Fundamental Analysis Friday 13 March 2023

Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect currency prices.

US Banking Crisis

The rise in interest rates is the direct cause of uncertainty in the banking sector. The difficulty for the Federal Reserve is to rein in inflation without collapsing the economy. It is not an easy job after such extraordinary government intervention during COVID. The cracks are getting serious and water is starting to leak out of the jar. There is so much of trust that one can put in whatever the mainstream media has been blasting to the public. Soft landing is a myth that place hopes in the hearts of the uninformed, ignoring the signs of reality. We now know that Silvergate Bank is collapsing and possibly facing bankruptcy soon, which was partly caused by crypto scandal FTX.

The dominos are falling and pushing others to falter as well. Previous week we see another major bank getting crushed and shut downed by regulators, which is Silicon Valley Bank (SVB). Definitely, someone knew this in advance and did something about it, who is Greg Becker (CEO of SVB). He sold $3.6 million worth of SVB shares 11 days before the bank got steamrolled, as reported by The Street. Condolence and pity go to the millions of uninformed depositors & investors that will never be able to recuperate their hard earn money.

In less than 48 hours, 2 major banks got crushed and this is the crack in the system that could bring down the house of cards. A Lehmann Brother‘s look-alike situation is panning out in 2023 and this may be more severe. SVB’s collapse could have a contagion effect on other regional banks in the US, as reported by Yahoo Finance. Crypto money is almost all of the banks in US and the banking systems are so intertwined, when one fall, the others follow suit. According to Yahoo Finance report as well, stocks of multiple regional banks are being halted on Friday amid massive selling by speculators after SVB was brought down by regulators, such as PacWest Bancorp, Western Alliance Bancorp, and First Republic Bank.

In the days and weeks to come, many banks are in the crosshairs of hedge funds and big speculators are they are gearing up their borrows and ready to short any banking stocks that shows any sort of signs of cracking. A benchmark index that can help determine that will be KBW Nasdaq Bank Index, which tracks large cap bank stocks. It tanked 7.7% on Friday and there is possibly more downside move in the near future. There are insider information that got release about Goldman Sachs fresh short interest in banking stocks such as SBNY (Signature Bank), FRC (First Republic Bank), ZION (Zion Bancorp), KEY (Key Bank), TFC (Truist Financial Corp) and etc. The sharks smells blood now and the are coming in for the kill.