Signs of Recession?
- Billionaire investor Mark Mobius told Fox Business:
- “I have an account with HSBC Bank in Shanghai, China. I can not take my money out”
- “The government is restricting flow of money out of the country.”
- “I cannot get an explanation of why they are doing this”
- “They are putting all kinds of barriers.”
- Canon announced that it is voluntarily de-listing from the New York Stock Exchange
- Still listed on Tokyo Stock Exchange
- Reason given is that the volume of trading on Canon ADRs (American Depositary Receipts) has declined
- Former economist from Obama administration, Larry Summers was interviewed on CNN:
- “would not be amazed if the U.S. were to hit 6% inflation”
- “Hope for the best but plan for the worst, I think is the right advice”
- Economy might soon come to a crashing half and fall into recession
- Federal Reserve’s “push and push” process to lower inflationary prices could eventually result in a recession
- Historical precedent indicates the process of bringing down inflation may lead to a recession
- Could be approaching a “Wile I Coyote moment”
- Economy “could hit an air pocket in a few months”
- Federal Reserve Chairman Jerome Powell stated:
- “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of the rate hikes”
- The Fed’s inflation-fighting job is not over
- Rates are likely to head higher than central bank policymakers had expected
- Manheim Used Vehicle Value Index report published:
- Average price for used car up 4.3% in last month
- First month to month gain since May of 2022
- Largest monthly increase since February, 2009
- Used car prices account for 4.5% of the Consumer Price Index
- Silicon Valley Bank, the 18th largest bank in the U.S., collapsed Friday morning
- capital crisis led to the second-largest failure of a financial institution in US history.
- California regulators closed down the tech lender and put it under the control of the US Federal Deposit Insurance Corporation
- Bank had $209 billion in total assets in 2022
- The FDIC is acting as a receiver, which typically means it will liquidate the bank’s assets to pay back its customers, including depositors and creditors.
- “SVB’s condition deteriorated so quickly that it couldn’t last just five more hours,” wrote Better Markets CEO Dennis M. Kelleher. “That’s because its depositors were withdrawing their money so fast that the bank was insolvent, and an intraday closure was unavoidable due to a classic bank run.”
- decline stems partly from the Federal Reserve’s aggressive interest rate hikes over the past year
- “SVB’s institutional challenges reflect a larger and more widespread systemic issue: The banking industry is sitting on a ton of low-yielding assets that, thanks to the last year of rate increases, are now far underwater — and sinking,” wrote Konrad Alt, co-founder of Klaros
Group. - “It is possible today we found our Enron.”, stated Michael Burry, the legendary “Big Short” investor
- “The U.S. banking system is on the verge of a much bigger collapse than 2008. Banks ownlong-term paper at extremely low interest rates. They can not compete with short-term Treasuries. Mass withdrawals from depositors seeking higher yields will result in a wave of bank failures”, stated economist Peter Schiff.
- Crypto-focused lender Silvergate said Wednesday it is winding down operations and will liquidate the bank after being financially pummeled by turmoil in digital assets
- Signature Bank, another lender, was hit hard by the bank selloff, with shares sinking 30% before being halted for volatility Friday.
- The four largest US banks -- JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup -- saw their share prices plunge between 4% and 6%, wiping $52.3 billion from their collective market capitalizations on Friday.
- The Silicon Valley raise got everybody nervous about people's capital levels and what deposits are doing. A lot of institutional investors don't feel great about owning certain banks right now, said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.
- 'It just gets people freaked out because Silicon Valley, historically has been a very strong, well- run bank. If they're having issues right now, people are wondering what about other banks that are lesser quality and that don't have the reputation that Silicon Valley Bank has.'
- US stocks to drop in next 2 months?
- Larry McDonald, founder of “The Bear Trap Report” and former executive at Lehman Bros., stated that “The withdrawal of capital from the middle-class families is so spectacular. The middle class families are getting hammered here, and so the consumer pressure’s violent”
- “There are really massive cracks under the surface, and that is why the market probably goes down 10%, 20%, maybe 30% in the next 60 days”