Given the enormity of the Silicon Valley Bank collapse, I wanted to a few thoughts, insights and suggestions for your investments and more importantly for your financial plan. Here’s a link to the on .
Missional Money Podcast in iTunes
SVB Bank Crisis Your Next Steps
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What to Watch
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What to Avoid
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What to Watch
Hopefully, you’re not doing what I’m doing… Watching the markets on a daily, hourly, and sometimes minute-by-minute basis. That’s my job as your Investment Advisor and I am doing my job!
Last week was a wild and rocky ride on Wall Street. Banking Crisis drama at Silicon Valley Bank, jobs growth (again!), and a persistently hawkish Fed all fueled the headlines. There was no shortage of fireworks, and major U.S. equity indexes markets fell sharply.
In fact, the S&P 500 fell to levels not seen since January.
Tallying last week, the S&P 500 declined by , the Nasdaq 100 fell by , and the Dow Jones Industrial Average decreased by .
What to Avoid
Wall Street and Silicon Valley California were in full panic mode over this past weekend demanding that the FED and Treasury intervene to pull their chestnuts out of the fire.
A few leaders have kept a cool head in this so called banking crisis—but billionaire hedge-fund operator Bill Ackman and venture investor David Sacks had a vested interest in spreading panic.
, and the agency will try to find a private buyer for the bank.
Market Silicon Valley Bank
Venture capitalists and tech startups felt pain last week as Silicon Valley Bank became , sparked by the company’s need for liquidity, which resulted in an old-fashioned bank run.
The majority of the forty-year-old institution’s clients are venture capitalists and tech startups. The California Department of Financial Protection and Innovation (DFPI) of the bank last week and appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver.
SVB and the ensuing fallout is an ongoing story. The latest information shows that the U.S. government has indeed and will backstop depositors and financial institutions associated with Silicon Valley Bank. This occurrence is reminiscent of the phenomenon from 2008.
What to Do Next
There are some things that SVB Bank could have done to avoid the crisis, ironically, some of those same things are helpful for every investor. Mike Tyson was right about one thing. Everybody’s got plans – until they get hit. Before the next wave of market volatilty and uncertainty comes our way, I hope you’ll take me up on my offer to help you do the following 3 things BEFORE we get hit…
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Update Your Financial Plan
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Know Your Risk Number and What’s In Your Portfolio
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Let’s Have That Conversation
Your Next Steps
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Visit when you’re ready to .
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Get Your Risk Number to take our
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Book your with a
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on
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to the in iTunes and everywhere Podcasts are Played
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to BayRock News for updates on the SVB Bank Crisis and Your Next Steps
Important Note
Please note that this situation is constantly evolving, so keep in mind that there may be some new developments I’m not covering in this episode of the .
SVB Bank Crisis News
I encourage you to read more about minute-to-minute developments in news sources like CNBC, The Wall Street Journal, and The New York Times.
Some of the most interesting news is actually old news. One piece of old news that I find interesting is about one of the creators of the Dodd Frank Act: Did you know that
What Really Happend at SVB Bank
– and what does it mean for you and your financial future? Let’s talk about it on today’s episode of Missional Money!
SVB Market Effects
There were, of course, chain reactions. For example, on Saturday, Etsy to sellers informing them that their payouts were delayed. Notable companies that to SVB include Roku, Etsy, Roblox, and Vimeo.
CNBC’s Jim Cramer is calling the bank’s collapse . However, understand that not even a month ago, Cramer suggested SVB as a buy on CNBC. Yikes.
Rate Policy Impact?
For a glass-half-full perspective on SVB, the odds of a 50-basis-point increase at the March meeting fell precipitously last Thursday, of a 25-basis-point hike.
Per the the odds further shifted as of Monday, with probabilities showing a 76.8% probability of a 25-basis-point hike, a 23.2% chance of no rate hike, and a 0% chance of a 50-basis-point hike at the March 22nd meeting. The data is dynamic and is accurate as of the last check.
Investor Protection
For banking products, FDIC provides protections up to . Many of SVB’s clients were large tech companies that most likely exceeded the limits, but the latest news does indicate that the U.S. government will .
It is a good time to mention that while covers banking products, it is that protects investors of securities held at clearing firms.
Government Bond Yields Drop
Holy flight to safety. Investors flocked to treasuries at a frenzied pace last week, sending treasury yields lower across the curve.
Ten-year note yields dropped sharply last week, closing the week at , down from their previous weekly close of .
This sharp drop in yield translates to the mood of the market last week, which was informed by SVB events that rushed investors into safe-haven plays like treasuries and the fact that the Fed may have to rethink sharp rate hikes and/or the “higher for longer” narrative.
Folks are now chomping at the bit to see how the narrative plays out this week regarding the handling of SVB and any Fed/government involvement. We also get Consumer Price Index (CPI) data Tuesday.
Jobs Growth (Again!)
Federal Reserve Chair Jerome Powell has broadcasted that the Fed’s rate hike policy will be data-dependent. Nonfarm payrolls for February came in above expectations again, showing versus 225,000 expected. Rising interest rates are intended to cool job demand, yet employers continue to add workers at a .
Measuring market reaction to the employment data released last Friday was challenging, as all eyes and ears were on SVB. The employment data would ordinarily translate to an increased likelihood for a “higher for longer” interest rate narrative. But given the events of last week, the Fed may have to take a step back to reconsider the aggressive stance on rate hikes.
Market participants will eagerly await clarity this week from the Fed.
Times Like These
As you may have seen, federal regulators also took over Signature Bank of New York over the weekend. President Joe Biden that the SVB and Signature Bank bailouts would not be footed by taxpayers.
While the headlines may seem concerning, we have been here before. Lehman and Bear Stearns happened in 2008, and long-term investors reaped the rewards of holding through turbulent times.
Let’s remind ourselves of that and remain disciplined on our long-term journey. For some investors, dollar-cost averaging may make sense in the coming days and weeks. For others, simply remaining disciplined and sticking to the plan may be the answer.
SVB Bank Crisis Article Links
As we post updates to this story, I’ll update the following list of links for easy reference. You can also search the website using keyword SVB to find videos, articles, and updates related to our series: SVB Bank Crisis Your Next Steps.
