Experts say that Silicon Valley Bank (SVB) is just another casualty of the Fed’s latest hiking cycle. They argue the collapse is the “natural result” of the latest “everything bubble” bursting. Legendary investor Jeremy Grantham slammed the central bank for creating bubbles with its policies. “They’ve engaged in policies that drive up the prices of assets, other things being even, and create spectacular overpriced bubbles. They then break because that’s what bubbles have to do. They simply break off their extreme overpricing, and we pay a very tough price.” Analysts at Deutsche Bank agree, saying, “…It is not a stretch to say that this episode is emblematic of the higher-for-longer rate regime we appear to be at the start of.” As banking regulators rushed to backstop depositors with money at SVB and Signature Bank, investors are scrambling to protect themselves with safe-haven assets like gold.
Business Insider/Jennifer Sor
SVB’s collapse is what happens when an ‘everything bubble’ finally bursts
The collapse of Silicon Valley Bank is the natural result of the “everything bubble” that’s engulfed markets in the last decade finally bursting. And now that a new rate environment is upon us, the market should expect more of these chaotic episodes.
The tech-focused bank’s spectacular downfall stunned investors this week. SVB’s stock plunged over 80% and the firm’s losses wiped out $55 billion from Wall Street’s top four banks in a day, before the bank was eventually shut down by regulators on Friday.
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Yahoo Finance/Brian Sozzi
Silicon Valley Bank collapse — everything you need to know right now
Welcome to the first true black swan event for markets since the COVID-induced meme stock craze.
Silicon Valley Bank’s collapse on Friday is the second-largest bank failure in the U.S.
Treasury Secretary Janet Yellen said early Sunday there will be no federal bailout for the stricken bank, and she held true to those words by the end of the day.
You can read the full article, here.
CNBC/Yun Li
Investors rush into bonds, gold in flight to safety after SVB rescue
Investors flocked to safe-haven assets such as Treasurys and gold on Monday amid an extraordinary plan to backstop the banking system and limit the impact from the collapse of Silicon Valley Bank.
The benchmark 10-year Treasury yield fell nearly 20 basis points to 3.50%, touching the lowest level since Feb.3. The 10-year rate last traded around 3.54%. The yield on the 2-year Treasury tumbled more than 40 basis points to 4.16%, also the lowest in over five weeks. Yields move inversely to prices and one basis point equals 0.01%. The iShares 20+ Treasury Bond ETF jumped 3%.
You can read the full article, here.
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