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Is Warren Buffett trying to repeat his 2008 bailout success with Biden officials?
According to this article (https://finance.yahoo.com/news/warren-buffett-contact-biden-officials-222309661.html), Warren Buffett has been in contact with Biden administration officials about various economic issues, including inflation, taxes, and infrastructure. The article speculates that Buffett may be trying to influence policy decisions that could benefit his company, Berkshire Hathaway, or his personal investments.
This reminds me of how Buffett played a crucial role in the 2008 financial crisis, when he bailed out several banks and companies with his billions of dollars. He also advised then-Treasury Secretary Hank Paulson to inject capital into the banks rather than buying their toxic assets, which helped stabilize the financial system and prevent a deeper recession. (Sources: **1** https://www.cnbc.com/id/40276100, **2** https://www.thewealthadvisor.com/article/how-warren-buffett-clinched-2008-bailouts, **3** https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-goldman-sachs-sale-billions-return-bailout-2020-5-1029212109)
Buffett made a handsome profit from his 2008 deals, netting more than $3 billion from his $5 billion investment in Goldman Sachs alone. He also received favorable terms and dividends from other firms he rescued, such as Bank of America and General Electric. (Sources: **3** https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-goldman-sachs-sale-billions-return-bailout-2020-5-1029212109, **4** https://www.theguardian.com/business/2008/sep/24/warrenbuffett.wallstreet)
Could Buffett be looking for another opportunity to profit from a crisis? Is he trying to sway Biden officials to adopt policies that would create favorable conditions for his businesses or investments? Or is he genuinely concerned about the state of the economy and the welfare of the American people?
One thing that makes me suspicious is that there have been 20+ private jets that flew into Omaha, Nebraska, where Buffett lives and runs Berkshire Hathaway. Who are these visitors and what are they discussing with him? Are they seeking his advice or his money? Are they planning some kind of deal or merger?
Is Warren Buffett trying to repeat his 2008 bailout success with Biden officials?
According to this article (https://finance.yahoo.com/news/warren-buffett-contact-biden-officials-222309661.html), Warren Buffett has been in contact with Biden administration officials about various economic issues, including inflation, taxes, and infrastructure. The article speculates that Buffett may be trying to influence policy decisions that could benefit his company, Berkshire Hathaway, or his personal investments.
This reminds me of how Buffett played a crucial role in the 2008 financial crisis, when he...
Fed's balance sheet spikes by almost $300 billion in a week
At its peak in 2022 the Fed's balance sheet hit a high of $8.9T. Over the last year they got this down to around $8.3T.
However since the fallout of SVB, in under a week, the Fed's balance sheet has risen back over $8.6T and is now on pace to make new all time highs by next week.
Source: https://fred.stlouisfed.org/series/WALCL
I would usually share an article, but I can't really find anyone reporting on this.
Fed's balance sheet spikes by almost $300 billion in a week
At its peak in 2022 the Fed's balance sheet hit a high of $8.9T. Over the last year they got this down to around $8.3T.
However since the fallout of SVB, in under a week, the Fed's balance sheet has risen back over $8.6T and is now on pace to make new all time highs by next week....
Silicon Valley Bank Collapse Explained in under 400 words.
# Introduction:
Silicon Valley Bank(SVB) is a bank that primarily serves Venture Capital/Private Equity firms in areas such as Technology and Medical start ups.
# Reasons:
**Interest rates environment**
In 2021, SVB received a substantial amount of deposit due to overall economy booming. It bought a lot of government treasury bonds at a low interest rate. (Source https://www.wsj.com/articles/bond-losses-push-silicon-valley-bank-parent-to-raise-capital-125e89d4?mod=Searchresults_pos2&page=1) Government bonds are not bad but they are exposed to interest rate risk.
However, as the FEDs started raising interest rates it reduced the value of bonds SVB had outstanding. When FEDs raise interest rates, this leads to higher coupon rates on newer bonds so older bonds are sold off to capitalize on the higher coupon rates, which in turn reduces the price of older bonds i.e. their value.
IF a firm had held these bonds till maturity, no losses are made. However, due to poor environment it led to lower investment into VCs so more VCs pulled their deposits out. SVB had very little liquidity so it was forced to realize the losses on the older bonds. (Source https://www.barrons.com/articles/svb-silicon-valley-bank-rates-securities-693c931c) Higher uncertainty as more bad news of losses from SVB began piling up, it led to even more deposits being withdrawn and more losses crystalizing leading to a loop of destruction.
So, SVB wants to avoid losses, it tries to hold securities till maturity i.e. Held to maturity(HTM) assets. Accounting practices allows for HTM to be in terms of par value and not the updated value.
According to the 2022 10-K, SVB has total deposits of about 173 billion but only 118 billion in relatively liquid assets. BUT 76% of liquid assets are in HTM, that 76% is according to PAR VALUE so the actual worth of HTM today could be significantly lower.
**Signaling**
In finance, there's a theory called the Signaling theory. Basically, when a firm issues out new stocks its foresees losses ahead and wants to spread the losses among a larger number of shareholders, as it is also in manager's best interest to do so due to them usually having a stake in the company. SVB announced a $2.25 billion equity financing plan to raise capital. (Source https://www.wsj.com/articles/bond-losses-push-silicon-valley-bank-parent-to-raise-capital-125e89d4?mod=Searchresults_pos2&page=1)
**Large Exposure to Diversity Risk.**
SVB's main customers had more or less the same demographic so the deposits owned by SVB are more or less the same. There's very high correlation between the deposits, a withdrawal most likely will trigger another withdrawal as customers are facing the same extent of losses or same issues so the diversity risk is high.
Breaking: SVB depositors to have access to -all- money on Monday; Fed announces new emergency bank term funding program
March 12, 2023
Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors
To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.
The Federal Reserve is prepared to address any liquidity pressures that may arise.
The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
More details here: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
https://www.cnbc.com/2023/03/12/regulators-unveil-plan-to-stem-damage-from-svb-collapse.html?__source=androidappshare
Breaking: SVB depositors to have access to -all- money on Monday; Fed announces new emergency bank term funding program
March 12, 2023
Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors...
Trading halted for multiple US banks at open
Western Alliance Bancorp down 75%
First Republic Bank down 66%
Customers Bancorp down 54%
PacWest Bancorp down 46%
Zions Bancorp down 44%
Bank of Hawaii down 42%
Comerica down 39%
East West Bancorp down 32%
Elon Musk says he's 'open to the idea' of buying Silicon Valley Bank
* Elon Musk tweeted late Friday he was "open to the idea" of buying the failed Silicon Valley Bank.
* A Tesla investor appeared to disapprove of the billionaire's idea, telling him "no thanks."
* Musk sold about $23 billion of Tesla stock last year to help finance his Twitter takeover.
https://finance.yahoo.com/news/elon-musk-says-hes-open-100000094.html
Elon Musk says he's 'open to the idea' of buying Silicon Valley Bank
* Elon Musk tweeted late Friday he was "open to the idea" of buying the failed Silicon Valley Bank.
* A Tesla investor appeared to disapprove of the billionaire's idea, telling him "no thanks."
* Musk sold about $23 billion of Tesla stock last year to help finance his Twitter takeover....
Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits
Silicon Valley Bank has been closed by regulators, which have taken control of the bank’s deposits, the Federal Deposit Insurance Corporation announced Friday.
The California Department of Financial protection and Innovation closed SVB, and named the Federal Deposit Insurance Corporation as the receiver.
Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits
Silicon Valley Bank has been closed by regulators, which have taken control of the bank’s deposits, the Federal Deposit Insurance Corporation announced Friday.
The California Department of Financial protection and Innovation closed SVB, and named the Federal Deposit Insurance Corporation as the receiver.
Adidas said it will propose an annual dividend of $0.74, down from $3.48 per share in 2021, a cut of nearly 80%
German sportswear giant Adidas unveiled plans to slash its dividend on Wednesday, reiterating warnings the company could face its first annual loss in decades following the costly decision to split with rapper and designer Kanye West and scrap their lucrative joint brand, Yeezy.
* Adidas said it will propose an annual dividend of $0.74 (€0.70) per share at its annual general meeting on May 11.
* The proposed payout is down from $3.48 (€3.30) per share in 2021, a cut of nearly 80%.
* Adidas reported losses of $508 million (€482 million) for the fourth quarter of 2022, largely reflecting falling sales in China and the company’s split with West, also known as Ye, which it said cost it $632 million (€600 million) in sales.
* Adidas reiterated warnings the company is on track for its first full-year loss in decades, projecting losses of more than $700 million.
* The company said it stands to lose $527 million (€500 million) in 2023 if it cannot sell or repurpose Yeezy shoes left over from its partnership with West, which were estimated to bring in $1.26 billion (€1.2 billion) in revenue this year.
* CEO Bjørn Gulden said 2023 will be a “transition year” for Adidas to reinvigorate its core business and build a path to profitability in 2024.
https://www.forbes.com/sites/roberthart/2023/03/08/adidas-slashes-dividend-amid-fallout-from-kanye-west-breakup
https://www.adidas-group.com/en/media/news-archive/press-releases/2023/adidas-results-in-2022-reflect-geopolitical-macroeconomic-and-company-specific-challenges/
Adidas said it will propose an annual dividend of $0.74, down from $3.48 per share in 2021, a cut of nearly 80%
German sportswear giant Adidas unveiled plans to slash its dividend on Wednesday, reiterating warnings the company could face its first annual loss in decades following the costly decision to split with rapper and designer Kanye West and scrap their lucrative joint brand, Yeezy.
* Adidas said it will propose an annual dividend of $0.74 (€0.70) per share at its annual general meeting on May 11....
Meta Is Said to Plan Thousands More Layoffs as Soon as This Week
Meta Is Said to Plan Thousands More Layoffs as Soon as This Week
-Second round of cuts in four months driven by efficiency push
-Social networking giant may finalize plans in the next week
Meta Platforms Inc., the owner of Facebook and Instagram, is planning a fresh round of layoffs and will cut thousands of employees as soon as this week, according to people familiar with the matter.
The world’s largest social networking company is eliminating more jobs, on top of a 13% reduction in November, in a bid to become a more efficient organization. In its earlier round of cuts, Meta slashed 11,000 workers in what was its first-ever major layoff. The company has also been working to flatten its organization, giving buyout packages to managers and cutting whole teams it deems nonessential, Bloomberg News reported in February, a move that is still being finalized and could affect thousands of staffers.
The imminent round of cuts is being driven by financial targets and is separate from the “flattening,” said the people, who asked not to be identified discussing internal matters. Meta, which has seen a slowdown in advertising revenue and has shifted focus to a virtual-reality platform called the metaverse, has been asking directors and vice presidents to make lists of employees that can be let go, the people said. A Meta spokesperson declined to comment on the plans on Monday.
This phase of layoffs could be finalized in the next week, according to the people. **Those working on the plan are hoping to have it ready before Chief Executive Officer Mark Zuckerberg goes on parental leave for his third child, which may be imminent, one person said.**
The November cuts were a surprise, but another round of firings has been widely anticipated by the Meta workforce. Zuckerberg has dubbed 2023 Meta’s “year of efficiency,” and the company has been communicating that theme to employees during performance reviews, which were completed last week, the people said.
Workers at the Menlo Park, California-based company described heightened anxiety and low morale among colleagues lately. Some employees expressed worry about whether they’d receive their bonuses, which are set to be distributed this month, if they lose their jobs beforehand, the people said.
https://www.bloomberg.com/news/articles/2023-03-07/meta-is-said-to-plan-thousands-more-layoffs-as-soon-as-this-week?
why are people saying inflation has come down?
taken directly from the St.Louis fed data site:
median CPI for jan '23 was 8.142% which is close to ATH:
https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE
and sticky CPI (less food and energy) is at an all-time high of 6.55%
https://fred.stlouisfed.org/series/CORESTICKM159SFRBATL
am i reading the wrong inflation stats?
what happened to Evergrande
Wasn't it supposed to collapse and cause massive debt default waves and potentially crash the markets?
What happened there and why has the topic been completely out of the spotlight - what has it been? One year?
Just interested to know if I'm missing something or the CCP effectively just swept this under the rug
Tesla stock falls more than 5% after hours as Investor Day falls short on detail
https://www.cnbc.com/2023/03/01/tesla-2023-investor-day-after-the-bell-master-plan-part-3-teased.html
Electric vehicle maker Tesla hosted a 2023 Investor Day presentation in Austin, Texas, on Wednesday. CEO Elon Musk took the stage to share his “Master Plan 3,” and to discuss how Tesla plans to scale up in the face of increasing competition.
The presentation was long on vision, and included a review of prior achievements, but short on specifics about any new Tesla products or services.
Near the beginning of the presentation, Musk said, “There is a clear path to a sustainable-energy Earth. It doesn’t require destroying natural habitats. It doesn’t require us to be austere and stop using electricity and be in the cold or anything.” He added, “In fact, you could support a civilization much bigger than Earth, much more than the 8 billion humans could actually be supported sustainably on Earth.”
Musk was initially joined on stage by the Senior Vice President of Powertrain and Energy Engineering at Tesla, Drew Baglino. They discussed a future in which the company would play a role in “re-powering the grid with renewable fuels” as they ramp up battery production, both for Tesla’s electric vehicles and for the company’s utility-scale energy storage systems.
Tesla’s goal is to produce 20 million electric vehicles per year by 2030, executives reiterated. The company reported full-year deliveries of around 1.31 million vehicles in 2022.
During a question and answer session following the 3-hour presentation, executives fielded a question about how Tesla could grow its market share in China.
Elon Musk passed the question to Tom Zhu, who is heading up global production and has run the China and APAC businesses for Tesla for years. “As long as you offer a product with value at affordable price you don’t have to worry about demand,” Zhu said. “We try everything to cut costs,” he added, “and pass down that value to our customers.”
Musk then added, “Demand is a function of affordability not desire.” He said, “Even small changes in the price have a big effect on demand.”
Zhu also announced that as of Wednesday, Tesla had produced 4 million cars in total.
“It took us 12 years to build the first million, and about 18 months to the second million. The third million, 11 months. Then less than 7 months to build the 4 millionth,” Zhu said touting the company’s improving operational efficiency.
He said that the company plans to build new car and battery cell factories, and also to produce more cars per year at its existing factories.
Tesla charging leader Rebecca Tinucci said that in 2022 the company provided 9 terawatt hours across charging methods, including home charging including 40,000 Superchargers. (By way of comparison, the entire U.S. consumes about 4,000 terawatt hours of electricity per year.) Tinucci also noted that about half of the company’s Superchargers in the EU are open to other vehicles, and that the company just opened 10 Superchargers in the US to non-Teslas.
Tesla design leader Franz von Holzhausen and vice president of vehicle engineering Lars Moravy took the stage to show off a number of planned manufacturing changes meant to improve the efficiency of Tesla vehicle production. But von Holzhausen said that Tesla would not yet reveal its “next gen” vehicle.
The company’s powertrain vice president, Colin Campbell, said that Tesla’s next powertrain factory will be 50% smaller than the one in Austin, Texas, but will have the same capacity. He also said the company is working on a new kind of drive unit that is compatible with any battery cell type, and a motor that will be built without any rare earth metals.
Ahead of the 2023 Investor Day, at a press conference on Tuesday, Mexico president Andres Manuel Lopez Obrador said Tesla had agreed to build a large factory in Monterrey, Mexico. He said Tesla agreed to use recycled water and take other initiatives to cope with water-scarcity in the region.
Musk confirmed the factory plans on Wednesday, and said production there would supplement, rather than replace, any manufacturing at other Tesla facilities.
Tesla shares have rebounded from declines during 2022, and are up more than 60% for the year so far. However, the stock dropped 1.43% on Wednesday prior to the event, and 5% after hours.
Mizuho Securities analysts maintained a buy rating on shares of Tesla ahead of Investor Day, seeing Tesla in a leadership position in a growing market for fully electric vehicles. They wrote in a note earlier this week, “Near-term, we see continued strength in TSLA’s market share, but see cheaper competitor EVs coming to market as potentially dilutive to TSLA’s share of the US EV market.”
Currently, the lowest-priced Tesla available is the Model 3 sedan, which starts at a price point of around $43,000, they wrote. Seven models from other automakers are currently priced below that, Mizhuo noted.
Musk’s ambitious Master Plan Part Deux was published in 2016, and has not been completely fulfilled. It included four main objectives:
“Create stunning solar roofs with seamlessly integrated battery storage”
“Expand the electric vehicle product line to address all major segments”
“Develop a self-driving capability that is 10X safer than manual via massive fleet learning”
“Enable your car to make money for you when you aren’t using it”.
Tesla stock falls more than 5% after hours as Investor Day falls short on detail
https://www.cnbc.com/2023/03/01/tesla-2023-investor-day-after-the-bell-master-plan-part-3-teased.html
Electric vehicle maker Tesla hosted a 2023 Investor Day presentation in Austin, Texas, on Wednesday. CEO Elon Musk took the stage to share his “Master Plan 3,” and to discuss how Tesla plans to scale up in the face of increasing competition....
Google is now cheaper than Meta on a forward PE basis
It's probably too soon to call Google a slam dunk value buy here, but what this does show is that the stock decline has been driven largely by investor sentiment and not by Google's business performance. Sentiment could easily get worse, but you're getting plenty of long-term compensation for buying Google at today's prices. Far from being an AI victim, Google looks well positioned for whatever the future of AI may bring, and the lack of positive investor sentiment around this makes it even better to buy. You can buy Google here comfortably, and if the forward PE gets anywhere near where Meta's did, you can ramp up your purchases.
Google is not a recession-proof stock, they're not guaranteed to crush the competition in the AI space, and the company isn't yet as cheap as Meta was during their 2022 debacle. But Google is a great business for a good price.
Above content quoted from: *Google Is The Most-Hated Tech Stock On Wall Street - Time To Buy*
Google is now cheaper than Meta on a forward PE basis
It's probably too soon to call Google a slam dunk value buy here, but what this does show is that the stock decline has been driven largely by investor sentiment and not by Google's business performance. Sentiment could easily get worse, but you're getting plenty of long-term compensation for buying Google at today's prices. Far from being an AI victim, Google looks well positioned for whatever the future of AI may bring, and the lack of positive investor sentiment around this makes it even better to buy. You can buy Go...