As a reminder. The bank never goes bankrupt and G7 countries will NOT default on their claims. Adjustment takes place through money debasement
There are 3 ways to invest at a time of FIAT currency: 1/ Spend 2/ Invest in risk assets 3/ Invest in store of values
$JPM JP Morgan Chase Q4 FY23.
CEO Jamie Dimon: Deficit spending and supply chain adjustments “may lead inflation to be stickier and rates to be higher than markets expect." • Net revenue +12% Y/Y to $38.6B ($1.2B miss). • Net Income $9.3B. • Non-GAAP EPS: $3.97 ($0.37 beat). • CET1 ratio of 15.0%. • Expect FY24 NII of $90B (+1% Y/Y).
Bank credit is contracting sharply
This has only happened ONCE in the last 50 years. Source: Game of Trades
Is the US banking crisis really over?
Unrealized losses on investment securities held by US banks hit $684 billion in Q3, according to the FDIC. This marks a 22.5% jump compared to unrealized losses seen last year. The jump was primarily driven by rising mortgages rates reducing the value of mortgage-backed securities held by banks. Despite these challenges, the FDIC states that banks remain "well capitalized." This comes as usage of the Fed's emergency funding facility for banks hit another record high of $114 billion. Source: The Kobeissi Letter
Hong Kong local bank rate (HIBOR) jumped to its highest level in 16 years
Source: Barchart, Bloomberg
U.S. Bank Losses on held-to-maturity assets have soared to an ALL-TIME HIGH of $400 Billion! 👀
Source: Barchart, FT
US bank stocks never recovered from the regional banking crisis. Currently, US bank stocks are at record lows relative to the S&P 500
According to Moodys, major US banks are sitting on $650 billion in unrealized losses. Meanwhile, the looming commercial real estate (CRE) crisis has small banks in question. Small banks currently hold ~70% of all CRE loans in the US, $1.5 trillion of which need to be refinanced by 2025. Source: BofA, The Kobeissi Letter
US Commercial Bank deposits fell 2.5% over the last 2 years, the largest 2-year decline on record
Source: Charlie Bilello
