Silicon Valley Bank troubles may cause Fed to start cutting rates, says Larry McDonald

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[darnellcapriccioso]

With all this scary news making the headlines, is this really a good time to buy stocks? I know everyone says the market is ripe enough for buying but will stocks tank further this year? How long until a full stock recovery?

[Tommytumee]

I am late to pay my rent and thus Fed should start cutting rates. 🤣

[conduit]

The Fed will absolutely *not* cut rates. The banks at risk of runs are the ones offering squat for interest, like SVB.

[Quantitative_Teasing]

This is absurd… banks are hugely capitalized they just don’t want to pay interest. As people withdraw their cash for better yield on T bills then the banks will be forced to compete hence a new equilibrium. The fed isn’t going to pivot because the banks are insistent on paying 0pc interest.

[donm]

The fed and Jerome was on TV this week and just said they need to raise rates to get inflation to come down, with inflation still over double their target rate, and employment numbers excellent, the fed just said they have to raise rates to bring inflation down since the raises haven't had the desired effect yet. These bank managers just put to many eggs in 1 basket and screwed up, they shouldn't be bailed out, let them fail.

[omnimoeish]

It's hilarious she keeps calling SVB a small bank. It was the 16th biggest bank by assets had nearly a quarter trillion in assets. It's also hilarious people think tightening financial conditions is going to get inflation down when it's 95% due to pent up demand, excess pandemic savings and supply chain problems all of which have nothing to do with interest rates. Sure the higher interest rates bring prices down on houses and cars slightly but that seems to be about it.

[BillyBob-oplg]

WTH that would be the stupidest thing ever. It would drive all us regular folk into even worse poverty if they were to reverse too soon

[bracomatkov]

Becky starts by saying she doesn't want to spark additional concerns then she does precisely that. Fed pivot talk is back and will be repeated for the rest ot the day. LOL

[alexp]

Moody's Credit Rating Agency granted Silicon Valley Bank a rating of "A" just three days before this bank went down.

Let that sink in folks.

[ecrespol]

Seriously this is probably the worst analysis I've ever heard, the Fed is going to cut rates because of a run on a regional bank caused by the bank's bad messaging. If you believe that I have a bridge to sell you. Then he goes on to say money is leaving the banks because of the rate on the 2 year, which is also ridiculous banks offer a lower rate than the 2 year because they are more liquid the fact that they are now paying a rate well above zero only makes them more attractive to depositors now.

[ironmikehallowween]

It’s just numbing at this point. Rates are not being cut.

[davidsawyers]

The fed better not cut rates, better raise rates. Stocks are only as high as they are because of cheap debt. These are normal rates for the past 30 years.

[jackjhmc]

as a former banking equity analyst, it s impossible to model most of the banks unless you can forecast interest rates 18 months ahead with high precision. Good luck with that.

Most analysts only know a rough idea of exposure but it s a nightmare when blackswan events happen and there are just with way too many moving parts.

[TheWesterosiNinja]

Yeah cut rates and let inflation expectations become unanchored. Sounds like the guest is offsides on his equities exposure...

[st_eunice]

So basically banks should give more to their users/savers and that should cause fed to pivot😂

[oluwakemisolaakeju]

Hit 213k today. Thank you for all the knowledge and nugget you have thrown my way since last year. The hedge fund you talked then was the game changeR for me. Since I started working with them everything just aligned for good!!!🥰..

[AH-fmrj]

Dude, marked to market was exactly the problem of 2008😂😂😂

[jerolvilladolid]

Nonsense! SVB was a well managed company with most of its assets in safe, treasury bills and bonds. The fatal mistake it made was make a direct offering in the stock market this week. As you know, the US equity markets is beyond acidic right now due to the Fed’s absurdly high interest rates. And the stock market is FULL of short sellers today.

If you day trade, you know that since november of 2022 any direct offerings by companies attract hordes of short sellers. Plunging a stock -60% in 1 day. Even though that same stock rises +60% 2 days later when the short sellers close their positions.

Normal pharmaceutical companies can take these 1-day stock collapses. But SVB forgot that any collapse in its stock price, however artificial and temporary, will cause depositors to loose trust and withdraw their money. Thats precisely what happened less than 24 hours after they were attacked by short sellers.

[christianloeckinger]

If the yield of the T-bills are the reason for the bank run, there is a easy solution: increase the savings acc interest rates. Cuts in your profit but saves your capital.

[mr.bojangles]

The problem is that most people interviewed has less problems with high inflation then with high interest rates