suisse fits right in. At the time of writing this text there is information that UBS will buy CS for 3 billion francs. The decision is also quite logical, taking into account all the problems of the main Swiss bank.

It's been a very interesting two weeks. It's very lively...

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