Syz the moment

As highlighted by The Kobeissi Letter, three of Canada's largest banks are seeing ~20% of their outstanding mortgages in negative amortization. What does this mean? Monthly payments on ~20% of mortgages at BMO, TD, and CIBC are no longer enough to cover interest expense. This means you end up owing more than your original loan amount over time. Typically, variable rate mortgages with fixed payments experience this in a rapidly rising interest rate environment. These homeowners may begin to foreclose over the next few months. This is an important trend worth watching.

Source: Charlie Bilello

The chip designer aims to raise ~$5B, targeting a valuation of $50B-$55B. It's the largest US IPO since $RIVN in 2021. Note that SoftBank’s $50bn flotation of Arm is more than five times oversubscribed, according to bankers pitching investors on the biggest initial public offering in nearly two years, as the UK-based chip designer forecast accelerating revenue growth boosted by the artificial intelligence boom. Despite investor concerns about a drop in profits in Arm’s most recent quarter amid a smartphone industry slowdown and the company’s exposure to multiple risks in China, advisers working on the Nasdaq listing said there was “little price sensitivity among investors”, many of whom would be forced to buy because of Arm’s inclusion in indices. Here's a snapshot of its FY 2023 income satement by App Economy Insights

It now stands at a new record high of $108 billion, even as the regional bank crisis is "over." The current rate banks are paying the Fed on these loans is an alarming ~5.5%. i.e . the banks that almost collapsed are now borrowing record levels of expensive debt from the Fed. Is the US regional banks crisis really over? Source: zerohedge, Bloomberg, The Kobeissi Letter

Source: Bloomberg, HolgerZ

This is the biggest-ever quarterly profit for a bank in the second quarter as a result of its emergency takeover of Credit Suisse, and confirmed that it would fully integrate the local business of its former rival by next year. Key takeaways: - UBS said the result primarily reflected $28.93 billion in negative goodwill on the Credit Suisse acquisition (i.e this huge profit is due to a huge one-off gain that reflects how the acquisition costs were far below Credit Suisse's value). Underlying profit before tax, which excludes negative goodwill, integration-related expenses and acquisition costs, came in at $1.1 billion - The accounting gain for the quarter eclipses JPMorgan Chase & Co.’s $14.3 billion profit in the first quarter of 2021, the modern record for US and European lenders; - Analysts had projected a net profit of $12.8 billion for the three months to the end of June, according to a Reuters poll. Source: Bloomberg, CNBC Source illustration: Sonntagzeitung / Melk Thalmann

Total assets $350 billion... Source: FinanceLancelot * What Is the Federal Home Loan Bank System (FHLB)? The Federal Home Loan Bank System (FHLB) is a consortium of 11 regional banks across the U.S. that provide a reliable stream of cash to other banks and lenders to finance housing, infrastructure, economic development, and other individual and community needs. (source: Investopedia)

Yesterday it had its lowest close of 2023, back to the panic levels of mid-March when Silicon Valley Bank failed. Source chart: James Bianco