More than 186 US banks well-positioned for collapse, SVB analysis reveals Rising interest rates, which brought down the U.S. banking system’s asset market value by $2 trillion, combined with a large share of uninsured deposits at some U.S. banks, threaten banks’ stability. The perfect mix of losses, uninsured leverage and an extensive loan portfolio, among other factors, resulted in the fall of Silicon Valley Bank (SVB). Comparing SVB’s situation with other players revealed that nearly 190 banks operating in the United States are potentially at risk of a run. While SVB’s collapse came as a reminder of the fragility of the traditional financial system, a recent analysis by economists showed that a large number of banks are at risk from uninsured deposit withdrawals. It read: “Even if only h

U.S. dollar likely to continue to hammer the Euro currency(Kitco News) - The U.S. dollar index is a basket of six major global currencies weighted against the greenback. The USDX this week hit a 20-year high, supported by rising U.S. interest rates and safe-haven demand for the greenback and for U.S. Treasuries that are purchased in U.S. dollars. It’s not just that the U.S. economy is stronger or that U.S. interest rates are out-pacing the rate rises in other major economies. Rather it’s a combination of the latter and the fact that the Euro zone is facing an energy crisis and rising inflation that have sapped its countries’ economies and in turn put keen downside price pressure on the Euro currency against the U.S. dollar.It’s important to note that price trends in the currency markets te

What Is Stagflation?Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).KEY TAKEAWAYSStagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output.Stagflation was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.1The prevailing economic theory at the time could not easily explain how stagflation could occur.Since the 1970s, rising price levels during periods of slow or negative economi

Cathie Wood Watch: Ark Snaps Up More Tesla Shares Cathie Wood's flagship Ark Innovation ETF dropped 67% last year, and is down 80% from its February 2021 peak. Celebrity money manager Cathie Wood of Ark Investment Management, bought shares of her favorite young technology stocks last year as they slid. Ark’s chief executive has been a particularly big buyer of electric vehicle titan Tesla (TSLA) - Get Free Report since October. It has suffered from production problems, and there is concern that sales growth will slow. Investors also are worried that Chief Executive Elon Musk is preoccupied with his newly-bought Twitter. Tesla shares plunged 65% in 2022. Wood pounced on them Dec. 30, with Ark Innovation ETF (ARKK) - Get Free Report purchasing 221,748 shares, worth $27.3 million as of the De

Asia facing ‘stagflationary’ risks, IMF official warnsSenior official points to Ukraine war, soaring commodity prices and China’s economic slowdown as risks to the region.Asia faces a “stagflationary” outlook, a senior International Monetary Fund (IMF) official warned on Tuesday, pointing to the Ukraine war, soaring commodity prices and China’s economic slowdown as risks to the region.While Asia’s trade and financial exposure to Russia and Ukraine are limited, the region’s economies will be affected by the crisis through higher commodity prices and slower growth in European trading partners, said Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department.At the same time, inflation in Asia is also starting to pick up just as China’s economic slowdown is adding to press

Wall Street Faces Billion-Dollar Losses on Sinking Buyout Debt(Bloomberg) -- Investment bankers in the US and Europe are bracing for potentially billions of dollars in total losses on big-ticket leveraged buyouts as they struggle to offload risky corporate debt that’s plunging in value amid a sweeping market selloff.The biggest hit, which could amount to about $1 billion, may come from the take-private of Citrix Systems Inc., which a group of lenders led by Bank of America Corp., Credit Suisse Group AG and Goldman Sachs Group Inc. signed in January, according to people with knowledge of the deals and the terms at which banks underwrote them.Each of the three lead banks could face losses in excess of $100 million, said the people, who asked not to be identified when discussing private trans

EU Nears Price Cap Agreement On Russian Seaborne Oil U.S. Deputy Treasury Secretary Wally Adeyemo said he was encouraged by the news about the tentative agreement on the price cap -- an idea supported by the United States and the other Group of Seven (G7) leading industrialized nations -- adding that he expects the European Union to iron out details and reach a final agreement. EU countries have wrangled for days over the details of the price cap. Poland, which had pushed for the cap to be as low as possible, had as of late on December 1 not confirmed its support for the deal, Reuters and AFP reported. The initial G7 proposal last week was for a cap of $65-$70 per barrel with no adjustment mechanism. Poland, Lithuania, and Estonia rejected that level because Russian Urals crude, the main v

Commodity prices from copper to wheat are collapsing - and that could flip global inflation into deflation, says SocGenGlobal inflation is likely to swing to deflation in the next six months, Societe Generale said this week. The bank said such a development would follow what's been a fast collapse in commodity prices. Agricultural prices have been part of a rout that's also seen copper and oil prices yanked lower. From oil to metals to wheat, prices for natural resources have slumped from this year's highs and the fast deceleration will likely lead what's been a hot inflationary environment into a deflationary period in the coming months. That's the view from Societe Generale's co-head of global strategy Albert Edwards who in a note published Thursday looked at the "stunning collapse" in t

Gold is 'undervalued' and could see 'aggressive move to the upside,' despite Fed rate hikes - Luke Alexander (Kitco News) - Fed rate hikes have put downward pressure on the gold price, but gold will eventually break out aggressively, said Luke Alexander, CEO and President of Newcore Gold (TSX-V: NCAU), a Vancouver-based gold miner. Gold's price fell by 8.6 percent over the year, despite U.S. inflation peaking at 9.1 percent in June. Alexander mentioned that as the Fed raises rates, the U.S. dollar would continue to perform well, which will be an "overhang on the gold price." He added that when "expectations start to change, I think that's when we'll start to see gold perform… It could be a very aggressive move to the upside." "[Gold] is undervalued in terms of the momentum that I see in th

China Considers Relaxing Ban On Imports Of Australian Coal China is considering a partial easing of its more than two-year ban on imports of coal from Australia amid signs of improving bilateral relations, sources with knowledge of the matter told Bloomberg on Wednesday. China’s National Development and Reform Commission discussed this week the idea to allow four large Chinese coal importers to make new purchases of Australian coal this year, Bloomberg’s sources said, noting that such imports could resume as early as April this year. The four importers that could potentially be allowed to buy Australian coal are China Baowu Steel Group Corp, China Datang Corporation, China Huaneng Group Co, and China Energy Investment Corporation, according to Bloomberg. China enacted an unofficial ban o