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KBE: S&P500 / BANK RUNS / RSI / MACD / DIVERGENCE / BANK CRISIS DESCRIPTION: The chart above shows a relationship between KBE & SPX which is important for the current ongoing banking issues. KBE is a BANK ETF that reflects the overall performance of the banking sector in the United States. At the moment there is a major discrepancy between KBE & SPX value. Normally there is a consistent relationship between the banking sector performance and SPX value but one will have to give in eventually. POINTS: 1. Deviation is 6.25 Point difference & represent crucial points of control for price action. 2. Vertical Orange Lines represent peak price action for S&P 500 & KBE before correction. 3. AVERAGE CORRECTION OF 12% ON KBE DURING BEAR MARKET. RSI: Overextended from RSI AVERAGE banking sector can see some pullback in the coming days. MACD: Currently in EXTREMELY OVERSOLD TERRITORY on MACD FULL CHART LINK: www.tradingview.com AMEX:KBE SP:SPX
AMEX:KBEShort
by DGSTBROKERACC
1929 styled Bank Run Starting Tomorrow !!!SIVB SVB Financial Group Buyout or Bail Out, the only options! SVB was the second-largest banking failure in the history of the United States! Only 2.7% of Silicon Valley Bank deposits are less than $250,000. Meaning, 97.3% aren't FDIC insured, resulting in over $160 billion of uninsured customer deposits. Roughly 50% of the US venture capital-funded startups are clients of SVB, potentially putting 65,000 startups at risk of payroll disruptions. Such a situation could have significant consequences for the startup and tech sectors. SVB did business with FTX, plus many other formerly overvalued tech companies. With $210 billion in assets, $SIBV was the 15th largest bank in the US in terms of deposits. SVB held $91 billion in bond portfolio, classified as “held-to-maturity” securities, with an yield of 1.78! SVB CEO Greg Becker explained that the bank was selling its available-for-sale bond portfolio for $21 billion due to anticipated sustained higher interest rates, challenging conditions in both public and private markets, and elevated cash burn levels from its clients. This move resulted in a total loss of $1.8 billion for the bank. I think we are going to see a government take over of SIVB SVB Financial Group on Monday. In case they don’t do that, a 1929 styled bank run starting tomorrow! So i don’t think they have a choice other than bail out SVB Financial. In case of a Takeover, the buyout area should be $12.75 - $32. This is my Price Target for SIVB. 2020 Covid Lockdown level was $128 so the stock is Still expensive right now! Looking forward to read your opinion about it!
SShort
by TopgOptions
A traders' week ahead playbook - the Fed bring out the big gunsWe start the week on a positive note but with such event risk in front of us volatility remains something that traders need to adjust too and respect. After spending most of the weekend debating who was to blame for SVB Financials demise and who was next in the firing line, we’ve seen the Fed uniting with the US Treasury and the FDIC to bring out the big guns - all strategically timed for the futures open – we’ve seen that Signature Bank has also failed, but in both cases depositors are fully covered and will have access to all deposited capital – this removes a major source of contagion risk and depositors across regional and smaller banks know categorically that the Fed won’t make you wear a haircut and have your back. We’ve seen a suite of other facilities announced aimed at addressing liquidity and funding concerns – notably, banks can access term funding using collateral valued at par – this is a big deal for banks and a clear positive given collateral used for funding was valued at a discount in the current rate cycle – so funding assets, especially for the more destressed financial institutions is now cheaper. The Fed are not only addressing concerns over the bank’s asset side of the balance sheet but on the liability side, where they are essentially stepping in front of a larger bank run, which as we’ve seen once again can be devastatingly swift to bring down any institution. The Treasury has been keen to highlight that SVB Financial, which primarily failed to hedge its interest rate exposure, is not being bailed out and it’s the depositors that are their sole focus - the Fed are essentially the lender of last resort. Still, there's likely going to be further migrations to the stronger banks and those with a large asset base and low equity will continue to see depositors divest capital. The reaction in markets has so far been positive with the USD following a further rally in the US 2yr Treasury, with yields -11bp on the day. The market now prices ‘just’ 27bp at the 22 March FOMC meeting – we see 61bp of hikes now priced through mid-2023, down from over 100bp last week. Certainly, the data over the past five days is a tailwind to lower interest rate expectations. Clearly, the deterioration in the asset quality held on bank’s balance sheet - much of which is not marked-to-market to show the impact of unrealised losses - is a major consideration. The USD is lower vs all major currencies, notably vs the MXN and AUD, where the additional headwind of US equity futures gaining 1.3% is weighing as relief comes into the market. We should see low volatility priced in the VIX index. One questions how long this goodwill lasts and while the troika of US institutions provides a backstop, it's still concerning that we’re in this position - what other black swans could come as a result of the rapid shift in interest rates? The price action in the KRE ETF (S&P Regional Bank ETF) could offer broader market direction, while we watch the extent of relief seen in single stock names such as First Republic and Charles Schwab (Pepperstone clients can trade these on MT5) – but also in USD funding and other risk metrics, such as the difference between secured and non-secured funding. Looking ahead and sentiment in markets and the subsequent price action will most likely be affected by the US CPI print. This is key now and the marquee known event risk that could really move markets around. Naturally given the recent repricing lower in rates expectations it suggests a core CPI print below 0.3% MoM could get the risk party really started. Conversely, above 0.5% MoM could see the market really open the door to a 50bp hike again – the higher the outcome obviously the bigger the rally in the USD and drawdown in equity markets. The market is seeing a higher probability of an above consensus CPI print, but I think we get a more pronounced move in markets on a lower print than the move we could see on a higher outcome – especially if core services ex-housing was to come in weaker. I guess we’ll never know though. We will also see US retail sales and PPI, and both could impact given the hotter prints we saw last month. Aussie and UK jobs and the ECB meeting will also get close attention from traders. It's another huge week in the markets – we could be staring at a big rally in risky assets if inflation comes in soft and we see a sustained rally in financials – where the markets increase conviction that the Fed are close to a pause. Conversely, one can make a compelling counterargument to that, based on an alternate set of outcomes. The fact remains traders need to consider their leverage, and position size and be agile to change – we react, we cut losers without emotion and move on, and we respect but harness the volatility.
PEPPERSTONE:USDX
by Pepperstone
What impact will there be after bankruptcy for SVB? The main reason for SVB's problem this time is liquidity. The banking industry is different from other industries, where the importance of liquidity is far greater than profitability. In the past few decades, there have been too many banks that have experienced extreme risks due to liquidity issues, and SVB has fallen into the same trap. The management was aware of the bankruptcy, as the CEO cashed out $3.6 million in stocks two weeks before disclosing the losses. The exaggeration was that a few hours before the announcement of bankruptcy, the company still distributed bonuses for 2022 to its employees. It is a stark contrast between those who received the bonus and thinking about how to spend it, and those who cannot withdraw their deposits and are worried about the situation. The market is concerned about the possibility of systemic risk and a Lehman-like crisis. As discussed earlier, based on the data, the liquidity risk of large banks is manageable, and the Federal Reserve is providing a backstop. However, there are around 5,000 banks in the United States, and more than just SVB may face liquidity risks in a high-interest rate environment. (Based on the data, there is a significant amount of unrealized losses for the four largest banks in the United States. The risk depends on the ratio of "hold-to-maturity investments/total liabilities." The ratios for the four banks are 22%, 12%, 12%, and 17%, while SVB's ratio is as high as 47%. Overall, the risk appears manageable.) The bankruptcy of SVB has the deepest impact on technology companies, as Silicon Valley Bank was set up to provide financing to technology companies, so many technology companies also keep their cash in SVB. Many companies have already disclosed the amount of their deposits in SVB over the weekend, and the impact on the technology industry is indeed significant. In theory, the money in SVB is safe because the asset problem is not significant, but due to the mismatch of terms, it takes six months or even a year to pay, which is a huge pressure for some technology startups. Those who have started a business know that every day they wake up, they have to pay rent and salaries, and liquidity is the core support for company operations. Hedge funds in the United States have already begun to look for opportunities to enter this time-limited money-making opportunity. Today, a hedge fund proposed to buy the startup company's deposits in SVB at a price as low as 60% of face value. It is indeed taking advantage of the situation to buy at this price, and if the asset confirmation is no problem, the portion due in a year, which is a 5% discount rate, is highly likely to be recovered by more than 90%. The bankruptcy of SVB has had a significant impact on financial assets, and the US stock market has fallen for two consecutive days mostly because of this. The US bond yield has also fallen for two consecutive days, and the flight to safety sentiment is beginning to spread. In the final analysis, the reason for SVB's bankruptcy this time is the Federal Reserve's rapid rate hike. Many contradictions will be highlighted in a high-interest-rate environment. The United States may still be relatively stable, and the greatest volatility may be in Europe and emerging markets. The follow-up is to pay attention to whether there will be further impacts and the Federal Reserve's further actions. The Federal Reserve has confirmed that it will hold an emergency closed meeting of the Federal Reserve System Board of Directors at 11:30 am local time on Monday, and we await the outcome of the meeting. Follow me and you'll get more interesting investment information! Plus, I'll share real-time trading strategies during trading hours, including stocks, gold , crude oil , forex, cryptocurrencies, and more!
S
by EagleEyeStrategy