Why This Gap Caused A Banking Crisis
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- Опубліковано 30 вер 2024
- EPB Investor Services - epbresearch.co...
The regional banking crisis, triggered by the failure of Silicon Valley Bank, has persisted for the past four months. The core issue lies in the decline of bank credit and banks' hesitancy to extend credit amid an inverted yield curve and recessionary pressures. As a result, bank credit has continued to decrease, with the growth rate slowing and even contracting in recent months. Banks have been grappling with the challenge of replacing low-cost deposits with higher-cost borrowings, leading to a reduction in assets and a reluctance to extend new credit. This situation poses a significant hurdle for banks to grow their balance sheets and meet the credit needs of the economy, making it increasingly difficult for the overall economy to avoid contraction.
The decline in bank credit has had a notable impact on lending activities, with banks pulling back on various types of loans. Business Commercial and Industrial loans have experienced a sharp contraction, while real estate loans, particularly in the commercial sector, have also slowed down. The reduction in lending to businesses is expected to have a dampening effect on economic activity. Overall, the persistent decline in bank credit, combined with the challenges faced by banks in replacing lost funding and the contraction of loan portfolios, paints a bleak picture for the economy, making it increasingly challenging to sustain growth.
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The banking situation is a reminder that Fed hikes are having an effect, even if the economy has held up so far,” It’s precisely at times like these that investors need to be on guard against the next certainty. First SVB, then signature bank and now first republic bank, these are all the signs of yet another 2008 market crash 2.0
Very true, people downplay advisors role, until burnt by their mistakes. I remember just after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researched for license advisors. Thankfully, I came across someone of practical knowledge, and decades of experience, my stagnant reserve of $325K has yielded nearly $1m after subsequent investments so far.
Margaret Johnson Arndt is my portfolio-coach, I found her on Bloomberg where she was featured, I looked up her name on the internet. Fortunately I came across her site and reached out to her, you can verify her yourself.
I am really worried about the current bank crisis/interest rates, these are all the signs of yet another 2008 market crash 2.0 , so my question is do I still save in the United States dollar or is this a good time to buy gold?
Many people underestimate the importance of advisors until their emotions lead to negative outcomes. I remember a few summers ago, after my long divorce, I sought the help of a diligent license advisor. They greatly assisted in boosting my business, increasing my reserve from $175k to around $350k despite inflation.
This is exactly how i wish to get my finances coordinated ahead of retirement. Can I get access to your advisor?
In fact, I'm not sure whether I'm permitted to say this, but I'd suggest searching for Vivian Carol Gioia as she gained a lot of attention in 2020. She is both my coach and the manager of my portfolio.
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Another excellent video from EPB. Please keep it up, keep it scholarly, and don't join the DoomTuber gang just for the panic views.
I have learnt so much watching your videos ,God bless this channel always . At this age , we all have to think long term . Focus on your career and goals . Invest money , Find someone you can hustle and pray with . We can no longer afford to waste time .focus on everything that matters in the long run . Stability, Loyalty, Peace of mind
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@ Vinre2018
ON l.G
I watch many of your videos multiple times since it takes more than 1 viewing to digest the 'richness' of the content. A+
Great video again, you are highlighting important changes and I find your insights highly valuable. I rarely comment on any video, but I noticed that you don’t cap your y-axis when presenting certain graph’s. You include the values, for example of the level of deposit, but the changes look a lot bigger than they are, had you included 0 in your presentation of a graph. Thank you for the content you are creating
These videos are incredible and such high quality
Damn, the GOAT in economics explanation. When's the new vid?
This research group still alive?
For any management who may have not want this short summary vids.
These vids can generate hundred thousand/millions of potential customers on your mailing list. I plan to check it later :)
Wanna invest in US at the proper time
Edit:
Saw the email/newsletter. it seemed to stop around the same month as this vid
I hope this research group is still alive.
Yes they were a bit early in calling for recession
but signs are it's still either soft landing/signs of lower savings/lower economic growth are still here
Where have you been!? I need an EPB fix!
But these graphs don’t show the huge problem . Too much lending on land. Everyone was borrowing on top of borrowing and now there’s so much new money in the market it’ll be years before any reflection of policies by the fed is felt. We won’t pop this bubble until 2025 unless the fed lowers interest rates, then inflation will return and this cycle of unaffordable for most will continue until 2040 or even 2050 until the dollar is no longer the world reserve currency.
Where is the crash you have been talking about?
Coming
So bring on the crash! But first blow off top?
@EPB Research: When you say banks can't make money becasue of the small spread difference between borrowing cost and the interest they get from they clients it seems like you ignore the whole idea, that they can hand out multiple times the money they need to hold. That's why they can still make a lot of money when they hand out the money and put the asset (real eastate) on the balance sheet. Please explain why this is not the case.
I was so glad to see you on Wealthion! I hope it grows your channel exponentially!
Seems like an intentional side effect of the Fed's inflation fight. Only question is if this sparks a recession which is minor compared up runaway inflation
we are already in a depression but they don't want to say it.
@@gottakeepup Not sure I would say depression, but recession for sure. We just don't have the job loss or drop in the sale of goods to indicate a depression. But I wouldn't put a depression out of the possibility of things to come. The biggest thing that has not happened yet is job loss. Once that breaks, then we will see how bad this really is. But the recession is here. Just a matter of time before its felt by more than just businesses.
@@zackeryhardy9504 exactly
@@gottakeepup doomerism is a shitty hobby.
4:00 there is a third option.
bank owners can capitalize their own bank.
but the purpose of a government enforced ponzi scheme is to fleece others, not yourself
"Capitalize their bank" -- that actually caught me off guard. Good one! Lol.
I believe this lack of bank credit and high interest rates will have an impact on the economy, but when? There seems to be zero effect on the real economy. I say this because jobs seem plentiful, most who need a job can find one. Stock market is rallying. Unemployment is still low. Headline inflation coming down (albeit core inflation is holding steady). Non-Farm payroll is higher than before co-vid. All our current metrics look great. No cause for alarm. I guess the FED will hold rates until they see an affect or raise them again until something else breaks? But, what is making this business cycle so prolonged and different than the past?
It’s a takedown shake out….everything is on schedule.
Such a wealth of information in a short amount of time. Thank you.
Did you stop doing videos? I haven’t seen any in over three months
What happened to the recession you predicted earlier this year???
I'm still waiting for the recession. It really seems that many things are in bubble but the bubble just being very resilient
Seems like the much discussed recession may not happen after all
this channel is so good. straight to the point. No call for subs. Very neutral and non opinionated. Favorite channel on YT rn.
Great analysis! Very clearly explained 👍
Good video but you should address accuracy of your housing price predictions.
Just subscribed to your channel and it is excellent! Appreciate your clear explanation of the mechanisms at work in the banking industry and elsewhere. Thank You!
Times are weird. The US dollar is losing purchasing power due to inflation while strengthening against other currencies and assets. The stock market, real estate, crvpto AND precious metals are down because people are fleeing to the "safety" of the dollar. where else can we put our investment money? I can't afford to see my savings of around $320,000 turn to dust in front of my eyes.
Personally, I would say have a mentor. Not sure where you will get an experience one, but if your knowledge of the market is limited, it seems like a good bet.
Sure, Fiduciary CFP are outperforming the market and generating good returns, but some charge a lot, as their services are currently in greater demand than ever.
@@patricia_nura3378 Yes, they can have a positive impact on an individual's portfolio. 𝑴𝒂𝒚𝒓𝒂’s strategy is transparent allowing full ownership of my trading account and the fees are very reasonable compared to my return on investment
Out of curiosity, I searched for 𝑴𝒂𝒚𝒓𝒂 using her full name and she seems pretty tight and outstanding. I read her curriculum vitae, her school career. She is a fiduciary who will act in my best interest. So I booked a session with her on her contact webpage and hope she responds soon
Mayra Femia Hetrick
High quality content as usual
Pray for this young mans health. We need him back
Good work bro. Keep it up.
Literally can't wait for a new video!
But...AI
Please post more content!
Hope you know about Melody Wright (housing)
Only Wixpool offers good returns from investments in DEX platforms on reliable networks like Bitcoin. And I dont see the point of working with risky assets...
Its been over a month with no new video from you. Please make a comprehensive video about the housing market and your prediction.
Cash is King might start to be heard again. All the debt is denominated in dollars...so how can the debt be loaned or repaid...how can cash be raised without higher rates for depositors. Cash is going up in value. That's a depression.
So why are stonks up? Shouldn't there be downward pressure on securities?
The news media is currently flooded with economic statistics. It takes a lot to see beyond the sea of headlines and focus on what matters, which is that no matter how low equities fall, they always rise again. I completely disregard all news and continue to invest. I recently set aside $45k to invest in the market as we anticipate a meltdown. Do you have any suggestions?
Banks just reported smashing earnings...
Do an analysis on precious metals during recessions, please!
Can you do some new videos please? Maybe on the housing market?
The big banks like JPM are reporting earnings today and are doing great.
Great vid, thanks. Is the Y-axis at 2:25 correct?
The question is the Fed smart enough to know when to stop. They need to let capitalism and innovation do the final steps to curbing inflation. If you make capitalism and innovation too expensive, it will only make the problem worse
So no recession or housing crash inbound?
Aren’t savings at banks deposits?
Excellent. As always. Thanks
Thank you for the video
Frightening
Thanks for these!
👌🏻
The only reason why the stock market is doing relatively well is due to the AI boom cycle. I believe that this credit contraction will still be dominated by the increase in efficiency due to AI. Currently two more rate hikes are expected this year so the credit crunch should continue, especially in commercial real estate. Bank stocks are fairly priced, if you are able to whether the economic downturn and not realize unrealized losses, bank stocks could be a good buy.
I disagree. There is no "AI boom cycle" that I am aware of. AI didn't just show up last November with ChatGPT. The technology has been around and used for at least a decade or more in larger corporations. Technology driven Efficiencies are _always_ in motion and dynamic. The term "AI" has just become another useless marking term that means nothing.
AI has indeed been around, but specific application of large language models has created a solution to all sorts of problems. It isn't that far fetched to assume huge technology gains in areas such as task automation and personal assistant tasks to dominate this decade. General purpose transformer models hint at the ability to reason and complete tasks. AutoGPT is just a harbinger for what's to come.
I think I remember hearing about Google deep mind AI and IBM Watson AI from a long time ago. I think they even had Watson go on jeopardy TV show. Mostly they just compete with chess grandmasters to show how smart the AI were
I think it's better to start with a question, Did the intervention by the Fed and Gov during the SVB banking crisis and other banks help stabilize the financial system and by extension the stock market. If so, then we can expect more of these types of actions/programs going into the future and things like BTFP to be extended as long as it needs to be to maintain financial stability.
I believe the primary reason the stock markets are doing so well is that the federal reserve has no credibility. The market believes that at the first sign of trouble rates will be slammed back down to zero and money printed out the wazoo. Best to hold a real asset, like a company. What else would I buy? All debt instruments yield less than zero after taxes and inflation and risk of capital loss. That's not investing, that's throwing money in the toilet. No thanks. That's the reason I'm invested the way I am.
The fact that this channel has 86K subscribers and people like Stephen Graham or Andrei Jikh are in the scale of millions is laughable.
EPB research, can you extend your charts further back beyond 2022. I don't see why 2022 is your baseline. Are you trying to fit the data to your narrative?
EPB is very good at presenting information in a clear manner rather than pushing narratives which is likely why the axis were chosen they way they were. But I agree, that bothered me too.
That would break the echo chamber
always enjoyed the research/presentation here, all 16-18 yr olds wishing to enter finance/or to simply get a better grasp of how economics work should follow this site. To the viewers, many too young to remember, once upon a time, majority of banks only hold 60-80% of their assets in loans, and rest in Treasuries. Now w/ internet, consumers can go straight to Treasuries themselves, leaving banks to figure out how to navigate this reality....Come March 2024, we will see for sure....Commercial Real Estate is in same spot residential real estate was in 2007!!! SVB/REIT's problems are visible to everyone, 2024 will be nasty for the sector....not just in office, retail/hospitality is not any better...(geographic will play a key role, Covid Lock Down states/cities will do much worse vs FL/SE in general this go around compared to 90's S/L and 2008 GFC)
Could you show graphs/charts with more of a gray background? The white is hard on the eyes.
US treasury bonds DO NOT DEFAULT. Any bank holding them IS SAFE. We DO NOT HAVE A BANKING CRISIS, that's why we're not hearing about banks failing in droves.
What do you call yield control and synchronized policies between Treasury and FOMC? Why were US Treasuries denominated in Swiss currency during the 1970s.
A bank can fail by holding too many US treasury bonds. They may be forced to sell them before the expiration date in order to meet depositor demands. If interest rates are rising the bonds will be worth less than they paid for them forcing them to sell at a loss. This is called interest rate risk.
@@bentbeyondrepair let me rewrite what you wrote. If people panic and run on their banks then it can fail, otherwise banks holding treasury bonds are safe b/c treasury bonds do not default.
@@bentbeyondrepair i'm an ex public finance banker, i know how bonds & interest rates work.
@@bentbeyondrepair treasury bonds are the highest of the high, and when markets tank folks buy treasury bonds - 'flight to quality' is the term bankers use.