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Major European stocks rebounded ahead of Thursday's session on positive sentiment pushed by news the Swiss National Bank decided to support Credit Suisse amid struggles caused by the spillover effects of Silicon Valley Bank's crash. Today's session will also be marked by the European Central Bank's interest rate decision.
The DAX jumped 1.48% at 7:41 am CET, while the CAC 40 rose 1.57%. The Euro Stoxx 50 climbed 1.74%, and the FTSE 100 expanded by 1.03%.
The euro gained 0.28% against the dollar to sell for 1.06074 at 7:47 am CET, while the pound increased 0.13% to $1.20729.
Baha Breaking News (BBN) / ND
Good luck today y’al
WORTH A READ
What I Think About the Silicon Valley Bank Situation
Ray Dalio
March 14, 2023
I've been doing an AMA on social media and getting a lot of great questions I've been sharing here. Here are some thoughts I had in response to a question about Silicon Valley Bank.
I think that it is a very classic event in the very classic bubble-bursting part of the short-term debt cycle (which lasts about seven years, give or take about three) in which the tight money to curtail credit growth and inflation leads to a self-reinforcing debt-credit contraction that takes place via a domino-falling-like contagion process that continues until central banks create easy money that negates the debt-credit contraction, thus producing more new credit and debt, which creates the seeds for the next big debt problem until these short-term cycles build up the debt assets and liabilities to the point that they are unsustainable and the whole thing collapses in a debt restructuring and debt monetization (which typically happens about once every 75 years, give or take about 25 years).
While in different cycles the sectors that are in bubbles are different (i.e., in 2008 it was heavily in residential real estate and now it’s in negative-cash-flow venture and private equity companies as well as commercial real estate companies that can’t take the hit of higher interest rates and tighter money), the self-reinforcing contraction dynamic is the same. Based on my understanding of this dynamic and what is now happening (which line up), this bank failure is a “canary in the coal mine” early-sign dynamic that will have knock-on effects in the venture world and well beyond it.
To put this in context and think about how this will likely play out, I find it useful to go to my archetypical debt cycles dynamic that I cover more comprehensively in my book Principles for Navigating Big Debt Crises than I can cover here. I am linking to the PDF version available for free here and will summarize in this Observations.
Because one man’s debts are another man’s assets and most people are levered long (i.e., they are holding assets financed by debt), when interest rates rise and money becomes tight, assets fall in value, which hurts debtors, creditors, asset holders, and financial intermediaries, which causes a self-reinforcing contraction and contagion because when money is needed, other assets are sold and when creditors are hurt, they curtail lending. Those financial intermediaries (most importantly banks) that are most leveraged long to the asset bubble that is bursting are particularly affected. It is classic that coming out of an extended period of very low real interest rates and abundant credit, there is an enormous amount of leveraged long holding of assets that are going down due to higher interest rates and tighter money, which is producing this classic dynamic of dominos falling.
https://www.linkedin.com/pulse/what-i-think-silicon-valley-bank-situation-ray-dalio/
Its a nightmare trading day where crazy moves can happen. Best not to trade at all.
The good news i think and i hope, is that we’re seeing the “norm” in markets when sectors have issues eg stocks down and gold up for example-
the horrible panic times like 2008 and covid march2020 when everything went down together in a rush for liquidity !!! Hopefully short lived
Hi Steve, all throughout this week and last when gold got a mention on the Baha news site there was a crypto news article as well, bitcoin was hitting highs concurrent with gold.
2 banks have had issues for different reasons and it’s good to see the regulation bought in is being acted on :-). Traders making a packet- nothing like 2008- completely different when the banks caused a crisis for known reasons that crashed stocks and crashed gold
You are probably right. Mr Tibbles.
I also wonder if at last the regulators have been given more teeth.
Especially now the Banks are in serious trouble again.
What is interesting also is how BTC and other major crypto has performed comparatively well as have tech stocks... major players have different indices I accept, but interesting nonetheless.
Gold price in euros skyrocketed over 3% on Wednesday, the highest since April 2022, as investors turn to the precious metals market amid the ongoing crisis surrounding the collapse of the Silicon Valley Bank and uncertainty tied to Credit Suisse.
Spot gold advanced 3.36% to sell for €1,833.7835 at 6:03 pm CET. The liquid gold in Swiss francs also went up 3.04% to change hands for 1,793.2144 at 6:06 pm CET. Meanwhile, gold in dollars traded 1.41% higher to go for $1,930.18 at 6:10 pm CET.
Baha Breaking News (BBN) / MX
Good luck to all holders tomorrow- and I’ll be ready to press the button as fast as i can if good- also depends, of course, on markets too plus gold - todays another reminder that cey is a stock and not gold itself - hence the SP
Fair comments Paul!
As we are all too aware there were far too many missed targets and unrealistic promises from Pardey & Youssef in the past!
It would be nice if the results were good and the price went up! How long is it since that happened?
Gold staying at this level or rising would help in the longer term-------and should bring lower costs and bigger dividends.
As I said recently, Martin Horgan could walk away with no loss of face, so Im guessing he is staying because he thinks he can improve things.
Boring but a bit better than "Steady as she goes" , should help bring the credibility levels back up a bit more.
Lets be honest, if he suddenly promised a lot, we would all be panicking!
Fingers crossed!
Best of luck y’al
Well gold has made it through £1600 for the first time ever and is now over two percent above the previous all time high. Hopefully ounces will be back up nearly 10% at around 440k and partly as a result costs not up much and maybe even down slightly in which case the news will be good unless the dividend hammers us, I am staying all in but then I am not a trader.
Patryk
Wishfull thinking the share price always falls on results day,thats why people have sold and we are now down despite gold price up again
Yep Mr T- same as I heard from a different source :-).
RIYADH, March 15 (Reuters) - The head of Credit Suisse Group's largest shareholder, Saudi National Bank (SNB) (1180.SE), said on Wednesday it would not buy more shares in the Swiss bank on regulatory grounds.
Credit Suisse's biggest backer says can't put up more cash; share down by a fifth
"We cannot because we would go above 10%. It’s a regulatory issue," SNB chairman Ammar Al Khudairy said in an interview with Reuters. The Saudi bank holds a 9.88% stake in Credit Suisse, according to Refinitiv data.
https://www.reuters.com/business/finance/credit-suisses-saudi-backer-happy-with-transformation-plan-doesnt-think-extra-2023-03-15/
Back to CEY... as per my norm, I won't be in for tomorrow's RNS, like many here, too long in the tooth and been whacked at RNS in the past! Will be ready to hop back in tomorrow on any rise and hopefully only miss out on the initial jump at open if there is one.
So, any views here on what is likely to come out in the RNS other than the obvious?
CSwiss leverage ratio still good, no liquidity issues, different issue to SVB, confidence issue now... not like 2008- regulatory changes since 2008 crisis in play hence Saudi couldn't step in.
Mr Bond,
Possibly some US suppression or manipulation to allow the closing and opening of trading positions to try and be on the right side of the boat?
Always euphoria lol- gold will pullback as hysteria subsides - CS will be fine, banks will be fine - tomorrows RNS important - the brave will remain in, some will bail before day end on fab profits again today too :-). Then if good RNS tomorrow at 07:00 and markets ok incl gold- go back in on any rise
Looks like market is expecting the results to be good along with the higher Gold price, this will explode if that’s the case.
1930!!!!!!
Got that real gut feel now that CS is pretty much a gonner and gold price is being supported by the too big to save possibility - and hence all mayhem and the collateral damage this could cause.