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Despite bank run, why is the market higher? • First, the bank run APPEARS to have stabilized • Second, the inflation SEEMS to be taming Do not be complacent, keep on keeping track of the coming market developments. Just like what Jerome Powell said on the 3rd May after the latest interest rate hike, in the meeting conference, he said “We will take a data-dependent approach, our future policy will depend how events unfold … meeting by meeting.” I totally agree with him! As a retail investor, we can study into the price behavioural movement and I did quite a few videos on that (see below), market will usually give us early signal and we should be able to tell before the next crisis hits again. Trading & Hedging in Nasdaq - E-mini Nasdaq Futures & Options: Minimum fluctuation 0.25 index points = $5.00 Micro E-mini Nasdaq Futures & Options: Minimum fluctuation 0.25 index points = $0.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:MNQ1!
by konhow
Why Russell Index the most Reflective for Bank Run Crisis?Russell represents the true economy of United States. There are 2,000 medium size companies with each value between $300m to $2b. The index includes a diverse range of companies from various sectors, including financials, healthcare, consumer goods, industrials, and technology. In my opinion Russell represents the true economy of united states. If the bank run crisis deepens, it is possible that 2,000 companies will not hold up well. The reasons for this are stated in the video. This could affect the other major indices, with the Russell 2000 potentially leading the pack. The Russell 2000 is considered more reflective of the US economy compared to the other major indices with big names like Apple, Amazon, and Microsoft. E-mini Russell 2000 Index Futures & Option Outright: 0.10 index points = $5.00 Micro E-mini Russell 2000 Index Futures Outright: 0.10 index points = $0.50 Micro E-mini S&P 500 Index Futures & Option Outright: 0.25 index points = $1.25 Micro E-mini Nasdaq Index Futures & Option Outright: 0.25 index points = $0.50 Micro E-mini Dow Jones Industrial Average Index Futures Outright: 1.0 index points = $0.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:RTY1!Short
by konhow
18
When Fear Reigns Banking Majors GainIn times of crisis, investors rush to safety. When risk shows in places of safety, bank runs begin. One's pain is someone else's gain. Silicon Valley Bank (SVB) & Signature Banks' combined assets at $300 billion is witnessing a flight to safety. At $300 billion, it is trivial relative to $23 trillion within the American banking system. Remember that the FDIC only insures deposits up to USD 250k. Both institutional and individual clients holding large deposits in regional banks are rushing to move their funds from regional to major banks. Between 2020 and 2022, regional bank index outperformed the broader bank index. Regional banks business was designed to be lean - collect deposits and extend loans to home buyers and local businesses. This was meant to be less risky relative to banking majors whose businesses were sophisticated and inherently risky. Hence the banking relief law passed in 2018, made regulations less onerous to banks with domestic assets of less than $250 billion. As a result, by end of 2022, US had 2,100 banks with $19.8 trillion in assets. Only ten out of these 2,100 banks had domestic assets more than $250 billion. Lax regulations led some regional banks astray with concentrated bets on customer segments and risk management of asset and liability maturity risk. With rates rising, tides receding, banks that were swimming naked became obvious. Chart below contrasts the impact of unrealised losses on select US bank's tier 1 capital ratio. It is little surprise that SVB imploded with such an adverse capital situation when unrealised losses were accounted for. Now as crisis of confidence in banking spreads across both sides of the Atlantic, depositors are rushing to move their money to larger safer bank and money markets. FT reported on March 15th that large US banks are getting flooded with fund transfer requests from regional banks. SVB has triggered a tectonic shift in depos­its unseen in more than a decade. Veteran hands know well that anxiety created by small shocks make larger crises less likely. JPM, Citigroup are among the beneficiaries of regional bank pains. To aid cus­tom­ers to move depos­its swiftly, these banks are tak­ing extra steps to speed up client onboard­ing. It is reported that these banks are reassigning employees to account opening linked jobs to handle workload and to hasten the process. HNI’s Shifting to Large Banks Despite the liquidity backstop promise extended by US Fed and US Treasury, depos­it­ors are moving funds into lar­ger banks such as JPM, Citi and Bank of America. This phenomenon is more so for accounts holding >$250k (the limit up to which is guaranteed by FDIC). The 25 biggest US banks gained $120B in deposits in the days following the collapse of SVB and Signature while smaller banks saw a net outflow of $108B during that period. This has been the largest weekly decline in deposits at small banks and poses the risk of inciting more financial instability. Citi’s private bank servicing wealthy individuals is opening accounts within a day com­pared to usual timeline of one to two weeks. Citi is reported to open accounts & initiate fund transfers even as new clients are under compliance checks. Larger banks are subject to significantly tougher regulatory scrutiny as a result they become attractive destinations for shell-shocked depositors. Portfolio diversification is not new. Long shadow cast by the debacle of three sizeable banks within a space of a week has exposed the fragility in the system. This has prompted depositors to diversify not only their portfolios but also their banks. Moreover, comparing the actual assets held by large banks to mid-sized banks: SVB and Silvergate, both of which collapsed had their assets largely held in bonds held to maturity or available for sale. For SVB, the maturity date was in the far future, posing liquidity concerns when a bank run ensued. By contrast, Silvergate largely had bonds available for sale but selling them all at once would have caused huge realized losses. Another interesting takeaway is the way in which each regional mid-sized bank adopts a different portfolio tailored for their specific clientele and their needs. Although, this allows them to fine-tune their operations and holdings, it comes with the downside of financial instability during periods of aggressive rate hikes and economic uncertainty. By contrast, Citigroup, JP Morgan, BoA, and PNC have portfolios that are well diversified with a healthy mix of cash & interbank loans, loans, bonds to maturity, and bonds available for sale. Crucially, their significant cash holdings allow them to weather the storm far better and eases any liquidity concerns for depositors. Capital Flow Towards Asset Managers Large asset managers are also witnessing an influx of funds. Seemingly the money is moving away from regional banks and into majors and asset managers offering access to money market funds. Money market funds which hold US Government Debt are considered the safest destination for large amounts of fund given the overwhelming uncertainty in the banking sector. They also have the added advantage of offering investors seniority in case of bankruptcy proceedings. Certain MMF’s are currently offering yields as high as 5.02% compared to a paltry 0.23% average for bank deposits, making the shift towards MMF’s a no-brainer for many. More than $300B has flown into money market funds in March taking the overall assets in money market funds to a record $5.1T. This also represents the largest month of inflows for asset managers since the start of the COVID-19 pandemic. Goldman, Fidelity, and JPM are the biggest beneficiaries from these inflows. Goldman’s US money market funds have increased by $52B or 13% since the beginning of the banking crisis on March 9th. JPM’s funds received $46B while Fidelity saw $37B of inflows according to data from iMoneyNet. Capital Flow into Gold Gold is one of the most prominent safe haven assets that investors look to in times of economic uncertainty and instability. This capital flow was seen during the 2008 financial crisis when bank deposits plummeted and Gold price skyrocketed. The same can now be seen on an even larger scale. Commercial bank deposits have plummeted well below even 2008 levels while the price of gold is teetering around $2,000/ounce, the highest price ever. Although, some gold investors choose to buy physical gold or jewellery, larger investors often opt for other instruments that are more cost effective such as ETF’s or Futures. This too offers the larger banks a huge opportunity to benefit from the inflow of capital into gold-linked products through their investment banking divisions. GLD, or SPDR gold trust is the largest Gold ETF. It saw a net inflow of $915M in March. The same can be seen in CME’s GC futures which saw managed money traders increase their net long positions by 5x or 83k contracts ~$16B. Trade Setup This case study illustrates potential gains to be harvested from spread trades as funds move from regional banks to majors. With rates remaining elevated the majors enjoy a comfortable Net Interest Margin. Rising deposit base by cherry picking high credit quality customers will enable banking majors to vastly outperform the regional banks. Therefore, this case study sets for three spread trades - (a) Long JPM and Short KBWR (1:3) (b) Long COF and Short KBWR (1:2) (c) Long C and Short KBWR (1:1) A spread trade requires that the notional values of each leg of the trade to be identical. Accordingly, the ratios above have been provided based on the closing prices as of April 3rd. Table below sets out entry, target, stop and reward-to-risk ratio for each of these trades. Long JP Morgan & Short KBWR ● Entry: 2.82 ● Target: 3.17 ● Stop: 2.62 ● Profit at Target: $16 ● Loss at Stop: $9.5 ● Reward-to-Risk Ratio: 1.7x Long Capital One Financial & Short KBWR ● Entry: 2.08 ● Target: 2.54 ● Stop: 1.9 ● Profit at Target: $21 ● Loss at Stop: $8.5 ● Reward-to-Risk Ratio: 2.5x Long Citibank & Short KBWR ● Entry: 1.01 ● Target: 1.19 ● Stop: 0.937 ● Profit at Target: $8 ● Loss at Stop: $3.5 ● Reward-to-Risk Ratio: 2.2x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com cme /. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NASDAQ:KBWBLong
by mintdotfinance
2
Eurozone banks now caught the coldAs I mentioned before, the contagion will spread like wildfire because the banking system are so intertwined. We now see Deutsche Bank potentially get caught in the onslaught. Their share tanked by approximately 15% last Friday. After Credit Suisse got obliterated and UBS come to pick up the remains with assistance from SNB ($100 Billion Swiss Franc), their share price now trade below $1. Liquidity injection did nothing to help Credit Suisse. I see this bailout as helping the top 10% to rescue their money and let the rest die. It is always the case. Silicon Valley Bank just gap down and declining more, Signature Bank not showing signs of recovery at all and the regulators/leaders of US still say everything is okay. One thing to bare in mind is that, all the country's leaders have a fiduciary duty to not cause public panic, even though they have a gun to their head. So, what ever you read right now in the mass media by Janet Yellen, Jerome Powell, Bank CEOs and other Central Bank chairperson, is deemed untrustworthy. As mentioned before, the next sector that might get hit will be real estate, in particular commercial real estate. White collar layoffs on-going + high inflation + high cost of borrowing + tightening lending requirement + high delinquency in rental/mortgage payments + work from home/hybrid preference = commercial real estate crash. If this crash happens, Commercial Mortgage Backed Securities will come crashing down too, which will bring down the Big Banks. There will be flight to safety. Gold and silver will continue to rise, no doubt about that. US Stock market will like rally short term as Eurozone and Switzerland is on shaky grounds. US Dollar may see a short term bullishness as sentiment on Euro bloc is hitting the headlines. Massive riots in France due to Macro increasing retirement age, will also be priced-in and act as catalyst. APAC region could potentially see great alternative to store value and protect capital. APAC markets, as I always said, is more conservative and resilient. By Sifu Steve @ XeroAcademy
TVC:DXY
by XeroAcademy
2
Interest Rate Hikes & Bank Collapse: How to Protect Your TradingThe Federal Reserve has been increasing interest rates for the past 9 months, causing a ripple effect throughout the financial world. In recent week, we have seen 3 major banks collapse as a direct result of the interest rate hikes, which has caused trouble in the financial world as well. As a trader, it's essential to understand how these events can affect your trading decisions and how to navigate the current situation. The Impact of Interest Rate Hikes on the Financial World Interest rate hikes have a direct impact on the financial world, including the stock market, bond market, and the housing market. As the Federal Reserve increases interest rates, borrowing becomes more expensive, which can lead to a slowdown in economic growth. It can also lead to increased volatility in the stock market, as investors react to the news and make changes to their portfolios. The Collapse of Banks and the IT Sector The recent collapse of two banks has caused trouble in the stock market specially IT sector, as many IT companies & startups have provided services to these banks. The collapse of these banks has caused a ripple effect throughout the financial world, leading to concerns about the stability of the financial system. Navigating Trading During the Current Situation As a trader, it's important to stay informed about the current situation and how it can affect your trading decisions. Here are some tips for navigating trading during the current situation: Stay informed: Keep up-to-date with the latest news and developments related to the interest rate hikes and the banking collapse. This can help you make informed decisions about your trades. Diversify your portfolio: Diversification is always important in trading, but it's especially crucial during times of economic uncertainty. Consider spreading your investments across different sectors to minimize your risk. Monitor volatility: As interest rates continue to rise, volatility in the markets may increase. Keep an eye on market volatility and adjust your trading strategies accordingly. Be patient: It's important to be patient and avoid making impulsive trading decisions based on emotions. Take the time to analyze the market and make informed decisions based on your trading plan. Use stop-loss orders: Consider using stop-loss orders to minimize your risk and protect your investments. Stop-loss orders automatically trigger a sale when a stock falls to a certain price, which can prevent you from incurring significant losses. Stay disciplined: It's important to stay disciplined and stick to your trading plan, even during times of economic uncertainty. Avoid making impulsive decisions based on emotions, and focus on your long-term trading goals. Take advantage of opportunities: While economic turbulence can be challenging for traders, it can also create opportunities for profit. Keep an eye out for undervalued stocks or assets that may be poised for growth in the future, and consider taking advantage of these opportunities if they align with your trading goals and strategy. Avoid overtrading: During times of economic uncertainty, it's important to avoid overtrading and taking on too much risk. Stick to your trading plan and avoid making impulsive decisions based on emotions or short-term market movements. In conclusion, the current situation of interest rate hikes and banking collapse can have a significant impact on the financial world and your trading decisions. By staying informed, diversifying your portfolio, monitoring volatility, and being patient, you can navigate this challenging environment and make informed trading decisions. Remember to always prioritize risk management and stay focused on your long-term trading goals.
SP:SPXEducation
by AfnanTAjuddin
Robert Kiyosaki and now Larry Fink on Credit Suisse's demiseThis 2 charts reminds me of a James Bond movie, Skyfall. There is a claim by many that, these companies are too big to fail. Oh yeah? 7th largest investment bank in the world is get steamrolled. Yesterday about 6pm Malaysia time, Credit Suisse ($CSGN) got halted due to excessive selling. Robert Kiyosaki predicts this bank will be next. Today, Larry Fink of Blackrock is echoing Rich Dad Poor Dad author. 2nd largest Swiss bank is going under real soon and this will rock Eurozone badly. On to US banks, Moody's have place 5-6 banks under watch for downgrading due to contagion following SVB, Silvergate and Signature bank's catastrophe. The pack leader is First Republic Bank ($FRC). Since last week Thurs, already down 80%. Holy moly! Others will be Western Alliance Bancorp ($WAL), Intrust Financial Corp, UMB Financial Corp ($UMBF), Zion Bancorp ($ZION) and Comerica Inc ($CMA). This year will be crazy. Will Jerome Powell finally pivot? He got 2 options, raise rates and crush the economy OR pivot and deal with rising inflation again. What I think is, you will keep printing money. Like you always do and that's all you can do, dear central banks. Stop covering up simple stuff with euphemism such as Bank Term Funding Program (BTFP) to cover up for money printing. As if Quantitative Easing is not euphemistic enough. By Sifu Steve @ XeroAcademy
C
by XeroAcademy
SBNY Signature Bank next to Collapse? If you haven`t bought those 5X puts: Then you should know that Signature Bank's stock experienced its worst day on record following the collapse of SIVB Silicon Valley Bank and SI Silvergate. Due to high volatility, trading was suspended earlier in Friday's session, and the stock has continued to decline for five consecutive sessions. This downturn was triggered by the closure of Silvergate, the second major bank serving digital assets companies, as well as the regulatory shutdown of Silicon Valley Bank, the 18th largest bank in the United States. It has been reported that Signature Bank had exposure to FTX. I am still bearish on the company and i believe it will reach the $34 - $63 area soon! Looking forward to read your opinion about it!
SShort
by TopgOptions
COIN Coinbase Crypto Winter in SpringIf you haven`t sold COIN here, ahead of earnings: Then you should know that following a string of investigations and lawsuits against it, Silvergate Bank, a prominent lender to cryptocurrency firms, lost five key partners on March 2. Coinbase, Paxos, Gemini, BitStamp, and Galaxy Digital were among the notable crypto firms that previously relied on Silvergate as their banking partner. As a result, Coinbase ended its relationship with SI Silvergate and turned to SBNY Signature Bank, which i also believe it can drop significantly in price. In my opinion, we are about to witness a Crypto Winter in full Spring. COIN Coinbase could easily reach $53 by the end of this month, according to the Fibonacci retracement tool. Looking forward to read your opinion about it.
NASDAQ:COINShort
by TopgOptions
8
SBNY Signature Bank exposure to FTXOn December 21 Fitch Ratings revised Signature Bank's (SBNY) 'BBB+' Long-Term Issuer Default Rating (IDR) Rating Outlook to Negative from Stable. On Jan 10, a team of analysts led by Ken Usdin downgraded SBNY Signature Bank to Hold from Buy, and slashed their target price to $124 from $185. SBNY Signature Bank said that it had an exposure to FTX of less than 0.1%. They also announced a reduction is crypto exposure, of which Jefferies analysts said: “Signature Bank’s decision to shrink its crypto deposits by $8 billion to $10 billion and replacing with wholesale borrowings at 4.25% will drive a significant net interest margin reset in the coming quarters,”, which is a key profitability metric for banks. Looking at the SBNY Signature Bank options chain ahead of earnings , I would buy the $75 strike price Puts with 2023-6-16 expiration date for about $4.45 premium. If the options turn out to be profitable Before the earnings release, i would sell at least 50%. Looking forward to read your opinion about it.
SShort
by TopgOptions
Silvergate Capital - Crypto's White Knights About to Eat a MOASSSo, Silvergate Capital is this bank that services the crypto market and is arguably a pretty shady company. It's a shady company because crypto itself is extremely filthy, is a cult, and doing business with shady cult people who are printing money out of thin air on the Internet brings with itself certain problems that no bank who is legit is willing to muddy its hands with. Crypto is this thing that was originally supposed to provide a check and balance against a national central banking system that was corrupted by the globalists. But, like everything else, crypto was co-opted and ruined by the exact same system it was designed to destabilize. History has come to pass, and just like really dirty water, you can't make it clean ever again. You can only burn it and watch it vanish. If you want to see where the real scam with crypto and its "stablecoins" like BUSD and Tether is, then you need to start looking at how Chinese Communist Party-related entities have pumped and dumped other cryptos, ultimately for conversion into BTC and ETH, which are offloaded on both foreign (South Korea) and US domestic exchanges in exchange for USD. The ultimate purpose of which is for CCP princelings to enrich themselves, and for the regime to have an under-the-table blood transfusion route for USD, which it has needed to stay alive all these years. They need USD because you need USD to buy oil and commodities. It's just that simple. Don't believe it? Look at what happened with Sri Lanka last year when it ran out of USD reserves and couldn't buy oil. People burned the presidential palace to the ground, and their president had to run away in a helicopter. The Communist Party has never been powerful. The Communist Party is dangerous, but it's not powerful. Nothing as riddled by corruption as it is counts as "powerful." It's just that all its members are bound by "mutually assured destruction." Since none of the white knights are willing to touch the topic of the connection to history's most wicked and brutal regime and just want to sound off about Binance and Tether for likes on Twitter, this should already tell you a lot about the integrity of the people who claim to be fighting for justice. But if there's one thing I despise the most, it's the soy leftists who feign to be white knight justice warriors who are opposed to the crypto ponzi and the money laundering scheme, because they just, like, really have morals, yeah? But in reality they use the opportunity to bring in a glut of followers and readers who lost a lot of money in crypto and are resentful and disenfranchised to both grift from and spread socialist indoctrination to. That group of scum happens to be a group boys and girls who has been, only because they were provided intelligence from someone who understands, holding puts on SI and SBNY for a very long period of time. People who are following the instructions of others tend to fail at thinking for themselves, and they tend to get greedy and forget that they don't actually have any abilities. If you don't believe it, just look at all the fools who called for $85 and $55 Tesla when it was already at $100 after falling for four or five straight months. Their bottom puts, and their puts all the way back up, all expired worthless as Tesla more than doubled in value and never even dipped again. Further to my point, Silvergate is the #1 most shorted stock in the market , and by a huge margin. 73.5% of the float is shorted as of Jan. 31, the most recent reporting. Putting that into perspective, everyone's favourite memecoin to lose money on, Bed Bath and Beyond , only had 48% of its float shorted. Now, it's a fallacy to think that because something is super shorted that you're going to get a "MOASS," and even stupider to think that retail can combine their bottle depot pocket change to take out Wall Street's positions. That was never what happened with Wall Street Bets and Gamestop. What really happened is a narrative was spun on the Marxist Reddit PR train to bring in idiots to provide exit liquidity at the top, and only an idiot would believe the narrative that retail combined forces to injure the pearly gates of the world's financial heart. Moreover, despite SI being such a piece of crap and the crypto market being on the verge of being smashed by the Federal Reserve and the US Treasury as they take down stablecoins to install a Central Bank Digital Currency and their own version of the CCP's social credit system, one based on "saving the world from climate change," according to 12/31 SEC filings , the biggest holders of SI, fundamental names like Blackrock and Vanguard, State Street, Block.One, Morgan Stanley, etc, all increased their positions. That should really ring some bells for you boys who are following the soy leftists on Twitter to ape on how crypto, SBNY, SI, Tether, and Binance are all going to $0, and going to $0 tomorrow. You're a few months early. Guillotines fall from high up. Use your brain. Moreover, you can divine some insight from the options chain . Open interest on puts with strikes at $10, $15, and $17.50 are in the high four and mid five digits expiring March 17, and in the low four digits expiring in April from $12.50. But starting in May, open interest on calls with strikes from $15 to $50 are low to high four figures, while in May, there's 35,000 contracts of open puts from $10. I'm of the opinion that Bitcoin is about to retrace significantly to take out early bulls and trap overzealous bears who don't understand market structure and can't think like the market maker. Bitcoin - Can You Fade the Bear Trap for $34,000? Since SI is a crypto bank it will be algorithmically moved in connection with the underlying asset. There is confluence in the price action on SI in that the lows have not been retested. Yet, the dump on crypto is not going to be to set new lows. It's more likely to print new highs. But what the monthly candles tell you is that an extremely critical pivot was already taken out in January: And what weekly candles show you is that when price bounced back into the $20s, PA both printed lower highs and was held back by the mitigation candle left in November Moreover, from the Friday close to the low is a 25% range. This % is a very significant amount from a PNL perspective. Thus, I believe that what is coming is: 1. Too early to go long and PA doesn't support it. 2. Crypto is likely to correct before going up again, if it goes up again. 3. Bottoms are untested, and so a double bottom is possible, but a 78%+ retrace is slightly more likely. 4. Bears are looking for $0.00 because they're very smart, very rational, and are avatars of justice. 5. MMs are going to show them the meaning of "expired worthless" because they're the ones who sold them the puts, lol. You have to understand that a call for a long trade is not an endorsement of a company, the stock market's health at large, or an underlying instrument. It's simply that things don't go to the bottom in a straight line, and the more greedy people become, the more fearful you should be. This is a Warren Buffet quote, and if you can keep a cool head you can take advantage of what's about to happen. Not only can you take advantage of the long opportunity, but you can use the wisdom to find the best short for when these D-list banks really do go to $0.
S
by LordWrymouth
10