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Old 03-18-2023, 03:36 PM   #3541
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Can't read the article but that seems like no small problem to me..
probably a similar problem with ... every bank at this point.
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Old 03-18-2023, 03:45 PM   #3542
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Originally Posted by copyright1997reloaded View Post
QT is done. I can't find the source, but I read yesterday that the new bail out backstop facilities will result in over half of the QT done being restored to the Fed's balance sheet.



It is the money supply expansion that will eventually end up as higher prices. The question isn't if, it is when.



Early last year I predicted here on ER.org that something would cause the Fed to stop raising rates before their inflation target was reached. I was off on the timing, as I thought it would occur prior to the election, but here we are. They may do the 25 basis point raise to save face, but the more important aspect - cleaning up their books via QT is (in my estimation) done.



Here is my (worth what it is being paid for prediction): We will see rates fall as QE gets reimplemented (under a new name to protect the guilty), inflation may fall further in the short run (credit crisis will impact economic activity), but in the longer run inflation will resurge.



At this point my 5-6% position in precious metals is all of a sudden looking way too small.
Fed was never selling securities. Just letting them run off. Powell said in February that selling securities was not in view.

So it will take time. Fine with me. The direction is most important.
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Old 03-18-2023, 03:47 PM   #3543
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Originally Posted by Freedom56 View Post
I think it's too much hysteria with Schwab and the stock market casino.

"Schwab hasn’t been hit by people afraid that Schwab is going to go out of business, but they’ve been hit by [customers] going to higher rates...”

Cash sorting appears to be the issue. People are moving their cash balances to higher yielding products. This is forcing Schwab to borrow money at higher rates to cover cash demands in excess of the securities invested with that cash at longer durations. This will impact earnings.

https://www.ft.com/content/9623dde7-...7-76c6d95a8685
And here's what Schwab says about all of this... That and $5 should get you a small coffee at Starbucks. (Maybe)

But still a pretty good statement, IMO.

https://www.aboutschwab.com/my-persp...ndustry-events
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Old 03-18-2023, 06:03 PM   #3544
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^^^^^
Click on the link in the post. Then when it comes up, cut and past the URL in another window and you should be able to read the article. Works for me.
Didn't work for me.
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Old 03-18-2023, 08:46 PM   #3545
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^^^^^
Didn't work for me either.
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Old 03-18-2023, 08:47 PM   #3546
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Originally Posted by lawman View Post
No. I plan to buy short term C.D.'s just like you.
I dunno lawman, perhaps you'll need to get cash and put it under your mattress.

Quote:
Nearly 200 more banks may be vulnerable to the same type of risk that took down Silicon Valley Bank: The value of the assets they hold.

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago. ...

Source: https://nypost.com/2023/03/18/nearly...svb-did-study/
The reality is that no banks are designed to survive a big run.... they take deposits and issue CDs and use that money to make or buy loans... let's say for discussion purposes like the old days they make auto loans and mortgage loans... those loans are not immediately liquid... it is totally unrealistic to think that any bank can generate cash quickly enough to endure a run.

I seem to have a faint recollection that by law they could defer paying you your withdrawal by a certain number s but I can't find anythign on that.
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Old 03-18-2023, 11:04 PM   #3547
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Originally Posted by Freedom56 View Post
Another batch was dumped. I have been buying a lot of CDs again today but this time for my parents joint account that I have power of attorney.
I'm new to CD's and don't understand what you mean when a batch gets dumped. Lots a questions:
Is that when a bank offers a bunch of CD's all at once? Are these "new issues"? If so, does this happen multiple times an hour (by multiple banks)?

I'm trying to understand the pacing of purchasing them, and how I should go about doing it. Is it something you need to watch and buy immediately (because it changes so much - like a stock), or is it more leisurely and it might be around for a week or month until they are all sold?
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Can you explain "net new assets" at investment houses
Old 03-19-2023, 12:03 AM   #3548
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Can you explain "net new assets" at investment houses

I read this paragraph in an article and I don't understand what they are referring to as 'net new assets.' In this example, does bringing in net new assets means 1) Their stock value went up because people bought a lot 2) People bought a lot of their CD's or 3) People transferred their accounts to Schwab?

"This week, reports note Charles Schwab brought in $16.5 billion in net new assets. With 34 million account holders, it was clear that most of them didn’t especially care about the trouble surrounding the bank, including the massive sell-off. While certainly, the troubles at other banks hit Schwab hard, it was still regarded as a “safe haven” among financial institutions. In fact, Credit Suisse—itself no stranger to trouble this week—considered Charles Schwab enough of a safe haven to upgrade it to “outperform.”
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Old 03-19-2023, 05:29 AM   #3549
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New assets acquired in excess of assets leaving.

So they sold CDs and customers added new accounts or new money to existing accounts, in excess of withdrawals.
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Old 03-19-2023, 05:36 AM   #3550
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Thanks Again, Freedom
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Old 03-19-2023, 06:42 AM   #3551
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Quote:
Originally Posted by pb4uski View Post
Didn't work for me.
Quote:
Originally Posted by Gearhead Jim View Post
^^^^^
Didn't work for me either.

Still works for me. (I'm using Firefox but I tried it on Edge too and it works) When you copy the URL, try pasting it in your search bar in the new window (and not the address bar). That will bring up the search results.. Then click on the search results. It should be the first one at the top of the page.


If that doesn't work, you'll need to talk to someone in Level 2 support
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Old 03-19-2023, 06:58 AM   #3552
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Originally Posted by Brook2 View Post
I'm new to CD's and don't understand what you mean when a batch gets dumped. Lots a questions:
Is that when a bank offers a bunch of CD's all at once? Are these "new issues"? If so, does this happen multiple times an hour (by multiple banks)?

I'm trying to understand the pacing of purchasing them, and how I should go about doing it. Is it something you need to watch and buy immediately (because it changes so much - like a stock), or is it more leisurely and it might be around for a week or month until they are all sold?
Understand that you are trying to learn during a time somewhat abnormal/atypical behavior.
Normally CDs aren't gobbled up this quickly and it's not news when CD's become available. Right now people are primed up with cash wanting to quickly lock in longer term CDs before rates drop.
Also rates are a little choppy since the SVB failure as some banks are trying to raise deposits by offering higher rates. Usually rates are more competitive or uniform across banks such that you don't have to snap up the higher rates immediately before they are gone.
Right now some CDs offerings might be gobbled up withing hours/minutes. If you're not dependent on finding the absolute highest rate and can accept a CD rate a tenth or quarter lower you don't need to join the frenzy and chose from what is available.
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Old 03-19-2023, 06:59 AM   #3553
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Originally Posted by Brook2 View Post
I'm new to CD's and don't understand what you mean when a batch gets dumped. Lots a questions:
Is that when a bank offers a bunch of CD's all at once? Are these "new issues"? If so, does this happen multiple times an hour (by multiple banks)?

I'm trying to understand the pacing of purchasing them, and how I should go about doing it. Is it something you need to watch and buy immediately (because it changes so much - like a stock), or is it more leisurely and it might be around for a week or month until they are all sold?
Another way of saying a $6M to 12M lot of CDs in $1000 dollar denominations is offered for sale by a bank. Brokered CDs move in volume. The total issuance from a single bank can exceed $1B but is broken up into smaller increments and made available though multiple brokers. Another way you can buy CDs in online through your bank or visiting a branch and sitting down with a representative and filling out forms manually. Visiting a branch is the slowest and most expensive method for a bank and therefore the yields often tend to be lower than brokered CDs.
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Old 03-19-2023, 07:05 AM   #3554
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Originally Posted by Spock View Post
Understand that you are trying to learn during a time somewhat abnormal/atypical behavior.
Normally CDs aren't gobbled up this quickly and it's not news when CD's become available. Right now people are primed up with cash wanting to quickly lock in longer term CDs before rates drop.
Also rates are a little choppy since the SVB failure as some banks are trying to raise deposits by offering higher rates. Usually rates are more competitive or uniform across banks such that you don't have to snap up the higher rates immediately before they are gone.
Right now some CDs offerings might be gobbled up withing hours/minutes. If you're not dependent on finding the absolute highest rate and can accept a CD rate a tenth or quarter lower you don't need to join the frenzy and chose from what is available.
I think we will see CDs reset up to 70-90 basis points lower over the next couple of weeks at the 3-5 year durations for non-callable CDs. Yields at the short end of the curve have pretty much peaked. Yields at the the long end are still too low and will eventually normalize.
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Old 03-19-2023, 07:20 AM   #3555
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Originally Posted by Brook2 View Post
I read this paragraph in an article and I don't understand what they are referring to as 'net new assets.' In this example, does bringing in net new assets means 1) Their stock value went up because people bought a lot 2) People bought a lot of their CD's or 3) People transferred their accounts to Schwab?

"This week, reports note Charles Schwab brought in $16.5 billion in net new assets. With 34 million account holders, it was clear that most of them didn’t especially care about the trouble surrounding the bank, including the massive sell-off. While certainly, the troubles at other banks hit Schwab hard, it was still regarded as a “safe haven” among financial institutions. In fact, Credit Suisse—itself no stranger to trouble this week—considered Charles Schwab enough of a safe haven to upgrade it to “outperform.”
Unlike brokerage like Fidelity that offer interest bearing accounts for cash sweeps, Schwab will pay you next too zero for cash sweeps. TDA does the same but TDA is primarily for stock traders. They would then take depositor money and invest it in securities and earn interest income. Now that you can earn interest on cash, Schwab clients are choosing to buy MM funds and CD at yields higher than what Schwab has invested those cash deposits for.

Below is the explanation from Barron's. Sorry it will cost you $1 per week for a subscription when you exceed your free articles. Since I'm a self directed investor, I don't mind paying $1 per week for Barron's, WSJ, and the NY Times.

"Last year, Schwab generated more than $10 billion of net interest revenue, which represented about half its total annual revenue, according to the company’s fourth-quarter earnings report. That revenue is the difference between the interest Schwab earns on bonds and loans and the interest it pays out to its funding sources, which are primarily uninvested client cash balances. Schwab’s net interest revenue looks increasingly at risk as interest rates rise."

https://www.barrons.com/articles/cha...lloff-4bb1ae5f
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Old 03-19-2023, 07:24 AM   #3556
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Charles Schwab feels heat after SVB collapse https://worldnewsera.com/news/financ...-svb-collapse/

Article is 5 days old. You can substitute your favorite bank in lieu of <Charles Schwab>.

Since the article. SCHW is +4.80 (9.30%) for the past 5 days. JPM is -5.40 (-4.12%) for the past 5 days.

SVB, Credit Suisse, it all plays out.
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Old 03-19-2023, 07:47 AM   #3557
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Fed was never selling securities. Just letting them run off. Powell said in February that selling securities was not in view.

So it will take time. Fine with me. The direction is most important.
You say toMAYto , I say toMAHto.

I never stated they were selling securities, but it sure looks like the directionhas changed.

Fed held assets:
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Old 03-19-2023, 07:55 AM   #3558
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I've been off the grid for about 8 days and have heard little news except that more banks have gone belly up and people are piling into cash. I am selling all my Schwab Money Market (SWVXX)..
Prudent decision or irrational fear
Lawman, while I see that others have poked fun at your move, it appears that you aren't the only one moving from SWVXX (which holds a lot of commercial paper and above the limit CD's). SWVXX net asset flow: I've moved my Ameritrade and Schwab "cash" to SNSXX (as of a week + ago). It pays less but has short term treasuries. (also attached an image of its flows.)
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Old 03-19-2023, 08:00 AM   #3559
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Lawman, while I see that others have poked fun at your move, it appears that you aren't the only one moving from SWVXX (which holds a lot of commercial paper and above the limit CD's). SWVXX net asset flow: I've moved my Ameritrade and Schwab "cash" to SNSXX (as of a week + ago). It pays less but has short term treasuries. (also attached an image of its flows.)
That is what some of Schwab's own advisors/consultants are advising..
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Old 03-19-2023, 08:02 AM   #3560
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Lawman, while I see that others have poked fun at your move, it appears that you aren't the only one moving from SWVXX (which holds a lot of commercial paper and above the limit CD's). SWVXX net asset flow: I've moved my Ameritrade and Schwab "cash" to SNSXX (as of a week + ago). It pays less but has short term treasuries. (also attached an image of its flows.)
Poke fun at me too. (As if I really cared). I have sold/moved all of my SWVXX to CD's in recent weeks at Schwab and will probably move most of my cash there to CD's too before the end of the month. Not that I was afraid of SWVXX but CD rates hit my "all in" target range. SWVXX was a great place to park my money until CD rates got into my all in target range. YMMV
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