CONTAGION BUT THIS CAN BE A
MASSIVE BLOW FOR THE TECH
INVESTING COMMUNITY WHICH IS
ALREADY BLEEDING, I’LL SEND IT
BACK TO YOU.
DAGEN: THANK YOU SO MUCH KELLY
O’GRADY.
LET’S BEGIN MACRO MAVENS FOUNDER
STEPHANIE POMEROY. STEPHANIE IS NOT THE FIRST AND
STEPHANIE IS NOT THE FIRST AND
IT WILL BE THE LAST, EVEN WORSE
>> I THINK IT IS INTERESTING THAT EVERYONE IS CHARACTERIZING
THAT EVERYONE IS CHARACTERIZING
THIS AS STUNNING IN TERMS OF THE
SPEED THE BANK COLLAPSE.
I THINK FRANKLY THE SURPRISES
BEEN IT’S TAKEN THIS LONG FOR
SOMETHING TO BREAK, WE HAVE
UNDERGONE THE FASTEST MOST
AGGRESSIVE FED RATE HIKES IN
HISTORY FAR MORE AGGRESSIVE THAN
ANYTHING THAT WE SAW THAT LED UP
TO THE GOBLE FINANCIAL CRISIS IN
2007 AND EIGHT.
THE REALITY THE DOING ALL
AGAINST THE BACKDROP OF AN
INCREDIBLY LEVERAGED ECONOMY IN
A FINANCIAL SYSTEM OUTSIDE OF
THE REGULATORY PURVIEW THE PART
THAT IS OUTSIDE OF THE
REGULATORY PURVIEW OF THE
FEDERAL RESERVE THAT HAS BEEN
REALLY RUN LIKE THE WILD WEST.
NOW WE ARE DISCOVERING JUST HOW
MUCH SO.
I DO THINK THIS IS THE TIP OF
THE ICEBERG, THEY WILL SEE A LOT
MORE STORIES LIKE THIS AND I DO
THINK THE PROBLEMS WILL BLEED
OUT AS THEY INVARIABLY DO TO
OTHER PARTS OF THE MARKET AND
I’M THINKING SPECIFICALLY DAGEN
ABOUT THE CORPORATE BOND MARKET.
A LOT OF THE COMPANIES THAT WERE
INVOLVED WITH THIS BANK HAVE
BEEN BUYING OUT THE ZOMBIE
COMPANIES AND LATHERING UP DEBT
ON THEM AND TRYING TO SPEND THEM
OUT, THE ZOMBIE COMPANIES HAVE
OVER A TRILLION DOLLARS IN DEBT
THAT IS GOING TO EVACUATE AND A LOT OF PEOPLE GOING TO BE LEFT
LOT OF PEOPLE GOING TO BE LEFT
HOLDING THE BAG WHEN I HAPPENS.
THIS IS JUST THE BEGINNING THE
STORY AS FAR AS I’M CONCERNED.
>> GREATEST TARGET THAN EXPECTED
JOB NUMBER OVER 300,000 SO THAT
WILL LEAD US TO BELIEVE THAT THE
FED IS GOING TO KEEP RAISING
RATES BUT IF THEY KEEP RAISING
RATES ALL IMAGINE THAT A BE MORE
PRESSURE ON MORE BANKS DO YOU
SEE A PAUSE BECAUSE OF THE
PRESSURE ON THE BANKS FROM THE
FED?
>> I GUESS THE QUESTION IS THE
BANKS OF THE FED HAS BEEN
REGULATING AND ARE PROBABLY
GOING TO BE FINE, THERE WILL BE
SOME REVERBERATION AND
CONFIDENCE AND FRANKLY THE BANKS
ARE BEING VERY GREEDY BECAUSE
YOU CAN GET 5% ON A 12 MONTH FEE
BILL IN THEIR HOLDING DEPOSIT
RATES BELOW 1%.
THEY’RE GOING TO HAVE TO RAISE
THOSE RATES IF THEY WANT TO KEEP
THE DEPOSIT BECAUSE DEPOSITOR
CLIMBING AT THE FASTEST RATE IN
SEVERAL DECADES THIS IS A STORY
THAT THEY CAN ADDRESS AND THEY
CAN FIX THAT PROBLEM.
I THINK THIS RELATES TO THE
FEDERAL RESERVE.
THEY’RE NOT TO BE CONCERNED
ABOUT A 2008 STYLE MELTDOWN IN
THE BANKING SECTOR PER SE BUT
THE BALL BACK TO THE BROADER
ECONOMY WILL BE MEANINGFUL AND I
GUESS IT DEPENDS ON HOW QUICKLY
THAT BECOMES EVIDENT AND FRANKLY
THIS MORNING’S PAYROLL REPORT IS
MORE OF THE SAME IN TERMS OF
KEEPING THE FED’S FEET TO THE
FIRE AND WE HAVE SOME RELIEF ON
THE WAGE FRONT AND YOU ARE SEEN
INTERNALLY THINGS LIKE PART-TIME
JOBS ARE WHERE THE GROWTH IS AND
FULL-TIME JOBS ARE SLOWING
DRAMATICALLY, THAT IS TYPICALLY
BEEN A RECESSION SIGNAL.
WE WILL START TO GET SOME
TRACTION ON THESE NUMBERS BUT
THE FED HAS TALKED TO AND
INSISTED IT WOULD HOLD RATES
HIGHER FOR LONGER SO OFTEN THAT
I THINK THEY LOOK PRETTY
RIDICULOUS TO PIVOT IMMEDIATELY
AND RUSH TO BAILOUT ANY OF THESE
PLAYERS WHO WERE FRANKLY
IRRESPONSIBLE.
>> STEPHANIE IT IS READING YOUR
NOTES.
IT’S ABSOLUTELY INSANE THAT THE
REGULATORS IN WASHINGTON AND
EVEN THE FEDERAL RESERVE WOULD
NOT KNOW THAT THIS WAS AT LEAST
A POSSIBILITY GIVEN THE FACT
THAT LAST YEAR WAS THIS HORRIFIC
BEAR MARKET IN TREASURIES
BECAUSE OF WHAT THE FED WAS
DOING WITH RAPIDLY RAISING
INTEREST RATES IN THE
ANNIVERSARY IS COMING UP NEXT
WEEK OF THE FIRST RATE INCREASE
THE STRINGENT CHANGES IN CAPITAL
REQUIREMENTS WERE FORCED TO HOLD
TREASURIES ESSENTIALLY WHEN
MONEY STARTS GOING OUT OF THE
DOOR AND DEPOSITS THE BANKS LIKE
SVP ARE SITTING ON LOSSES.
WHEN YOU HAVE TO START REALIZING
THOSE LOSSES, YOU NEED TO RAISE
CAPITAL.
IT’S VERY SIMPLE.
I WANT YOU TO LISTEN TO JANET
YELLEN SHE WAS A TREASURY
SECRETARY.
SHE SAID OH NO, DON’T WORRY,
THIS IS ISOLATED, LISTEN TO
THIS.
>> I WILL JUST SAY YOU MENTIONED
SILICON VALLEY BANK.
THEIR RECENT DEVELOPMENTS AND
THE CONCERN A FEW BANKS.
THAT A MONITORING VERY CAREFULLY
WHEN BANKS EXPERIENCE FINANCIAL
LOSSES AND SHOULD BE A MATTER OF
CONCERN.
HELPLESS.
>> I WAS JUST LAUGHING.
IF THAT IS NOT THE MOST
UNCONFIDENT INSPIRING COMMENTARY
BUT AS YOU SAID THIS IS ALL PREDICTABLE WHEN YOU FORCE THE
PREDICTABLE WHEN YOU FORCE THE
BANKS TO HOLD NOTHING IN THE
FASTEST PACE IN HISTORY.
AND DRIVE SHARP LOSSES IN THE
SAME QUOTE UNQUOTE RISK-FREE
ASSET YOU’RE GOING TO CREATE
DISLOCATIONS.
AND NOTHING UNTOWARD HAD
OCCURRED OVER THE LAST 12 MONTHS
AND ACTUALLY MAYBE EVERYTHING’S
GOING TO BE JUST FINE SO THEY
CONTINUE TO TALK TOUGH AND KEEP
RAISING RATES.
MEANWHILE I KEEP TRYING TO THIS
ENTRY DESCRIBED AS NOT AS A
TIGHTENING CYCLE BUT AS A
INTEREST-RATE SHOCK IN THE FULL
FORCE OF THAT IS GOING TO MAKE
ITSELF KNOWN IN A HURRY AND I
THINK WERE NOW STARTING TO SEE
THAT UNFOLD BEFORE US AND THAT
SHOULD REALLY ACCELERATE BIG
TIME AS YOU MENTIONED.
WITH THE ONE-YEAR ANNIVERSARY
AND IS A LOT OF STUFF HAPPENS IN
TERMS OF DEBT THAT MATURES ET
CETERA AND NOW ARE GOING TO HAVE
TO ROLL DEBT AT MUCH HIGHER
RATES AND WILL SEE HOW THAT GOES
OVER.
DAGEN: GREAT TO SEE YOU.