Market Catastrophe *DESPITE* Fed Bank Bailout!! WARNING [Silicon Valley Bank]

listen to this you've got the co-founder

of Home Depot chiming in on this banking

crisis that's how bad this is getting

he's saying maybe the American people

will finally wake up and understand that

we're living in very tough times in fact

that a recession may have already

started who knows he says he goes on to

say quote these banks are badly run

because everybody is focused on

diversity of the woke issues and not

concentrating on one the one thing they

should which is shareholder returns and

protecting their shareholders and their

employees instead they're more concerned

about social policies and they think

that these banks are basically badly run

yikes this is a rebuke from the

co-founder of Home Depot Mr Marcus

slamming the banking crisis we've got a

lot to talk about with the banking

crisis remember we've got those coupon

codes linked down below for the programs

on building your wealth and I'll be in

the Silicon Valley area today so DM me

on Twitter or Instagram if you want to

share your story as a VC or a founder of

a startup so yesterday the Federal

Reserved you learned and issued what was

essentially a de facto 100 bailout of

FDIC even though that's not technically

the way it works because we have a new

btfp facility yes it literally sounds

like or seems like it would stand for by

the effing pivot facility it has its own

particular name that's not the actual

name but we'll just pretend it is

because it's funny but anyway that's the

Federal Reserves a program for providing

25 billion dollars of a Federal Reserve

backed liquidity to make sure that Banks

can go to the discount window at the New

York fed and basically hand them toxic

assets and the Federal Reserve

apparently without discounting those

toxic assets will give them money make

no mistake that is a bailout now Joe

Biden will be speaking and talking about

how don't worry your money is safe with

the banks we have backstopped all

Reserves at Banks all deposits are safe

you don't need to go close your bank

account at your local Regional Bank or

your credit union fear not because look

we are protecting all depositors don't

worry that three banks have just

collapsed in a span of five measly days

don't worry everything is fine and I

hate to say it but when people tell you

everything is fine during a banking

crisis I hate to say it but sometimes I

think thou protests are too much and I

think that's the same thing that's

happened with happening with First

Republic First Republic yesterday let

everyone know don't worry we have 70

billion dollars in liquidity we're fine

to cover deposits there's stock this

morning promptly down over 60 percent

after all silvergate closed on Wednesday

Silicon Valley Bank went into FDIC

receivership on Friday and it's being

liquidated no buyers showed up so on

Sunday the Federal Reserve had to come

out and you turn to bail out a bank and

I understand they're they they do not

want you to think this is a bailout I

make no mistake it's a bailout uh and

then at the same moment Signature Bank

collapses that's a real estate lender

who focused on Wealthy clients but made

a failed crypto bet and now the

government has taken control of that

bank as well that's three Banks down in

five days but don't worry the FED says

everything is okay there's nothing to

worry about here I don't know folks to

me I think there's a lot to worry about

and that kind of worry is what you're

seeing show up in the market the market

does not seem to believe the Federal

Reserve when they say this isn't a

taxpayer-funded bailout after all the

FED is trying to clarify that this is

just a loan to Banks and if there are

any losses don't worry the other banks

will just pay a special FDIC fee to

cover those losses I don't know about

you but that sounds a little bit like

banking socialism to me oh One Bank

failed we'll just make everyone else pay

their fair share of that bank making

risky moves and I think Jeffrey gonlock

who's a pretty Big Bear right now makes

the best argument he says quote so if I

have this right the Federal Reserve will

make loans on some of the collateral at

a par valuation that is worth 40 percent

less

yikes let me simplify that so you could

see what the FED is basically doing as

Jeffrey explains it here and then you

tell me if you think this is a bailout

or not because the government does not

want you to believe this is a bailout if

a bank goes to the Fed so here's the

bank and here's the fed and we'll call

this the discount window right here and

here's the banker and the banker says

hey I've got this uh note right here uh

the note says it's worth ten dollars or

it will say it's a hundred dollars the

note says it's worth a hundred dollars

don't mind the fact that it's actually

lost about sixty dollars of its value uh

in in market value so don't mind the

fact that this is technically only worth

forty dollars don't mind that at all uh

will you take this toxic asset in

exchange for a hundred dollars in cash

and the Federal Reserve is saying yeah

Yep looks good to me here's a hundred

dollars you're good we'll take your

toxic asset really only worth forty

dollars but we'll tell the American

people it's a one for one transaction

because we don't want the American

people thinking we're bailing out

Silicon Valley that'd be crazy we don't

want that at all now then some people

say oh but Kevin this is a facility

that's set up 25 to 100 billion dollars

of money back during 2008 and they've

set this facility aside for emergencies

in the future well all you have to do is

go to the left leaning Washington Post

to realize who actually backstops that

facility ah it's the American taxpayer

so anybody who tells you no this is not

a bailout the shareholders and the

bondholders are getting effed so they're

getting punished we're not bailing

anyone out yeah you are you're bailing

out the depositors now of course we

don't want to see people dead laid off

we don't want to see businesses go

bankrupt but let's be clear the bank was

known for giving risky loans and not

asking that many questions they had a

white glove service for giving you

mortgages if you were the founder of a

startup even if you didn't really have

any income for your business in other

words it was sort of the qualification

metric of you're a startup and you're

losing money here's a loan sounds like a

great way to benefit as a depositor

without taking any risk because the

Federal Reserve basically just told the

entire world there is no 250 000 FDIC

insured limit in fact the limit is

everything we will make sure you don't

lose a dime at the banks in other words

the 2018 economic growth regulatory

relief in consumer protection act which

basically reduced the regulation on

smaller Banks which meant they were not

considered it too big to fail if they

were under 250 billion dollars inside

like silverbank or the other bank banks

that have collapsed is actually false

that's just a farce the Federal Reserve

thinks everything is too big to fail and

maybe that is a sign that things are

actually a whole lot worse than they

currently seem consider the fact that

the last time the Federal Reserve got

out of bed on a Sunday to actually do

something was during the covid pandemic

where in March they u-turned on a Sunday

and cut interest rates two percent on a

Sunday they couldn't even wait until

Monday to do that it's the same thing

that happened yesterday although of

course the measure of it slightly

different one cutting rates the other

supporting a bank and basically bailing

out Banks but the reality is the Fed

woke up on a Sunday because this is a

big issue now going back to some of the

standards of 2018 remember what 2018 did

it eliminated the vocal rule for small

banks that basically was a rule that

says small Banks aren't allowed to

speculate on their Investments and guess

what the 2018 act got rid of that

Silicon Valley Bank was one of the banks

that was begging Congress to quote CEO

quote here let workers save thousands of

hours per year in stress tests and

preparing resolution plans we're just a

lender we're not a systemically

important bank that's what they lobbied

in 2018 to reduce regulation and now oh

no we're systemically important please

taxpayers bail us out you literally

can't make this stuff up but the

government and Joe Biden do not want you

to think this is a bailout whatever you

say Do not call this a bailout we're

just backstopping depositors nobody

wants to see a deposit or lose money

right yeah maybe they got benefits from

banks in terms of easy Lending easy

lines of credit for money losing

businesses and basically White Glove

services for their Founders but don't

worry we're just backstopping the

banking system because we don't want

contagion it's so bad that according to

a representative in our house of

Congress

he heard an individual in the Senate ask

their committee this is all from Twitter

okay this is Thomas massive is the rep

who's saying this he says quote a

Democratic senator literally asked

whether there was a program in place on

information

to censor any social media information

that could lead to a run on the banks

boy I got a big middle finger for you Mr

Democratic senator because the last

thing we want is to be censoring

Americans while lying to them about the

fact that this is not available

you can look this up the treasury

exchange stabilization fund ultimately

backs the program that is known as the

btfp bailout facility yes it's a stupid

acronym but

the treasury exchange stabilization fund

is backed by Guess Who

you and that's why we're starting to see

markets freak out because wait a minute

if we're being lied to about whether or

not this is a bailout and the Federal

Reserve is waking up on a Sunday to

conduct this bailout is it potentially

possible that things are worse than they

appear and the answer is yes you

remember what the most painful part of

the economic cycle is it's not the

inverting of the yield curve folks it is

the steepening of the yield curve if you

look on screen now I want you to see

this yield curve plummeting now on the

far right I'm going to show you what the

yield curve between the two year and the

10-year is doing today you ready for

this look at that folks that is a

massive steepening of the yield curve in

other words the 10-year treasure yield

the bond market is is is driving 10-year

treasure yields down 12 basis points

while driving the two-year treasury

yield down over 28 basis points in other

words the spread the difference between

the two the tenure is not falling as

fast as the two years falling the spread

between the two is narrowing that shows

up in a chart as a steeper yield curve

generally it is the steepening of the

yield curve that leads to the most pain

in markets and leads the Federal Reserve

to ultimately U-turn and bailout markets

and turn the money printer on again to

continue essentially their

government-funded socialism what do we

have here Goldman Sachs Financial

conditions index up what do we have here

European Bank stocks all down we expect

to see a lot of that in America as well

what else do we have we have the

five-year Break Even curve five-year

break-even curve rightfully so

plummeting because everybody's freaking

out why is everyone freaking out well

because this is a big deal a bank crisis

in America is a form of a financial

crisis and there's a reason why markets

are basically pricing in that the

Federal Reserve is going to start

cutting rates again look at this history

March 8th what do you have no rate Cuts

until

2024. you could see that by see the

orange bars at the top you really don't

see an implied drop with certainty until

approximately January of 2024 you could

potentially argue that's about December

of 2023 right around there that's fine

fair game before March 8th we definitely

did not have a rate cut being priced in

until about March of 2024 so you've seen

the right rate Cuts actually start

getting priced in as soon as March 8th

what happened uh and you could sort of

look at this and say November 2023

potentially the first bringing it down

to about five six a day later we have

November sitting around

5.4 a day later in the morning we have

our first cut uh sitting over here as a

height of about 5.25 price stand for

what looks like August on March 10th in

the evening we have what looks like a

5.15 rate a terminal rate or sort of a

moment rate uh rate at the moment with a

rate cut priced in as soon as or what

looks like early August but a lower

level uh than we had earlier in the day

then what we have the very next day on

the 12th is a curve that shows an even

larger drop at the beginning of August

so in other words you could see this is

becoming instead of a higher for longer

curve which looks like this see the Blue

Line how it's elevated for longer

stretched out more look how It's Quickly

starting to get pulled down on the right

side it's kind of like just look at the

blue it's kind of like somebody tied a

little anchor oopsies that's a little

messy uh that's the back of the desk

it's kind of like somebody uh pulled a

little or tied a little uh anchor to

that blue line and then it just got

joint down that's a little bit what it

feels like right there you're yanking

down that right side of the curve in

other words you're undoing higher for

longer and part of that is because

markets are actually thinking oh good

lord there is a chance

there is an actual real chance we might

be breaking things and as Michael burry

suggests uh oh we are looking at a 2000

and 2008 financial crisis again he says

quote in 2000 2008 and 2023 are all the

same people are full of hubris and greed

and take stupid risks and fail money is

then printed because it works so well

Mike Wilson from Morgan Stanley tells us

there are long and variable lags and

guess what's starting to show up now

long and variable lags German bond

yields have fallen as rapidly today as

they lasted a 1987 on Black Monday this

is a big deal and the contagion of the

Federal Reserve and FDIC and Treasury

Department bailing out Silicon Valley

Bank probably won't end the bank run

even Bill Ackman who's been begging for

a bailout from the government suggests

yeah other banks are probably still

going to fail and so today I wouldn't be

surprised if the fears of a bank run

continue after all a bank run generally

isn't a logical process a bank run is

generally what happens when people make

a relatively irrational decision of

pulling all their cash out of a bank for

fear that the bank is going to collapse

however in defense of people taking

money out of their Banks it's worth

considering the following if you're at a

let's just call it tier one Bank a

deposit is basically a deposit because

we expect that if the Federal Reserve is

willing to bail out a not too big to

fail bank then you could pretty much

guarantee they will run the money

printer as much as they need to to

backstop your money in a tier one Bank

Bank of America JPMorgan Wells Fargo

City Goldman Sachs and so on a top eight

Bank right after all those are the banks

that go through the most rigorous

Federal Reserve stress tests and those

are the ones that the Federal Reserve

says we trust and regulate the most and

we will do whatever we can to backstop

them that is now really considered a

tier one style deposit like deposit

actually equals deposit a tier 2 bank is

sort of a question mark like okay well

at what point are we no longer too big

to fail and maybe our deposits won't be

risk risk-free at all banks in the

future and if there is a non-zero chance

of my deposits being at risk at a

smaller Bank

why would I bank at a smaller Bank well

maybe you leave a few thousand bucks or

whatever and you say or a few hundred

bucks whatever and you keep a

relationship but you park most of your

money where maybe

it won't be as exposed to pain

who knows or potential pain there dare I

say who knows but the point of all of

this is simply to say Hey look

this is very clear it is a Federal

Reserve bailout of depositors it is

something that is likely to cause a lot

of volatility over the next few days

again we're seeing it in some of the

bank stocks all we have to do is look at

the Community Banks like FRC the thing

is down 65 at the time of this recording

Bank of America is down four percent

City down 2.25 percent JPM down one

percent the pain is here and it is

likely to stay in the meantime bond

yields are falling which maybe that'll

actually be good for Real Estate because

after all lower 10-year treasury yields

might mean that real estate assets uh

end up being able to get lower access to

mortgage rates unless of course the

spread between a bond yields and a

mortgage rates stays or increases should

I say then it's possible mortgage rates

could stabilize but I wouldn't be

surprised if they come down the real

fear though again is what happens in

markets and what happens with the

Federal Reserve will the Federal Reserve

go for 50 25 or 0. I've previously been

arguing that the Federal Reserve is more

likely to go zero than they are 50

thanks to the events that unfolded last

week Wednesday Thursday collapse of

silvergate and of course the collapse of

Silicon Valley Bank on Friday with the

leading indicators of that on Thursday

well sure enough now markets are pricing

in the highest likelihood of a 25 BP

hike a zero percent chance of a 50 BP

hike and now a chance of a zero percent

hike in other words a Fed pause JP

Morgan is calling for a 25 basis point

hike but what is Goldman Sachs saying

Goldman Sachs is saying Now's the Time

to pause Goldman Sachs is officially

calling for the Federal Reserve to pause

thanks to the uncertainty of this

banking crisis where not straight up

today we'll see what happens but we

expect a lot of volatility so that gets

you caught up on what's going on with

the banking crisis