The Banking Hell is Worsening | Deutsche Bank Crash & Severe Recession.

all of a sudden that funding kind of

evaporates and then the cost of capital

for banks to fund themselves changes

dramatically and alters and then all the

eyeballs come on okay who's the next

victim you know who's the who's the next

leading to have to bear and the serpent

in the market the serpents at least in

the market wants to find that next

fixture well folks just as we thought

the banking crisis might be over the

banking crisis is continuing to evolve

take a look at this screenshot of the

pricing of credit default swaps of four

Deutsche Bank on the right side you

could see these skyrocketing of credit

default swaps now we have been at this

level before in September and October

but why are we potentially revisiting

those levels again well it's potentially

because the banking crisis is actually

just getting started is it possible that

silvergates and Silicon Valley Bank as

well as signature and those bank

failures could all just be the tip of

the iceberg and the answer to that is

absolutely and unfortunately yeah yes

now don't worry says Jerome Powell

Jerome Powell tells us our banking

system is sound and we have nothing to

worry about and Janet Yellen says mostly

the same although stopping short of

suggesting that will fully guarantee

deposits in fact Janet Yellen

flip-flopped on Wednesday on Wednesday

Jerome Powell suggested don't worry all

deposits in the banking system are safe

and when he was challenged on that

suggesting hey wait a minute are you now

saying that FDIC insurance is extended

past 250k because you know that'd be

good that'd be a way for you to prevent

the banking crisis and the banking runs

for continuing right and he said don't

worry deposit outflows have stabilized

and we have our tools but that's all

we're willing to say that same day Janet

Yellen said this year as I said last

week the U.S banking system is sound

Federal government's recent actions have

demonstrated our Resolute commitment to

take the necessary steps to ensure that

deposit or savings remain safe that was

different from what Jerome Powell said

that led to a lot of nervousness like

hey wait a minute trumpal just said

everyone's safe you're saying you're

taking steps to make sure everyone is

safe that led to nervousness so the very

next day when she then testified before

the other chamber of Congress she

revised what she said she said following

as I have said we have used important

tools to act quickly to prevent

contagion and they are tools we could

use again the strong actions we have

taken to ensure Americans deposits are

safe certainly we would be prepared to

take such actions again if warranted in

other words hey um we just want to align

with what Jerome Powell said yes yes we

still have tools on the tool belt to

protect the banking system don't worry

no we're not guaranteeing everything but

trust us everything is fine well why

then Are banks like JP Morgan down 10 in

just the last two weeks why then our

credit default swaps which are like an

insurance premium to protect an investor

against laws at a bank skyrocketing and

why all of a sudden are we seeing this

fear arising even amongst companies like

UBS again that uh oh we might actually

have more pain coming than we expect

well it's probably because of the a1t

Wipeout over at Credit Suisse that a1t

Wipeout was actually a really big deal

and it started to lead to margin calls

around the world and a lot of panic that

wait a minute nobody really knows the

scope of what's going on and that is

creating nervousness take a look at this

article here here's an article from the

financial times talking about how the

a1t bonds were wiped out now what's

really important to know before you go

into this is that bonds and then and

somebody holds a bond is really just

somebody who holds an IOU right if you

lent me a thousand dollars and I gave

you a piece of paperback that said I owe

you a thousand dollars back it's just

like you're holding a bond now let's

assume you're holding that Bond and

you're like okay well if Kevin defaults

I get access to all his stock Holdings

first and that's generally what a bond

is known as but now you have swiss

Regulators who came in and said you know

what

we want somebody to buy this bank and we

want somebody to get those assets that

Kevin has maybe for pennies on the

dollar but we want somebody to buy those

assets let's just screw the bond holders

holding that note and wipe them out

before we wipe out the shareholders now

that is really weird because yes those

bondholders can get wiped out with a1ts

but not usually before the equity

holders but that was the most convenient

way to facilitate a deal

at Swiss banks and so that's exactly

what happened

the a1t bondholders got completely wiped

out written down to zero while

shareholders received 3.25 billion

dollars so in other words 17 billion

dollars of Bonds were wiped out while

shareholders actually received 3.25

billion dollars which is at least

something on the value of the company

now that has led to this fear of others

starting to sell these bonds look at

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for example we looked at a couple

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look at this selling pressures amongst

a1t clients especially wealthy clients

are starting to receive margin calls why

would they receive margin calls because

these were deemed to be super safe and

they had almost a 10 coupon think about

this a 10 coupon is like saying hey I

lent you a thousand bucks will you pay

me nearly 10 interest sure and don't

worry you're safe before the

shareholders and then what happens you

get rug pulled you get wiped out before

the shareholders get wiped out but you

were expecting to get 10 interest and

what's happening now you're kidding

absolutely nothing and so these wealthy

family offices throughout the world

whether they're in China uh in different

parts of Asia or in Europe who invested

in these a1t bonds thinking they were

safe

are actually getting wiped out and now

they're getting margin called and now

they're panicking thinking oh my god

well if this could happen at Credit

Suisse then maybe this could happen in

other Banks as well and maybe we should

sell out of this and this is much

riskier debt than we thought in fact the

financial times is quoting people saying

the following we haven't slept since

Sunday said one singapore-based private

Banker people are completely gobsmacked

now what is a private Banker well

private Banker is a banker that helps

work with people who have generally more

wealth than normal people who bank at

the bank and you do usually have three

levels you have uh for example if you go

to chase you have anybody who walks into

Chase who can open a bank account then

you have the private bank which is

usually where you have more than 250 000

in assets or you have the JPMorgan

wealth bank which is when you have more

than 10 million dollars in assets

these private Bankers are the people

usually representing people with a lot

of wealth and they are seeing their

clients freaking out over these bonds

getting wiped out and it's leading to

fears that the same kind of stress can

happen at other Banks and that is why we

are now seeing credit default swaps at

Deutsche Bank Skyrocket and what is that

leading to it's leading to their stocks

plummeting in fact in pre-market trading

Deutsche Bank stock is down as much as

13 and you're starting to see the same

kind of pain in American markets down 13

in in European markets right now on the

uh the NASDAQ or sorry the New York

Stock Exchange we're down 9.53 on

Deutsche Bank uh in pre-market you've

got a more limited response to U.S banks

but they're down JP Morgan for example

is down 2.24 so you're starting to see

fear that

Janet Yellen and uh Federal Reserve

chairperson Jerome Powell might not be

capable of handling this contagion

because all of a sudden if Deutsche Bank

starts having problems you're going to

have a whole lot more problems why well

because Deutsche Bank employs 82 500

people across the world on top of that

it has 1.5 trillion dollars in assets

think about that for a moment Silicon

Valley Bank had 211 billion dollars in

assets 1.5 trillion is a multiple of

seven that is you're now starting to see

stress at a bank that is seven times the

size of Silicon Valley Bank it is three

times the size of Credit Suisse and

Banks across the world are now suffering

France's Society generally is down seven

percent this morning Deutsche Bank is

obviously a German Bank in case that

wasn't clear UBS is also down as the

justice department is now probing UBS

Silicon Valley Bank is supposed to be

sold this weekend with bids due tonight

yes bids are due tonight for a Silicon

Valley Bank gosh bids being due tonight

kind of remind me of something so

yesterday as a tangent here uh this

amazing person who works for me Justin

uh just sent me a message that we have

now introduced take a look at this a new

feature for the courses on building your

wealth that let you now buy now pay

later with either a firm or karna or any

of the other buy now pay later Services

kind of cool I didn't know we could

integrate that we now have that a lot of

people have been requesting a buy now

pay later option uh and while I'm not

the biggest fan of buy now pay later we

now have that as an option for the

courses on building your wealth link

down below so in honor of that we have

extended the coupon code just today just

today uh so that way you could use that

coupon uh that was supposed to expire

Wednesday along with buy now pay later

so congratulations if you're interested

in using that but anyway going back to

Silicon Valley Bank Silicon Valley Bank

bids are due tonight uh bids will be

open until this evening and the bank is

expected to be sold over the weekend now

what's fascinating about that is they

want this bank to be sold before the

Market opens on Monday to prevent Panic

of a disorderly sale keep in mind the

kind of recession that we could be

walking into could be a balance sheet

recession which is exactly what you're

seeing happening at these banks these

banks are seeing their balance sheets

deteriorate at the same time as Bank

runs and fears are being caused at

specific Banks leading to a

consolidation of assets at larger Banks

but not just at Banks people are also

fleeing Banks and the reason people are

fleeing Banks is because you can

essentially get a yield at non-banks

well and money market funds why bother

getting a yield of bank if you can get

yield at money market funds look at this

folks Brett Whitton fantastic guy

brilliant mind over at ARC invest I'll

tell you Kathy would like or not she

employs some fantastic researchers look

at this chart right here money market

funds seeing a skyrocketing Google

search a result a sort of an explosion

of Google search results over here why

are you seeing this explosion of Google

search results where you're seeing it

because people are looking for a safer

place to put their money and why are

people doing that because why put your

money in the banks if you could just put

your money in treasuries or money market

funds and basically get a yield that you

couldn't otherwise be getting it's

fantastic so searches are skyrocketing

what is that doing it's leading to more

of a run on a Banks that's incredible

but it's also not good for the banks so

what's next well Silicon Valley Bank is

expected to be sold this weekend listen

to what happened at Silicon Valley Bank

and it shows you dare I say the near

corruption that happens at these Banks

you know how Joe Biden came out and said

hey uh don't worry even though we bailed

out depositors we punished the

executives because they got fired really

the executives got punished well guess

what Silicon Valley Bank just told us

about Executives getting punished do you

want to hear it here it is executive

paying at Silicon Valley Bank soared

after the bank embarked on a strategy to

boost profitability by buying riskier

assets exposed to Rising interest rates

according to the financial times

analysis of security filings and people

familiar with the matter the jump and

pay for CEO Greg Becker and CFO Daniel

back was the result of large multi-year

bonus Awards pegged to the bank's return

on Equity measure of profitability that

Rose sharply between the risky Landing

period of 2017 and 2021 filing show well

isn't that a little bit of a surprise no

it's not a surprise at all why is it not

a surprise at all it's not a surprise at

all because obviously when banks are

encouraged to be riskier what happens

they make more profit in the short term

so the executives get paid more money uh

that is not good because it encourages

more risky debt that is not fantastic

uh so what do you have well you have Joe

Biden telling you don't worry

everything's fine the banks are going to

be safe because they're going to have

good risk mitigation because otherwise

they'll get fired really

the CFO was also the guy who worked at

Lehman Brothers in 2008 and then moved

on to earn a 1.4 million dollar bonus in

2021 alone making 3.8 million dollars a

year

at Silicon Valley Bank Becker the CEO

made 10 million dollars in 2021.

oops

it's ridiculous we are also seeing bids

for credit or uh Silicon Valley Bank

from companies like the bank of London

that is not to be confused with the bank

of England which is the central bank it

is to be uh considered the bank of Hope

London which is a bank that's only

existed for two to three years like who

wants these toxic assets nobody in the

meantime we're seeing margin calls in

the a1ts market we're seeing bonuses

getting Frozen by the Swiss government

we're seeing Jenny Dylan and Jerome

Powell freaking out and they can't even

align with their own discussions and the

way they're trying to assure American

depositors and at the same time that's

happening what's lining up the next bank

failure yes before I read you this one

you're going to want to get yourself

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take a look by go to my camera.com

the next bank failure is coming pack

West Bank Corp is apparently now moving

to shore itself up after customers

pulled 20 of their deposits since the

start of the Year

1.4 billion dollars of financing has

been established from Partners they have

abandoned a capital raise thanks to a

surge in customer withdrawals pacquest

has now borrowed 3.7 billion dollars

from the federal Home Loans Bank

and they borrow 10.5 billion dollars

from the discount window and they borrow

2.1 billion dollars from the btfp the

bank term funding program from the

Federal Reserve their emergency facility

and folks they have seen an outflow of

4.9 billion dollars just from Venture

capitalists that is out of the total of

6.8 billion dollars that have flown out

of pack West Bank Corps in just the last

couple of weeks here

now this comes at the same time as First

Republic received a 30 billion infusion

from 11 strong banks with JP Morgan

leading the effort but guess what it has

not really helped quell the pain at all

in fact if you look at first Republican

Bank stock it is down six percent

yesterday four percent in uh the last uh

uh or pre-market here in the last five

days it's down to 50.8 in last month

it's down 89 in the last six months it's

down 90 it is near record lows in

pre-market today that might break record

lows today it's pretty remarkable

this is not good not only is it not good

but the US government as much as they're

telling us they're willing to swoop in

to guarantee deposits because after all

Quote their intervention was necessary

to protect the broader U.S banking

system we cannot have a guarantee that

if you have deposits in excess of FDIC

insurance that you will actually be

protected so what should you do as

somebody who's just trying to get

through this crisis well my opinion the

best thing that you should do is make

sure that if you have money in excess of

250k you have it spread out over

different banks use the FDIC insurance

calculator to make sure you're spread

out appropriately especially if you

operate a business use multiple

different banks multiple different bank

accounts now even if you do not have

money in excess of 250 000 I think it is

worth having money and maybe two to

three different banks have your money

separated so that way if for some reason

your assets were temporarily caught up

in a you know a banking shutdown or

freeze for a few days even you'd still

have access to capital for a few days

it's not a bad idea to have multiple

different bank accounts so I'm a big fan

of that and I think you should consider

it as well so consider that these small

and medium Bank contagion fears are real

remember this

now it's also worth noting that there's

a lot of resistance to creating any kind

of universal guarantee on deposits I

think this is why Jerome Powell and

Janet Yellen have this inconsistent

messaging they don't want to send this

message that there is a universal

guarantee because as the house Freedom

caucus says quote any universal

guarantee on Bank deposits whether

implicit or explicit enshrines A

Dangerous precedent that simply

encourages future irresponsible Behavior

to be paid for by those not involved who

followed the rules this is true remember

folks people like to tell you that no

the bailout of Silicon Valley Bank was

by no means a taxpayer funded

well that's only a half truth while it

is true in spirit

taxpayers are backstopping that bailout

if there's any loss of money from that

Silicon Valley Bank fund you're either

going to pay for it through the

treasuries appropriated fund with the

treasury backstop fund that actually

backstops the btfp from the FED that is

the treasury back stops it who's funding

that program you the taxpayer but not

only that you might also see it in

higher fees that the other banks that

you bank at as the FDIC tries to recoup

some of their damage Peter Schiff

tweeted on Monday the U.S banking system

is currently insolvent thanks to the fed

and the FDIC thanks for much Sounder

under the gold standard and prior to the

FDIC today we have 18 trillion in

deposits quote unquote insured by 100

billion in treasuries the value of all

Bank deposits will soon be destroyed by

inflation says Peter Schiff and he's not

terribly wrong about a lack of actual

insurance it's worth noting that the

FDIC only has enough money to insure

insurer dollar for dollar about one

point 95 of all deposit Reserves

oopsie dupsies that's not great here we

all are all wondering about how stable

coins are backed one to one yet the FDIC

is backed just 1.95 cents to every

dollar you have deposited yeah we do

happen to have the FED with the money

printer which is nice and somewhat

useful but it's also

um you know slightly concerning

so worth keeping an eye on what's going

on in the banking in the banking system

because well ultimately it affects all

of us but not only does it affect us in

terms of our banking it also affects the

market the reason there's a reason the

market is rent today on these renewed

fears of Deutsche Bank sparking concerns

of potentially Global contagion at the

time of this recording most indices are

down half to one percent we're also

seeing actually a flight to safety of

bonds that is the 10-year treasury yield

is down nine basis points to 3.31 now

part of you might be thinking well this

is fantastic that means mortgage rates

are going to come down right

not so fast mortgage spreads have

widened so much that even though the

10-year treasury has fallen about 80

basis points mortgage rates are still

close to seven percent they're not

actually coming down because risk Premia

measured via spreads are actually Rising

oopsie dupsies now all of a sudden

you're not seeing mortgage rates come

down while people are fleeing to the

safety of bonds and bond yields are

coming down that's a bummer for Real

Estate but it's actually a good thing

for banks see as treasury yields come

down what happens the value of Bank Bond

portfolios actually goes up

that is actually a good thing because it

could potentially mitigate how much uh

of of these toxic assets banks have on

their balance sheets remember these

banking crises started just a few weeks

ago when the 10-year treasury yield ran

up to an almost all-time high during

this cycle the last few years cycle here

to about 4.1 percent we've dropped about

80 basis points 0.8 in just the last

week and a half here that is actually a

fantastic way of propping up the

valuation of the maturity or the health

maturity bonds and the available for

sale Securities that banks have on their

balance sheets

in English the more treasure yields fall

the more stable the banking system

ironically becomes however it's coming

at the same time as now we're worried

that Deutsche Bank could collapse a bank

that's seven times the size of Silicon

Valley Bank and three times the size of

Credit Suisse

however the more pain we see at Deutsche

Bank ironically the less pain the rest

of the banking system faces but is it

likely that we're going to continue to

see more bank failures in the near term

absolutely

that's why I think it's incumbent upon

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all right there you have an update on

the Deutsche Bank crisis uh that was

that was a lot uh it's unfortunate that

now we are dealing with a continuation

of uh this banking crisis

it's also unfortunate battery levels of

my iPad are going down hold on one sec

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uh they have ways of making you charge

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plug that in

success

all right fantastic so uh next up

there's so much to cover today thank you

so much Kevin's always on the go and

we'll do the show wherever I see you on

Twitch I see you people watching you

twitch folks uh yes it's very

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but I do my best anyway you know we're

on day 61 of doing this in a row of

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