Prices.... Going Up!!!

[usedto]

Prices going up - My daughter got married in SoCal in 2019. I had to provide a one million dollar insurance policy for the venue.

My son is getting married at the end of this month, also in SoCal. They require a TWO million dollar policy.

Comparable venues.

The first policy was $177. The new one is $294.

 

[Mystic]

How about big Pharma. Is there a similar graph for big Pharma?

I can pull together a Big Pharma graph today.

 

[Mystic]

I googled "graph on how irritating graphs are" and couldn't find one.

Banned Per Google Community (mis)Standards

 

[Mystic]

I googled "graph on how irritating graphs are" and couldn't find one.

PS: I'll likely be posting updated (read: more) graphs re: The U.S. (and World?) Financial Services Sector performance today as well.

cc: @spicer

 

[Mystic]

Prices falling: The Tale Of Two Banks

- First Republic Bank
- Western Alliance Bancorp

The story of what happens when banks become "propping up schemes" for Tech and other sector start ups via their ties to venture capital (VC) institutions and willy-nilly back IPO and SPAC vehicles that go BOOM at the heights of a Free Money Party.

First, around November 2022, the NASDAQ plunged 30%, resulting in the collapse of dozens of IPO and SPAC vehicles whose VC backers "banked" @ (of course and by now famously) @ Silicon Valley Bank, but also suchfinancial services institutions as FIRST REPUBLIC BANK and WESTERN ALLIANCE BANCORP.

Here we are as of today -- Tuesday, 14 March 2023.

FIRST REPUBLIC BANK: P/S VALUE, Q1/2011 THROUGH 14 MARCH 2023 (7:10am Eastern)

Source: YCharts, 2023

COMMENT

Note that shares, currently at around $31, are back their level of 2013. Why? Because properly managed financial services institutions are intended to "serve" as government-regulated taxpayer-backed financial utilities ... not as stock pumping schemes.

First Republic Bank is not a conservatively run bank. It represents one of the worst excesses in the Free Money Party. Bank of America acquired FRB when it bought up Merrill Lynch, which had acquired it in 2007. In 2009, Bank of America sold FRB to a group of investors, most notably equity firms Colony Capital and General Atlantic, which sold FRB to the public via an IPO in December 2010. And so began the Free Money Party @ FRB.

WESTERN ALLIANCE BANCORP: P/S Q1/2011 THROUGH 14 MARCH 2023 (7:10am Eastern)

Source: YCharts, 2023

COMMENT

Note that shares, currently at around $28, are back where they’d been in 2014 and again, albeit briefly, in 2020. Why? Because -- again -- properly managed financial services institutions are intended to "serve" as government-regulated taxpayer-backed financial utilities ... not stock pumping schemes.

Western Alliance Bancorp is another magnificent stock-pumping font and proud member of the Free Money Party whose shares more than doubled between early 2020 and peaked in November 2021, after having multiplied by a factor of six since 2014. A bank stock. Where else to go but DOWN?

The Big Watch: where are Bank Of America, CitiGroup, JPMorgan Chase, and Wells Fargo now?

As of 7:20am on Tuesday, 14 March, they are FOR THE DAY SO FAR:






What has JP Morgan / Chase "done right" -- thus far -- to have performed so well vis-a-vis the other Big Boys of the financial services sector?

One hunch is that they did not aggressively (read: willy-nilly) back VCs pushing IPO or SPAC vehicles for TECH and other sector start ups during the Free Money Party, maintained a more conservsative stance consistent with the traditional expectation that properly managed financial services institutions are intended to "serve" as government-regulated taxpayer-backed financial utilities ... not stock pumping schemes.

Another hunch is being based NOT in California also contributed to more sober institutional management.

* CITIGROUP, also NOT based in California, ought to have followed JPM's example, eh?

PS: Dr. Paul Craig Roberts’ column today claims that five “too big to fail” banks are holding $188 trillion in derivatives, twice the total GDP of the world.

Who runs these banks, the Marx Brothers?

 

[YY1]

I've been an investor in JPM for over a decade.
I also listen to what the CEO (J Dimon) has to say about "the market" and "the economy".
Coincidentally, my elementary school bus stop (city bus, not traditional school bus) was literally across the street from that guy's office, albeit he was on the 30th floor.

I took some profit when they more than doubled right before the 2020 downturn.
They are still plus 85% what I paid.

I also bought WFC at "fire sale" when they had all that mortgage issue trouble.
Still waiting for that recovery despite mostly positive reports.
They've been paying about 4% which was out pacing inflation up until this past year.

 

[Mystic]

I've been an investor in JPM for over a decade.
I also listen to what the CEO (J Dimon) has to say about "the market" and "the economy".
Coincidentally, my elementary school bus stop (city bus, not traditional school bus) was literally across the street from that guy's office, albeit he was on the 30th floor.

I took some profit when they more than doubled right before the 2020 downturn.
They are still plus 85% what I paid.

I also bought WFC at "fire sale" when they had all that mortgage issue trouble.
Still waiting for that recovery despite mostly positive reports.
They've been paying about 4% which was out pacing inflation up until this past year.

Dimon's keeping his crews heads above the water for now. I, too, have significant holdings, in active accounts and shared, re: JPMorgan Chase, so, yeah, fingers crossed and all that... I recall Dimon railing against the rampant SPAC'ing of the last four years and that he's down on "derivatives" in general, so.... there is hope, yeah, unless some sorta financial services sector virus gets loose from some lab and yada yada yada....

 

[Mystic]

I've been an investor in JPM for over a decade.
I also listen to what the CEO (J Dimon) has to say about "the market" and "the economy".
Coincidentally, my elementary school bus stop (city bus, not traditional school bus) was literally across the street from that guy's office, albeit he was on the 30th floor.

I took some profit when they more than doubled right before the 2020 downturn.
They are still plus 85% what I paid.

I also bought WFC at "fire sale" when they had all that mortgage issue trouble.
Still waiting for that recovery despite mostly positive reports.
They've been paying about 4% which was out pacing inflation up until this past year.

So much for my (earlier) theory that JPMorgan Chase had taken a more tempered approach to its involvement in "Derivatives Markets" per stuff I read that came straight outta Dimon's mouth....


Source: US Bank Locations (https://www.usbanklocations.com/)

PS: I grabbed just the Top 21

UPDATE: https://en.wikipedia.org/wiki/Derivative_(finance)

 

[Mystic]

S&P 500: THE 10 BIGGEST GAINERS @ 14 MARCH 2023 ... ALL BANKS! CRISIS AVERTED!


Gee, ya think?

PS: Um, well almost all ... ignore Advanced Micro Device.

 

[rickb119]

So much for my (earlier) theory that JPMorgan Chase had taken a more tempered approach to its involvement in "Derivatives Markets" per stuff I read that came straight outta Dimon's mouth....

View attachment 2826948
Source: US Bank Locations (https://www.usbanklocations.com/)

PS: I grabbed just the Top 21

That's a whole lot of (funny money) digits.

 

[Mystic]

That's a whole lot of (funny money) digits.

It is.

 

[Mystic]

PRICES FALLING.....

re: Fallout from US Financial Services Crash(ing)....

I thought by now we'd see evidence of ripple FX @ France and Germany, Netherlands, UK and maybe even Luxembourg. but thus far all have held up "ok" except for .... and this IS a surprise:

View attachment 2828030
DOWN 23.57% TODAY.

Gosh, how will the EU member states' financial services sector look @ this time tomorrow?

 

[Mystic]

^^^ PS: Didn't have to wait until tomorrow, at least not in France. Here's today's market action for France's three largest financial services sector entities:





So, not as dire a picture as @ Credit Suisse. Give it a day or so.

PPS: One thing the French are smart about is they keep their distance from US-based institutions, especially where finances are concerned. The Swiss, not so much, as is obvious.

What about those GERMANS and LUXEMBOORGISH ... they buy lots 'n lots of US Treasury -- ahem -- "securities" .... I'll get to THE BRITS as well... I suspect Barclays Bank has dropped a tad today.

UPDATE: French large banks also declined, and so CAC trading was forcibly halted as Societe Generale was at -12.2% and BNP Paribas at -10.17% for the (half) day.

 

[Mystic]

^^^ PS: Didn't have to wait until tomorrow, at least not in France. Here's today's market action for France's three largest financial services sector entities:

View attachment 2828038
View attachment 2828039
View attachment 2828040
View attachment 2828041
So, not as dire a picture as @ Credit Suisse. Give it a day or so.

PPS: One thing the French are smart about is they keep their distance from US-based institutions, especially where finances are concerned. The Swiss, not so much, as is obvious.

What about those GERMANS and LUXEMBOORGISH ... they buy lots 'n lots of US Treasury -- ahem -- "securities" .... I'll get to THE BRITS as well... I suspect Barclays Bank has dropped a tad today.

German banks today:



DOWN and indeed the BIGGEST LOSERS @ the DAX for today.

 

[Mystic]

UPDATE RE: CREDIT SUISSE


COST OF INSURANCE AGAINST DEFAULT: CREDIT SUISSE (15 MARCH 2023)

Credit Suisse, the second largest Swiss financial conglomerate, may collapse, which would likely cause a chain reaction throughout Europe.

Today, investors have estimated the probability of Credit Suisse default at 47% and do not rule out its nationalization.

The situation is exacerbated by the position of Arab investors, who are not interested in saving the bank.

About the graph: the higher the level of "insurance against default", the greater the liklihood of institutional collapse.

All this did not arise in a vacuum. Rather, we are talking about an extremely dangerous aggravation of structural problems provoked by the situation in the United States.

Credit Suisse is just the first stage of Europe's financial upheaval.

 

[45rpmspinner]

What's going unsaid here is that what you're seeing in financials is largely fallout from the bond market.
Holding T-bills is just fine, but how a bank uses them, represents those assets on the balance sheet is the problem.

Silicon Valley in particular had a huge percentage of their assets tied up in extremely low interest T-bills, which at best points to lazy investing.
But more importantly, Silicon Valley represented those T-bills as assets being held to maturity, when in fact they represented a large percentage of the bank's liquidity. Basically, the assets were misrepresented.

As the price of T-bills dropped [and interest increased], Silicon Valley was caught in a liquidity trap....ultimately exacerbated by a bank run.
The only action that might have stopped that was a major overhaul of assets over the past year, along with reporting losses in the billions.

 

[usedto]

My pickup is under warranty, so I take it to the dealer for the oil change.

Took it in last year about this time for it's first. Cost me about $89. Back today for it's second - $139.

 

[Mystic]

What's going unsaid here is that what you're seeing in financials is largely fallout from the bond market.
Holding T-bills is just fine, but how a bank uses them, represents those assets on the balance sheet is the problem.

Silicon Valley in particular had a huge percentage of their assets tied up in extremely low interest T-bills, which at best points to lazy investing.
But more importantly, Silicon Valley represented those T-bills as assets being held to maturity, when in fact they represented a large percentage of the bank's liquidity. Basically, the assets were misrepresented.

As the price of T-bills dropped [and interest increased], Silicon Valley was caught in a liquidity trap....ultimately exacerbated by a bank run.
The only action that might have stopped that was a major overhaul of assets over the past year, along with reporting losses in the billions.

Exactly.

The crashes of Silvergate, Silicon Valley Bank, Signature Bank and the related bank insolvencies are much more serious than the 2008-09 crash.

Silicon Valley Bank (SVB) investments had no such default risk. The Treasury always can pay, simply by printing money, and the prime long-term mortgages whose packages SVP bought also were solvent. The problem is the financial system itself, or rather, the corner into which the post-Obama Fed has painted the banking system. It cannot escape from its 13 years of Quantitative Easing without reversing the asset-price inflation and causing bonds, stocks and real estate to lower their market value.

When interest rates rise and bond prices fall, stock prices tend to follow. But banks don’t have to mark down the market price of their assets to reflect this decline if they simply hold on to their bonds or packaged mortgages. They only have to reveal the loss in market value if depositors on balance withdraw their money and the bank actually has to sell these assets to raise the cash to pay their depositors.

That is exactly what happened at Silicon Valley Bank.

 

[Mystic]

^^^ PS:

And while we are not about to overturn the massive power of the rich in the financial system and the enormous network of elite opinion makers that supports them, but perhaps we can at least make the failure of SVB a teaching moment.

The rich are ripping us off big time. They are not lucky winners in a market competition due to their intelligence and hard work. They are people who have managed to rig the game to put big bucks in their pocket. That is the reality. We just have to find ways to change it. A key place to start is to stop pretending that their great wealth has anything to do with a free market.

So it goes.

 

[Pio1980]

^^^ PS:

And while we are not about to overturn the massive power of the rich in the financial system and the enormous network of elite opinion makers that supports them, but perhaps we can at least make the failure of SVB a teaching moment.

The rich are ripping us off big time. They are not lucky winners in a market competition due to their intelligence and hard work. They are people who have managed to rig the game to put big bucks in their pocket. That is the reality. We just have to find ways to change it. A key place to start is to stop pretending that their great wealth has anything to do with a free market.

So it goes.

"Golden rule".