LEIBOVIT VR NEWSLETTERS – MONDAY – MAY 8, 2023

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Brace yourselves, the banking crisis is just getting started – Yahoo! Finance

By Ben Marlow

 

Photo by Remy Steinegger

If Jamie Dimon was pondering a career change as a fortune-teller, he’d be wise to stick to the day job. On the other hand, if someone of Dimon’s stature could be so wrong about the banking turmoil that continues to sweep across the US, a cynic might ask whether he was still the right person to be running one of the world’s largest financial institutions, particularly when that organisation is right at the centre of Government-led efforts to prop up the whole system.

Having ridden to the rescue of California lender First Republic over the weekend, JP Morgan’s superstar boss had a message for financial markets: its shotgun takeover of First Republic heralded the end of the crisis. He should know better than to be drawn into the realms of speculation about things he has no control of but then Wall Street is so deferential to figures like Dimon that they start to believe they can walk on water.

Still, the speed with which Dimon’s words have come back to haunt him comes as a shock. A mere 48 hours later, and it looked as though the game was up for yet another regional American bank – the fourth since the end of March.

 

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Regional Bank Crisis Spreads To Big Banks As PacWest, US Bancorp Tumble, Stocks Dump Amid Widespread Liquidations -Zero Hedge

Two days ago, on May 2, in the aftermath of the FRC take-under by JPM which Jamie Dimon praised (of course) as a deal proving that the “system works as it should”, and predicted that the bank crisis is now almost over, a forecast which the Fed chair reiterated yesterday (just before all hell broke loose), we warned that the “banking crisis is baaaack” for the simple reason that by bailing out FRC, up to $75 billion in Fed reserves would be drained from the system pushing small banks back to their reserve constraint and forcing another market puke and/or Fed bailout.

And as events less than 24 hours later proved conclusively, we were again right.

Early this morning, after its stock crashed as much as 60% and falling to a record low in the afterhours session following a Bloomberg report that it was seeking to sell itself or raise capital and sparking concerns that it was the next insolvent bank, California’s PacWest Bancorp (it’s always a California bank for some odd reason), confirmed that it was indeed in talks with several potential investors, and said core deposits have increased since March in a desperate attempt to calm markets after the stock rout made it the new focal point of concern over the health of US regional lenders.

“The bank has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news,” PacWest said in a statement after the stock’s post-market plunge. “Our cash and available liquidity remains solid and exceeded our uninsured deposits.”

Sadly for PACW, in a world where a bank bringing attention to its balance sheet only invites bear raids and massive shorting, the bank failed to rebound and this morning it plunged as much as 48%, after being halted twice, and was last trading down 42%.

 

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The move to abandon US dollars is picking up participants. After decades of singular dominance in oil commerce, the dollar is heading toward a quick death. The ramifications of this will be beyond devastating to the US economy.

by Zero Hedge

Saudi Arabia, the UAE, Algeria, Egypt, Bahrain, and Iran have formally asked to join the BRICS group of nations as it prepares to hold its annual summit in South Africa.

In total, 19 nations have expressed interest in joining the emerging-markets bloc of Brazil, Russia, India, China, and South Africa, according to Anil Sooklal, South Africa’s ambassador to the group.

“What will be discussed is the expansion of BRICS and the modalities of how this will happen… Thirteen countries have formally asked to join, and another six have asked informally. We are getting applications to join every day,” the South African official told Bloomberg earlier this week.

BRICS will hold its annual summit in Cape Town during the first week of June. The foreign ministers from all five member states have confirmed their attendance.

Earlier this month, Bloomberg revealed that BRICS is expected to soon surpass the US-led G7 states in economic growth expectations.

 

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Half of America’s banks are potentially insolvent – this is how a credit crunch begins -Yahoo! Finance

Some of the many benefits of precious metals ownership are being able to literally put your hands on your assets as well as knowing you have something of an exchangeable value. All this discussion of insolvent banks underlines the reason we all should be diversified into metals. Insolvency translates into a potential inability to get your money. Stay one step ahead by purchasing physical metals today.

By Ambrose Evans-Pritchard

The twin crashes in US commercial real estate and the US bond market have collided with $9 trillion uninsured deposits in the American banking system. Such deposits can vanish in an afternoon in the cyber age.

The second and third biggest bank failures in US history have followed in quick succession. The US Treasury and Federal Reserve would like us to believe that they are “idiosyncratic”. That is a dangerous evasion.

Almost half of America’s 4,800 banks are already burning through their capital buffers. They may not have to mark all losses to market under US accounting rules but that does not make them solvent. Somebody will take those losses.

“It’s spooky. Thousands of banks are underwater,” said Professor Amit Seru, a banking expert at Stanford University. “Let’s not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent.”

The full shock of monetary tightening by the Fed has yet to hit. A great edifice of debt faces a refinancing cliff-edge over the next six quarters. Only then will we learn whether the US financial system can safely deflate the excess leverage induced by extreme monetary stimulus during the pandemic.

 

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Druckenmiller Warns US Debt Crisis Worse Than He Imagined -Yahoo! Finance

The debt crisis: a term that riles up the pundits but somehow never ends up meaning much. When someone like Stanley Druckenmiller, who has been a debt watcher for decades, says it is as bad as he’s ever seen it, we should all pause and listen.

By Sonali Basak

(Bloomberg) — Stanley Druckenmiller, the hedge fund investor and long-time deficit hawk, said the current impasse over the debt ceiling is dwarfed by the dangers of unchecked future government spending.

“The fiscal recklessness of the last decade has been like watching a horror movie unfold,” Druckenmiller, 69, who now runs his own Duquesne Family Office, said in a speech Monday at the University of Southern California Marshall School of Business.

In a follow-up email, he said he hopes the US government doesn’t go into default, “but honestly, all this focus on the debt ceiling instead of the future fiscal issue is like sitting on the beach at Santa Monica worrying about whether a 30-foot wave will damage the pier when you know there’s a 200-foot tsunami just 10 miles out.”

Druckenmiller’s comments echo those the billionaire investor gave a decade ago during a tour of 14 university campuses, when he encouraged students to pay attention to ballooning federal deficits that he believed could bankrupt future generations.

 

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First Republic’s failure shows we are fighting an unwinnable war – Yahoo! Finance

by Ben Wright

When Silicon Valley Bank was busy imploding earlier this year, and depositors were pulling their money out of shaky lenders to put it in safer-looking banks, the joke was that everyone was going to end up banking with JP Morgan. Now that the US uber-lender has agreed to acquire most of First Republic, another stricken bank, the gag is even less funny.

Make no mistake, this is yet another bailout. First Republic – like SVB and Signature Bank before it – was seized by the Federal Deposit Insurance Corporation (FDIC) before the sale was hastily arranged. The regulator has agreed to share the burden of any losses, which are expected to cost the FDIC something in the order of $13bn.

Jamie Dimon, JP Morgan’s chief executive, wanted to make it crystal clear whose idea this all was: “Our government invited us and others to step up, and we did.” The bank’s finance chief double underlined the point on a call after the acquisition was announced: “We did not seek out this deal.”

How did it come to this? Just under two months ago we passed the 15-year anniversary of the investment bank Bear Stearns being rescued from collapse by JP Morgan amid the global financial crisis. One of the key lessons then was that many banks had become “too big to fail”. READ MORE

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BIDEN HAS TO GO BUT WILL VOTER FRAUD PREVENT IT?

It’s official. President Joe Biden is running for re-election and taking Vice President Kamala Harris along with him.

In only two years at the White House, Biden has caused enormous damage to the country, threatened U.S. national security and weakened
America throughout the world with his disastrous foreign policy.

In his re-election video, Biden claims he’s standing up for the freedoms of Americans. Reality and Biden’s actions tell a different
story.

Biden has repeatedly targeted political opponents with the full force of the federal government and violated the fundamental rights of
Americans. He’s destroyed the economy with sky-high inflation, implemented Marxist policies in the mortgage system (which will lead to
another housing crisis) and forced hardworking Americans to pay off the student debt of wealthy degree holders. He’s made it a habit of
tearing down fundamental American values about hard work and personal responsibility. All of this while partnering with his son Hunter to
sell out the country to foreign adversaries.

Biden talks about freedom, yet he’s targeting your Second Amendment rights with calls for gun bans and by signing executive orders.
Government bureaucrats, with his endorsement, have violated the First Amendment through Big Tech censorship. Not to mention his efforts
to fire thousands of Americans after they said no thank you to an ineffective vaccine.

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WE ARE NOT FINANCIAL ADVISORS AND DO NOT PROVIDE FINANCIAL ADVICE