Friday 5 May 2023

Just How Safe Are US Banks?

 Baltic Dry Index. 1545 -13          Brent Crude 73.22

Spot Gold 2049               US 2 Year Yield 3.75  -0.14

Coronavirus Cases 01/04/20 World 1,000,000

Deaths 53,103

Coronavirus Cases 05/05/23 World 687,576,650

Deaths 6,869,692

"Always do what is right. It will gratify half of mankind and astound the other."

Mark Twain.

With interest rates still rising, the ECB raised by another 25 basis points yesterday, fears are rising over the safety of deposits in US regional banks.

For technical worriers, the US 1 month T. Bill yield soared by 1.06 percent yesterday to 5.76 percent. By comparison,  the 2 year T. Note fell 0.14 percent to 3.75 percent. Does someone smell a banking crash coming up.

How many more US banks have underwater holdings of US Treasury Notes and Treasury Bonds?  How many more have underwater holdings of mortgages, especially commercial real estate mortgages or worse, CRE mortgage backed securities?

Since there’s no way of knowing, every bank says it’s fine and healthy right up to the moment of collapse, US depositors are rightly worried if not outright scared.

With recession looming over the summer and autumn, this new US banking crisis will be around for many months. Coming next, rising unemployment, and rising debt defaults.

More bank failures are likely too.

Asia markets mixed as Wall Street marks four-day losing streak on banking woes

UPDATED THU, MAY 4 2023 11:51 PM EDT

Asia-Pacific markets were mixed as banking fears were reignited on Wall Street, sending the three major U.S. indexes into a four day losing streak. Regional bank shares sold off, with the SPDR S&P Regional Bank ETF (KRE) dropping more than 5% and some banks seeing volatile trading.

In Australia, the S&P/ASX 200 erased earlier losses and rose 0.29%. Investors digested the Reserve Bank of Australia’s statement on monetary policy on the central bank’s deliberations when it unexpectedly raised interest rates by 25 basis points to 3.85%.

Hong Kong’s Hang Seng index rose 0.59%, leading gains in the region. In mainland China, the Shanghai Composite slipped by 0.71% and the Shenzhen Component fell 1.08%.

China’s Caixin services purchasing managers index for April slipped to 56.4 from March’s reading of 57.8 but remained in expansion while the Caixin manufacturing PMI fell into contraction territory.

Markets in Japan and South Korea were closed for a holiday.

Overnight in the U.S., the Dow Jones Industrial Average fell 0.86%, while the S&P 500 slid 0.72% and the Nasdaq Composite shed 0.49%. The Dow turned negative for the year on Thursday, pulling back 0.06% year to date.

Asia markets mixed as Wall Street marks four-day losing streak on banking woes (

Regional bank stocks continue to slide on Thursday with PacWest leading the way down 50%

The rout in regional banks picked up steam again on Thursday morning, with several stocks suffering sizeable losses.

PacWest sank 50.6% was halted for volatility multiple times. The slide began on Wednesday evening following news that the Los Angeles-based bank was exploring strategic options, including a potential sale.

--- Meanwhile, Tennessee-based First Horizon also fell 33% after the regional lender and TD Bank announced that they were terminating their merger agreement. The banks said in a press release that the move was due to uncertainty around when TD would receive regulatory approval for the deal and was not related to First Horizon.

Other notable declines included a drop of 38% for Western Alliance and about 12% for Zions Bancorp. The SPDR S&P Regional Banking ETF (KRE) was down more than 5%.

Western Alliance’s slide came despite an update from the company on Wednesday evening that showed deposits have grown since the end of March.

“That hasn’t taken the heat off of the stock, or the bond prices. ... Investors are very nervous, and I think what they’re nervous about is the fact that Silicon Valley lost 75% of their deposits in 36 hours. There’s not a bank in the world that could really sustain that,” KBW CEO Tom Michaud said on CNBC’s “Squawk on the Street.”

Thursday’s moves come less than a week after First Republic was seized by regulators and sold at a discount to JPMorgan Chase, marking the the third failure of a regional bank since the start of March.

First Republic had searched for weeks for a market solution to stabilize itself after massive deposit withdrawals in the first quarter, but none materialized and regulators stepped in.

Many regional banks saw deposit outflows in March around the collapse of Silicon Valley Bank, raising questions about the stability of their funding and the value of some assets on their books that were not marked to market. Expected regulatory changes have also clouded the long-term profit outlook for the group.

JPMorgan CEO Jamie Dimon and Federal Reserve Chair Jerome Powell expressed optimism this week that the initial wave of bank failures has passed, but the drops for the stocks show that investors still lack confidence.

Michaud said that federal officials might need to change rules around deposit insurance, at least temporarily, to restore confidence in the banking system.

“This turmoil is still rolling, and I think it won’t stop until we build some stability into the system,” Michaud said.

Regional banks fall; PacWest down 50% (

Exclusive: US officials assessing possible 'manipulation' on banking shares

May 4 (Reuters) - U.S. federal and state officials are assessing whether "market manipulation" caused the recent volatility in banking shares, a source familiar with the matter said on Thursday, as the White House vowed to monitor "short-selling pressures on healthy banks."

Shares of regional banks resumed their slide this week after the collapse of First Republic Bank , the third U.S. mid-sized lender to fail in two months. Short sellers raked in $378.9 million in paper profits on Thursday alone from betting against certain regional banks, according to analytics firm Ortex.

Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly.

"State and federal regulators and officials are increasingly attentive to the possibility of market manipulation regarding banking equities," the source said.

White House press secretary Karine Jean-Pierre said the Biden administration was closely watching on the situation, but any possible action would be taken by the Securities and Exchange Commission.

---- The American Bankers Association on Thursday called on the SEC to investigate significant short sales of banking shares and social media engagement that it said appeared to be "disconnected from the underlying financial realities."

"We urge the SEC to consider all its existing tools and to take measures to reduce the avenues for abusive trading practices and restore investor confidence," the group said.

SEC Chair Gary Gensler on Thursday said the agency would go after any form of misconduct that might threaten investors or markets.

"As I’ve said, in times of increased volatility and uncertainty, the SEC is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly,” he said in a written statement.

---- The S&P 600 bank index (.SPSMCBKS) dropped over 3% on Thursday. PacWest Bancorp shares (PACW.O) tumbled over 50% after it confirmed it was exploring strategic options.

Western Alliance Bancorp (WAL.N) denied a report from the Financial Times that said it was exploring a potential sale, and said it was exploring legal options. Its shares plummeted more than 38%, with trading in the stock halted multiple times.

Share price swings did not reflect the fact that many regional banks outperformed on first quarter earnings and had sound fundamentals, including stable deposits, sufficient capital, and decreased uninsured deposits, the source said.

The source gave no details on specific cases that had drawn the attention of federal or state regulators.


Exclusive: US officials assessing possible 'manipulation' on banking shares | Reuters

In other news, the global economy is in trouble. Ultimately, more bad news for dodgy US regional banks.

Maersk Warns of a Downturn in Global Trade

By Bryce Baschuk

4 May 2023 at 12:00 BST

Shipping giant Maersk expects leaner days ahead  following a historically profitable period for the container shipping industry. 

The world’s second-largest shipping company just reported a 56% decline in first-quarter operating profit and warned of weaker results for the rest of 2023. 

The Copenhagen-based firm, which is seen as a bellwether for global trade, is confronting a perfect storm of waning consumer demand, falling shipping rates, reduced freight volume and elevated global inventory levels.  

“The financial performance that we enjoyed in the last couple of years were very much as a result of the extraordinary circumstances with Covid and some of the disruptions that we saw in the supply chain,” Maersk CEO Vincent Clerc told Bloomberg TV. “As we see this normalization we will see a normalization of prices and a normalization of revenues as a consequence.” 

The company, which transports close to one-fifth of the world’s containers, said its freight volumes declined 9.4% in the quarter while freight rates fell 37% versus the same period in 2022. 

Clerc said the industry must be disciplined on capacity in order to avoid a more severe downturn and companies may have to idle more vessels later this year. 

“We’ve already seen a lot of capacity being blanked to match the lower volume demand,” he told Bloomberg’s Anna Edwards. “There’s also some supply side risks in the form of new ships coming into service in the second part of the year and in the next. This will create a new challenge for the industry.” 


Supply Chain Latest: Global Shipping Slowdown - Bloomberg

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

How a US debt crisis standoff could cause a recession - a bad one

May 3, 2023

WASHINGTON - A fight between Republicans and Democrats over the debt limit ceiling could send the U.S. economy into a recession even if the standoff doesn't actually trigger a debt default, analysts say - and a much worse downturn with perhaps 7.5 million people thrown out of work if it does.

Already some corners of the vast market for U.S. debt are feeling a sharp pinch after Treasury Secretary Janet Yellen on Monday said that by early June the government may run short of the money to stay current on its bills - whether they are payments owed to foreign or domestic investors in Treasuries, federal employees and contractors or Social Security pensioners.

Total government spending on average is about $525 billion a month. A big chunk of that, about $225 billion on average in the first quarter, is deficit spending.

Hitting the debt ceiling would mean the government could no longer run that budget shortfall, delivering an immediate blow to millions of Americans who rely on government money directly or indirectly.

The market swoon from what would be an unprecedented U.S. default would bludgeon away billions more in wealth.

And while analysts have floated a few workarounds to keep money flowing, including invoking a constitutional provision that would likely face challenges in court, all are untested.

Investors are taking the risk seriously. Yields on as much as $650 billion of Treasury securities maturing in the first half of June rocketed to record highs after Yellen's announcement, reflecting the increased chance that they may not be paid off on schedule.

The cost to insure U.S. government debt against default has shot to the highest since the 2007-2009 financial crisis.

"I don’t think there are a lot of people in the market who would bet heavily that there will be a default. Most people I speak to think there will be a compromise between the Republicans and the White House," said Lou Brien, an analyst at DRW Trading. "But the odds are not zero, so the market is pricing in the possibility that they will be too late to prevent some sort of funding problem."

All of this is occurring as the economic outlook is dimming anyway.


How a US debt crisis standoff could cause a recession - a bad one (

Spain’s drought has pushed olive oil prices to a 26-year high — and they’re expected to stick

Olive oil prices have hit record levels, thanks to a prolonged drought in top producer Spain — and the elevated prices are expected to stay for some time.

When renowned Spanish-American chef José Andrés tweeted that eggs should be fried in olive oil a finger deep, one user commented: “Olive oil can be expensive at a finger deep. What’s an alternative for those of us on a budget?”

“Aldi olive oil spread used to 99p. It’s now £1.29 Plus lots of the basic ranges have disappeared. Even Aldi is expensive now!” said another Twitter user, based in England.

According to data from the International Monetary Fund, global olive oil prices have hit $5,989.8 per metric ton, marking a 26-year high.

And the high prices could stay “for some time to come,” said Mintec’s oilseeds and vegetable oils analyst, Kyle Holland.

‘Exceedingly poor’ weather conditions

Bad weather in Spain, in particular the prolonged dry spell, is the main reason behind soaring prices.

“The issues contributing to prices trending at near all-time highs are largely poor weather and a severely dry growing period for much of the Mediterranean, but most importantly in Spain, which is a major producer and exporter of olive oil,” Holland said.

As a result of “exceedingly poor” weather conditions, he said, the recent October to February olive harvest produced a yield 50% less than the usual output, tightening global supply and pushing prices upward.

“The exceedingly poor weather conditions meant that ... Spain produced an olive oil crop of around 630,000 metric tonnes, down from the usual 1.4 to 1.5 million metric tonnes harvest,” he said.


Olive oil prices hit record highs due to bad weather in Spain (

Covid-19 Corner

This section will continue until it becomes unneeded.

Due to its importance I will leave this up through the week.  Of course, much more research is needed, plus some research in combination with Ivermectin and other drugs too. Approx. 21 minutes.

Cannabidiol and covid

Cannabidiol and covid - YouTube

Note: Dr Campbell has now been censored by YouTube for a week, but is still available on Rumble.

Update from John (

Some other useful Covid links.

Johns Hopkins Coronavirus resource centre

Centers for Disease Control Coronavirus

The Spectator Covid-19 data tracker (UK)

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Thinking about an EV? Don't overlook how much a battery will set you back

May 3, 2023

Electric vehicle (EV) batteries can be expensive. Depending on the type of EV you own, the battery could set you back $3,500 to $20,000. Based on a federal requirement, the manufacturer’s warranty for an EV battery covers battery replacement for eight years or 100,000 miles. But if you exceed that time frame or mileage, you’ll likely have to pay out of pocket to get the battery replaced. 

Here’s what you need to know about electric car battery cost, how long your battery is likely to last, plus financing options to help cover the expense, should you have to replace your battery.

Average Electric Car Battery Cost

Just how much is an electric car battery? Electric car battery replacement cost largely depends on the make and model of the car. As a general rule of thumb, the more expensive your car is, the more the battery will be to replace. 

EV battery replacement cost is one of the major costs of owning an electric car.

Cost By EV

These are the approximate prices EV owners may expect to pay for the following types of vehicles, depending on the kilowatt hours of the battery pack and model and year of the EV:

  • BMW i3: $16,000
  • Chevy Bolt: $16,000
  • Chevy Volt: $4,000
  • Hyundai Ioniq: $2,800
  • Nissan Leaf: $3,500 to $9,500
  • Tesla Model 3: Up to $12,000
  • Tesla Model S: $12,000 to $22,000
  • VW e-Golf: Over $23,000

If you don’t have the money to pay for an electric car battery cost upfront, there are top personal loans that could help with this expense.


Thinking about an EV? Don't overlook how much a battery will set you back (

Another weekend and what a weekend. The Miami F-1 Grand Prix, the Kentucky Derby and a coronation in Westminster Abbey of King Charles III.

Underwhelmed, most stores in the UK are staying open for business as usual during Saturday’s coronation, money talks I suppose, though I doubt that many UK shoppers are aware of the Miami GP or have even heard of the Kentucky Derby. 

With showers forecast for London on Saturday, a watching world audience may get to see London crowds at their umbrella best. Have a great weekend everyone.

'When a man opens a car door for his wife, it's either a new car or a new wife.'

Prince Philip.

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