Deutsche Bank, Jim Cramer, Carol discussed on The Trish Regan Show
Maturity. It would have been fine, but on a market basis that went down. Okay, really quick. We're going to do a little Bond math here, just a quick little lesson for anybody who's wondering, why is it that when yields are going up, the price is going down, explain that phenomenon? Yeah, because basically, if you could go out and buy the same duration or a shorter duration bond and get a higher yield, there's not going to be as much demand for that Bond in the current market. And they don't have to pay the face value until the ten years are. Right. Right. So it's just basically. Yeah, and typically what you would see is that you would get a higher yield to hold that money for ten years as an investor. Because you're taking on more risk and, of course, what we won't get into the inverted yield curve stuff that we're dealing with now. But it does bring the point and this is the other accelerant that happened here is the other side of the fed equation when the fed raised rates and people have their money sitting in deposited cows and they're getting one or 2% on their money, but they could park it in a very short term treasury and get like 5% depositors like I'm just going to do that. So they started pulling some of their money. The economy is going a little bit sideways so they might need more money for working capital. So the other side of this is as the fed was raising rates, there were more people who pulled their deposits than the bank had projected based on a normal baseline. So the fact that there were depositors that needed that money and that money was tied up for the ten years, except for if they wanted to take a loft, that was that mismatch. So the fed backdrop of playing God with the economy that created the scenario and then the management's bone headedness of not appropriately assessing risk, going to do something they thought was low risk, but again, not thinking about it. And don't even get me started because one of their risk management officers over in the UK seemed to be more interested in making sure they were ESG compliant. We're going to have to do another conversation on that one of these days, Carol. But she was obsessed with making sure they had all their LGBTQ stuff and that they had a mental health blog. And I'm like, was anybody looking at the portfolio to think maybe there was a way to hedge? Just the possibility, I might get some inflation in the future. So okay. The fed did what it had to do. So theoretically, the system's been saved and yet we got a market that's tanking today. Why? So I believe you're referring to some issues with another bank, which is Credit Suisse. And these things are all related going back to easy money and the overall kind of wonkiness of the financial system. Or I should say, I guess jankiness is even better than wonky in this particular case. But the reality is an Credit Suisse has been a mass for a long time. My guess is that up until this point in time, people weren't that concerned about it, but now that everybody's attention is laser focused back on the banks because we have this ten U.S. situation in oh, by the way, you know, we have these banks that have been within the crypto arena as well that have also had major issues. So there are kind of these different bastions of issues that now, oh look, we have another issue. The credit Suisse is different. And I think in some ways actually, maybe Credit Suisse worries me a little bit more because then I start to say, well, what other balance sheets look like? I certainly don't want to see a repeat of 2008. And I hope that those liquidity stress tests are strong enough. Credit Suisse says they are. They said they're not having any issue with liquidity. They always say that. Now that it's going to look like they're causing a bank. A collapse where somebody has come out and, you know, people are worried about it. And the day or two before, but yeah, boy, we're really a big trouble here. I'm not feeling real good. We're going to throw a Hail Mary, but it's about 50 50. They're always like, oh, don't worry. We're liquid. We're great every single time. So, you know, so you don't buy and you're smart not to. There was a CNBC commentator who did buy it to weeks before SVB went down. Jim Cramer was saying this is a great buy, blah, blah, blah. So look, I think it's really important to kind of cut through the noise, figure out what's going on. Credit Suisse says they're fine, Carol Ross says they're not. Why not? And can this spread? So I have not spent enough time digging into Credit Suisse to say they are or they aren't other than just following them for a long time to say, this is a bank that I wouldn't have touched with a ten foot pole. By the way, there are a couple of others, Deutsche Bank, being one of them, and I know it's one of the big banks here, but just based on their own lending practices and history of corrupt behavior Wells Fargo. And that's just my own personal opinion. I don't like any of those banks. Okay. Not to say that I think that wells necessarily has an issue. I just think they have other issues if you know what I mean. But Credit Suisse and Deutsche Bank are two that have had all kinds of exposure to all kinds of weird products, which again is different than what we were talking about with Silicon Valley bag with this treasury being locked up. And not to make mistakes like the other folks do who go on and say, oh yeah, everything's great everything's bad. I haven't done enough research to be able to specifically say how bad of a thing. That's fair. I mean, I think a lot of people were hopeful. So the Saudis have a big stake in Credit Suisse, but they're limited. They can't take on more than a 10% stake, and they're already at 9.99 something. And so there were some hope that maybe the main shareholder there from Saudi Arabia would be able to help them out here by taking on more ownership or doing a stock buyback. That's not the case. I guess my question to you would be, how much of this is psychological at this point? I mean, we know Credit Suisse was having problems before any of this other stuff. And it's not, it's not entirely related related in terms of sentiment, perhaps, but I think that these are different reasons for having stress that these institutions. Should we be worried about other institutions, other investment banks, which we know do take on more risk than the regionals so I always say over what time frame because, you know, are we talking about this.