Happy Monday from New England. Your Survival Guy’s thin blood is adjusting to the cold, having just returned from a tropical island getaway to Key West. I’m here to report that the Conch Republic is alive and well. And notice it’s not a democracy. The Republic is where you go to get that neighborhood walkability without all the sensibilities. Tops on our list are lunches at Louie’s Backyard and the Thirsty Mermaid. Say hi to Patty at Louie’s and Ionela and Ava at Thirsty, and enjoy your cheeseburgers in paradise. Both are fab. And be sure to hit the waterfront at the Half Shell Raw Bar to … [Read more...]
Archives for March 2023
For Whom Is Your Portfolio Serving?
Pressure and prices are no friend of the Prudent Man. When there’s pressure for your portfolio to “do something,” then you’ve already lost the game. The same is true with prices. If you need prices to get to some level, then forget it. Pressure and prices? These are terms for the speculator. Someone Your Survival Guy has no interest in serving. But there is a brighter way forward. Once you focus on a portfolio built on patience, dividends, interest, and compounding, an entire world opens up to you. One in which you control your destiny and can rise above the fray. You know, trusting other … [Read more...]
Who’s to Blame for Banking Vulnerability?
In Barron's, Viral V. Acharya and Raghuram Rajan explain how quantitative easing may have left the banking system vulnerable to volatility. They conclude: There is plenty of blame to go around. But leaving aside the banks’ risk management and bank supervisors’ apparent failures, there are deeper questions. Why did uninsured deposits grow so rapidly during the pandemic? Why are banks so heavily invested in long-term securities portfolios? Why are we seeing bank runs so soon after the Fed flooded the system with liquidity? Part of the answer lies in quantitative easing, a form of monetary … [Read more...]
Mortgage Market Not Expected to Settle Down Soon
The collapse of Silicon Valley Bank and Signature Bank has created volatility in mortgage markets, and according to Jennifer Hughes in the Financial Times, that volatility isn't expected to settle down overnight. She writes: The market volatility triggered by the failure of three banks in the past week has spooked traders in economically vital US mortgage-backed securities, leaving other lenders, usually important buyers, on the sidelines. The $11tn market for bundles of US home loans was already feeling the strain of last year’s soaring interest rates, which pushed up MBS spreads — the … [Read more...]
Are You Living Your Best Life?
Sitting in my cave today. Looking out at the beautiful landscape. Thanking myself for peace of mind. Knowing it’s my own decision to take shelter. It’s been a long time. Independent thinking is a lonely journey. Yes, it helps knowing this storm, too, will pass. But when? Will they ever learn? Because it’s in times like these, I appreciate the wisdom of my elders. Thinking about the fireside chats they shared with grace. Learning to tread lightly and to avoid the eager man looking to tread on me. I don’t like eager. I don’t like exciting. I’m fine preserving myself. … [Read more...]
Were Silicon Valley Bank’s Motivations for Taking Losses Pure?
Below, the WSJ provides an account of how a plan hatched by Goldman Sachs to raise capital at Silicon Valley Bank (SVB) went south. What seems to be glossed over in this account and many others is SVB’s motivation for wanting to pull forward losses on a large portfolio of Treasury and agency mortgage-backed securities (MBS). Yes, SVB bought some longer-term bonds, and those bonds were held at an unrealized loss, but why recognize the losses all at once? The bank was apparently bleeding deposits, but there was no indication that the situation was unmanageable. What seems to be missed … [Read more...]
Will the Black Swan Usher in Digital Dollars?
What’s most disturbing about a black swan event is how it affects the rest of us. What will this non-bailout, bailout of Silicon Valley Bank and Signature usher in? Will we have a new way of banking where the Fed gets to call the shots? Will digital dollars be their way to control us? Because it’s times like these when those in power usher in change in the name of following “the science.” Will this give them the extra inch they need to tell us that currency digitization is for our “protection?” One thing’s for sure, we’re not going back to the way life was. Sitting in my cave, it never … [Read more...]
Major Rail Merger Gets Approval
A merger between rail giants Canadian Pacific and Kansas City Southern has been approved by regulators at the Surface Transportation Board. Esther Fung reports: A federal regulator has approved withconditions a merger between Canadian Pacific Railway Ltd. CP 6.23%increase; green up pointing triangle and Kansas City Southern, a $28 billion deal that would create the first freight rail network linking Canada, the U.S. and Mexico. “The merger is expected to offer more efficient and reliable service…and to improve the overall quality and availability of rail transportation services to the … [Read more...]
The Education of Barney Frank
After authoring one of the banking industry's largest regulatory bills, Barney Frank, ironically, has found himself on the regulated end of a bank failure. Frank, who has been on the board of Signature Bank, which just failed, is now learning just how difficult life can be for regulated businesses. The editors of The Wall Street Journal write: Life is full of irony, but it’s hard to think of a richer one than Barney Frank sitting on the board of the failed Signature Bank. The former Congressman who was the scourge of Wall Street, the co-author of the Dodd-Frank Act that was supposed to keep … [Read more...]
Credit Suisse Announced “Material Weaknesses” In Its Internal Controls
Owen Walker reports for the Financial Times that Credit Suisse has announced: “'material weaknesses' in its internal controls over financial reporting." Walker writes: Credit Suisse said it had identified “material weaknesses” in its internal controls over financial reporting, the latest blow to a bank battling to revive its fortunes. In its annual report on Tuesday, Credit Suisse said “management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements”. The bank said its full-year 2022 … [Read more...]