BlackMask Breaking News

As a result trillion of dollars in loans banks have made are under water. Their cost of funds are more then they return on the loans they have made, Fueled by the lowest cost of funds in the history of banking the fucks really fucked up big time.

Any  idiot even a banker or a wallstreeter can appear to be a genius when your costs of funds is ZERO. Its hard for even bankers to lose money in real estate and stocks when you fund the projects with free money and endless or stimulus from  the FED balance street.

Unfortunately every orgy does come to a end and their is a day of reckoning. And its now here for bankers and wallstreeters and real estate moguls. And half the banks in America over the next  years will fail.

Now its a grab for return.  Depositors were happy with no interest on their account balances in a zero rate world. All that is now changing. Money market funds, which invest in very short-term, debt, in March enjoyed their third-best month of inflows ever, according to Crane, as investors spooked by the banking turmoil poured about $345 billion into these funds. While the 25 largest U.S. commercial banks saw deposits climb $18 billion in March, smaller banks’ deposits dropped $212 billion, according to Federal Reserve data.  The 100 largest taxable money funds tracked by Crane yield more than 4.6% on average, (you can make 5% in far safer US Treasury Tbills) while the average rate on savings accounts nationwide is 0.37%, according to DepositAccounts.com, a unit of LendingTree. The flood of cash into money market funds means they now have a record of more than $5.6 trillion in assets. Some banks have sought to hold on to depositors by offering higher rates amid the recent bank failures–but some of those higher rates have already evaporated.  Since March of last year, money fund yields have climbed 4.13 percentage points, or 97% of the increase in the effective federal-funds rate over that period, while the average rate on banks’ three-month certificates of deposit offered to retail customers climbed just 0.32 percentage point, or 8% of the effective federal-funds rate increase, the New York Fed found.  The bigger the bank, the more likely they haven’t raised yields. The banks that have a lot of deposits already don’t need to pay up to bring in more.

But their is a better deal out there in a place to put your money 1000% guaranteed to be their for you no matter what. Let me preface my recommendations with two things you must know.

FIRST: The US will not default on its debt as the ha ha ha leaders play games with the debt ceiling.

SECOND: Lock in shorter term instruments because inflation is is NOT dead and the fed is not Not NOT done raising rates.

I urge to cash in ALL retirement accounts… Do not be fooled by so called US treasury funds offered by Fidelity and the like. You put your money in US Treasuries HELD IN YOUR NAME.  The best way to buy US government treasuries is through treasurydirect.gov

I recommend you buy two instruments at the present time.

GTUSD3M: Which is a 90day Tbill yielding a whopping 5.07%

or

GTUSD6M: Which is a  6 month Tbill yielding a incredible 5.02%

Insider Loans Surged Ahead of Turmoil at US Regional Banks

Not long before the Federal Reserve began lifting interest rates to tamp down inflation, regional banks across the US reported a surge in lending to a group of well-connected people: their own directors, officers and major shareholders.The trend continued through all of last year, reaching almost $10 billion by the end of 2022, according to a Bloomberg News analysis of data submitted to federal regulators. That was 12% more than a year earlier and represented the largest annual jump in lending to insiders, along with their related interests, in at least a decade.

What’s more, some of the biggest increases were at firms that have recently failed, or are now struggling amid the worst banking crisis since 2008. Among the regional banks that said they more than doubled the amount of credit to insiders last year were Silicon Valley Bank, Western Alliance Bank and First Republic Bank.

None of the lenders or their officers, directors or major shareholders has been accused of wrongdoing. The banks have said they extended credit on similar terms to insiders as they did to other clients. And lending, more broadly, at regional banks was up during the period. Some of the reported increase in insider loans was new borrowing, while some was the result of changes on boards, in executive suites and among top shareholders. When a board member or executive borrows from the bank he or she oversees, “you have an inherent conflict of interest,” said William Black, an associate professor of economics and law at the University of Missouri – Kansas City and a former bank regulator who helped expose corruption in the savings-and-loan industry in the 1980s. “And, worse, if things get difficult, that conflict of interest becomes extremely acute.” Such financing has featured in a number of decades-old financial scandals. Loans to officers, directors and major shareholders now require public disclosures and are regularly scrutinized as part of the Fed’s ongoing supervision of banks.

“If we find problems with these loans, we take enforcement or other remedial actions against the bank or refer the violations to other authorities,” a spokesperson for the Fed said. NB: HAHAHAHAHA

Silicon Valley Bank collapsed into receivership on March 10 after a botched effort to raise capital forced it to sell securities at a loss and sparked a run on deposits. About a month before its failure, it reported in a regulatory filing that credit to insiders rose more than sixfold to $219 million in 2022, with the bulk of the jump coming in the fourth quarter, Bloomberg News first reported on March 21. That was the third-highest increase among banks that reported loans to insiders at the end of 2021 and finished last year with $10 billion to $250 billion in assets, data filed with the Federal Financial Institutions Examination Council show.

The 135 banks of that size include some of the fastest-growing in America in recent years. Collectively, these institutions had $9.6 billion in credit outstanding to insiders or their businesses at the end of last year, a sum that can include everything from mortgages to a line of credit.

Among the biggest increases were those at Fayetteville, Arkansas-based Arvest Bank, which has ties to the billionaire Walton family, where insider lending more than tripled to $186 million, and at Comerica Bank in Dallas. which extended $671 million in credit to insiders, more than twice as much as a year earlier. FirstBank in Nashville, Tennessee, which had $12.8 billion in assets at the end of last year, reported a 185% jump to $114 million. The biggest jump in insider loans among regional banks last year came at Western Alliance, which has seen its stock slip 46% this year as customers yanked deposits. The Phoenix-based lender reported that credit to insiders rose 67-fold to $476 million last year, an increase largely the result of the appointment of a new director, Patricia Arvielo, in June. That required the bank to disclose hundreds of millions of dollars in credit extended to Arvielo’s mortgage company, New American Funding. Arvielo resigned from Western Alliance’s board on April 7, a day after receiving questions from Bloomberg about the relationship. The bank and New American said there was no connection between her departure and the credit Western Alliance extended to her business. “She decided to leave the board due to her other personal and professional commitments,” a spokesperson for Western Alliance said, adding that the bank has “rigorous policies and procedures in place to avoid any potential favoritism” when it extends credit to insiders. “NAF is a longstanding, significant client of the bank, and our continued service to NAF has never been influenced in any way by Ms. Arvielo’s brief service on the board,” the spokesperson said. The bank wouldn’t comment on confidential interactions with regulators. Western Alliance has been a critical partner for New American for several years, providing money to originate loans. By the end of March 2022, just before Arvielo joined Western Alliance’s board, the bank had $500 million in credit lines to New American, according to national data compiled by Massachusetts regulators. That was the biggest amount any bank had to her firm at the time and more than Western Alliance had underwritten for any other mortgage lender, the data show. As the housing market slowed last year because of rising interest rates, the line of credit was reduced by 30% to $350 million. Still, that was a smaller reduction than other banks’ lines to Arvielo’s firm. The mortgage company’s facility from JPMorgan Chase & Co. was reduced by 86% to $50 million from March to December, the Massachusetts data shows. JPMorgan declined to comment. Ken Block, New American’s general counsel, said in a statement that Arvielo had no role in negotiating the company’s lines of credit and that any changes were tied to projections for loan originations. Arvielo began discussing leaving the Western Alliance board in January, he said, but she was asked by the bank to stay on until a replacement was found. She and the mortgage company have not received any regulatory inquiries related to business dealings with Western Alliance, according to the statement. NN: Their is that smell again…. WHY ITS BULLSHIT!!

The British boss of Citigroup has warned that the US will fall into recession later this year amid a turbulent outlook for the financial sector. Jane Fraser, chief executive of the Wall Street giant, told investors that the US will enter into a shallow recession after JP Morgan forecast “storm clouds” gathering in the wake of the recent banking crisis. Jamie Dimon, chief executive of JP Morgan, issued the warning even as the lender was boosted by depositors pulling funds from smaller rivals.

He said: “The storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”

It came after the failure of Silicon Valley Bank (SVB) and the emergency rescue of Credit Suisse last month sent shockwaves through the global banking industry. However, first quarter results reported by JP Morgan on Friday showed that the bank benefited from the crisis, with deposits jumping by $37bn (£29.7bn) during the period amid a flight to safety. The unexpected rise in deposits, coupled with a strong performance in its consumer division, boosted JP Morgan’s profits by more than 50pc in the first quarter to $12.6bn. Analysts at Oppenheimer said that JPMorgan “solidly trounced” its own guidance and investor expectations in the first quarter. Shares jumped by nearly 7pc in early trading in New York. The sharp rise in deposits at the bank suggests that customers have flocked to JPMorgan amid concerns about the health of smaller regional banks in the US following SVB’s failure. A number of regional lenders struggled to arrest a wave of customer withdrawals, forcing US authorities to intervene amid fears of contagion. Several Wall Street giants, including JP Morgan, also provided a $30bn lifeline to prop up California’s First Republic. In his annual letter to investors earlier this month, Mr Dimon said: “While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd.” Citigroup also earned more from borrowers paying higher interest on loans, as net income rose 7pc to $4.6bn for the three months to March 31, it reported on Friday. The warnings come days after Andrew Bailey, the Governor of the Bank of England, played down the risks of a system-wide banking crisis. Speaking in Washington earlier this week, Mr Bailey said issues had arisen in a “few parts” of the banking industry following the “necessary sharp tightening in monetary policy to bring down inflation from levels that are much too high”. He added: “The post-crisis reforms to bank regulation have worked. Today I do not believe we face a systemic banking crisis. When I look at the UK banks, they are well capitalised, liquid and able to serve their customers and support the economy.” Separately, Christine Lagarde, president of the European Central Bank (ECB), warned on Friday that there remains considerable uncertainty around how fast inflation will fall. She said: “We expect euro area inflation to continue to fall, as lagged price pressures fade out and tighter monetary policy increasingly dampens demand. However, historically high wage growth, related to tight labour markets and compensation for high inflation, will support core inflation over the projection horizon, as it gradually returns to rates around our target. Meanwhile, BlackRock, the world’s largest asset manager, said it was on the hunt for a “transformational” deal amid turbulence in the banking sector. Larry Fink, chief executive of BlackRock, said: “If there is an opportunity to do something transformational, we are going to be prepared to do it. How can we double down on what we’re doing with… technology. How can we build out our footprint globally at this time?” NN: Show me how could things can be good for banks. they borrowed free money short at under 1% world wide and let it long average 10 years for 3.5%. Now banks borrow money at 5% short and are stuck with a lot of loans at 3.5%. SO you ask me are they in trouble?…. How could they not be……

BlackMask Pod Cast:

their is a lot not to like about schwabbie

Charles Schwab Corp. stunned Wall Street in 2019 by slashing trading commissions to zero, forcing its competitors to adapt. The move amounted to a big bet that its bank — rather than its well-known discount brokerage — would keep driving profits. For a while, it worked to perfection. The pandemic hit, interest rates were pinned near historic lows, and Schwab raked in billions as the fees it had forsaken were offset by what the company earned from its banking operation. But last month’s collapse of three US banks, the industry’s worst crisis since 2008, has turned that wager on its head.

Now Schwab, the biggest publicly traded US brokerage, faces one of the most painful moments in its 50-year history. After a rapid surge in interest rates, deposits sank while unrealized losses swelled. The stock plunged 33% in March, its worst month since 1987.

In recent weeks, Wall Street analysts sharply reduced their profit estimates. If they decline too far, Schwab could eventually be forced to sell securities at a loss. Chief Executive Officer Walt Bettinger, 62, and billionaire founder Charles Schwab, 85, issued two joint statements in recent weeks to reassure investors that there’s a “near-zero” chance of that. On April 6, they touted $53 billion of client assets that arrived in March, the second-largest for that month on record. “What we’ll be most keen to see is: did the pace of deposits leaving accelerate?” said Bloomberg Intelligence analyst Neil Sipes. “Can they quantify how much more there is to go?” Some investors decided not to wait. Rajiv Jain’s GQG Partners, which had been among Schwab’s top 15 shareholders at year-end, sold its entire $1.4 billion stake during last month’s turmoil, the Financial Times reported Friday. “We didn’t see an existential risk but they were caught up in the sentiment around banks,” Mark Barker, head of international at the investment firm, told the FT. “With all the inflows to money-market funds Charles Schwab is losing deposits revenue.” Schwab defies easy classification. Known for pioneering cheap stock trading, it grew into one of the largest US banks. The firm weathered seismic changes over five decades, including the dot-com bust, the dawn of low-cost index products and the era of free trading it ushered in. Cash has become even more important since then. While the move to zero-fee trading paved the way for its $26 billion purchase of TD Ameritrade, it also knocked out an income stream that totaled $763 million, or 7.5% of revenue, in 2018.

 

International Energy Agency’s expectation for 2023 is 2m bpd higher than last year’s figure

Global demand for oil this year is on track to rise to a record 101.9m barrels per day as China leads an economic surge among developing nations, the world’s leading energy body has forecast. The International Energy Agency’s predicted daily average for 2023 is 2m bpd higher than last year’s figure. The agency warned that a recent decision by the world’s biggest oil exporters to cut their production could drive oil prices higher, in a blow to efforts to reduce inflation and reset economic growth in developed countries.

“This augurs badly for the economic recovery and growth,” the IEA said. “Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly.”

Oil market prices soared by $15 a barrel after Opec, led by Saudi Arabia, and other allied oil-producing nations, led by Russia, agreed to deepen their production cuts to 2m bpd this year despite concerns that China’s economic rebound could drive higher demand. The move has angered western leaders because higher oil prices would make it harder for major economies to return to growth, and would provide extra revenues for the Kremlin as its war against Ukraine continues. The expected increase in global oil demand has also dashed hopes among climate campaigners that the Covid-19 pandemic had hastened the end of the world’s rising oil demand.

U.S. stocks are set to nose-dive at least 20% in the course of this year, Wall Street’s top strategist has cautioned. The S&P 500 ended Thursday’s trading session more than 1% higher at 4,146 points. Since the beginning of the year, the index has gained 8.4%, rebounding from a turbulent 2022.

However, in an interview with Bloomberg TV on Thursday, Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, warned that another downturn is looming for American stocks.Wilson—who was ranked No. 1 in last year Institutional Investor survey after correctly predicting the selloff in stocks—said his base case is still for the S&P 500 to end this year at 3,900 points. His bear case puts the index at 3,600 at the end of 2023, while his bull case is for the S&P 500 to end the year at 4,200. Before stocks get to those levels, though, Wilson said he is expecting a bleak scenario in which the S&P 500 plummets to a low somewhere between 3,000 and 3,300 points—a drop of more than 20% from current levels. “That path to 3,900 we still think goes through [the] low 3,000s ultimately,” he said. Wilson, who is a staunch bear and has been making the case for a broad selloff for some time, conceded that he had previously predicted the timing of a downturn incorrectly—but he stood by his pessimistic outlook for stocks in Thursday’s interview with Bloomberg.

“The tactical trading path we’ve gotten wrong this year is the timing of it,” he said. “[But] we don’t think the path is necessarily wrong. Calling the price and the time, it’s hard enough to get one right—to get both right, I think, is tricky. So we’ve been wrong on the timing for sure. But it doesn’t change our view.”

In its latest oil market report published on Friday, the International Energy Agency (IEA) said that “OPEC+ supply cuts risk aggravating expected oil supply deficit in H2 2023,” which could lead to high prices that will hurt consumers and threaten economic growth.

https://youtu.be/kPjHkQS4Fzs