: Is this a crisis - or an opportunity? Hear from three experts in today's TradeSmith Daily⦠[TradeSmith Daily]( The Bottom Line for Investors on the Bank Failures
When the price of just about everything goes haywire — as it has lately — how do you decide whether to buy… sell… or hold? Or more importantly, now that Silvergate, Signature Bank, and Silicon Valley Bank have shut down… - What does this mean for the economy?
- And does it present any specific, investable opportunities?
In todayâs TradeSmith Daily, Senior Analyst Mike Burnick, Quantum Edge Pro Editor Jason Bodner, and Senior Crypto Analyst Joe Shew take on these big questions at the top of every investorâs mind. RECOMMENDED LINK [Will You Get Left Behind?](
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“From a financial standpoint, it doesnât get more dramatic or anxiety-producing than having your money in a bank and finding out that bank has gone under,” Jason notes. However: “This is not the tip of the iceberg thatâs about to develop into a full-blown crisis.” Mike Burnick agrees. “Whatâs going on today is nowhere near as serious as 2008,” he wrote to his Dividends on Demand subscribers. “Today, banks are much stronger and better capitalized precisely because of the fallout from 2008.” “In 2008 it took regulators months before making what should have been obvious moves to shore up the banking system. By that time, a crisis of confidence in banks had already taken hold,” he continues in Dividends on Demand. This time, the Federal Reserve quickly announced a new “Bank Term Funding Program,” with the Treasury Department pledging up to $25 billion to make sure any other struggling banks can “meet the needs of all their depositors.” Key word: “depositors” — not shareholders, or executives. This isnât bailing out bank CEOs and letting them reward themselves with huge bonuses. Again… Itâs different this time. Silicon Valley Bank “invested heavily in U.S. Treasuries, which have been falling as interest rates have risen. Newer bonds carry higher rates, so older bonds are worth less. To raise money to meet withdrawals, the bank had to sell older Treasury bonds at losses,” Jason explains in his new free newsletter, Power Trends. “To be fair, though, Treasuries are historically âthe safestâ securities, and deposits kept simply in cash were getting roasted by inflation to the tune of 8% a year. This isnât the kind of reckless and unscrupulous behavior that contributed to so many bank failures in the 2008 crisis. The bank was between a rock and a hard place and reached a breaking point. That breaking point has to get the Fedâs attention, and I see no other option beyond easing up on rate increases,” Bodner concludes in Power Trends… “I can guarantee you (as much as anything can be guaranteed in life) that the Fed does not want to fight inflation at the expense of our financial system. That is a losing proposition no matter how you slice it.” Jason predicts that there will be rate cuts in 2024, but we all still have to wait to see what happens next week after the Fed meets. According to the CME FedWatch Tool, these are the odds of a rate hike as of this writing:
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Is it open season on regional bank stocks â whose stock prices were getting slashed up in the immediate aftermath but now have the Federal Reserve and the U.S. Treasury riding to the rescue? Not quite, say our analysts. “Itâs too soon to even consider wading into this mess,” Mike writes in Dividends on Demand. “Banks that took big risks lending against cryptocurrency or catering exclusively to venture capitalists should fail,” Mike declares… “Meanwhile, large, healthy, well-capitalized banks should be fine,” as the Fed considers them too big to fail anyway. And this is where Mike turned for his latest option trade for Dividends on Demand ([learn more about Dividends on Demand here](. Jason concurs that “shares of the âbestâ companies will continue to be high performers… These are the stocks with superior fundamentals, strong technicals, and lots of big money flowing in.” Tech and consumer discretionary stocks are the ones Bodner has his eye on for his subscriber portfolios. And for those interested in learning more about Jason and his trading system, you can see how he's putting an AI mega-trend to use to spot signals that indicate massive moves could be about to happen for certain stocks by [clicking here](. But itâs not just stocks you can apply these criteria to anymore. Joe Shew notes that Bitcoin (BTC), alongside gold, has run higher since the Fed injected fresh liquidity into the markets. If youâre interested in a momentum trade on BTC now that the fog is starting to lift… Joe recommends that you look for confirmation first — namely, for BTC to break above its 200-week moving average at $25,500. But Joeâs Crypto Advantage Society portfolio also features another crypto thatâs poised for liftoff in the coming weeks: Litecoin (LTC). If youâve heard of the “halving” event for Bitcoin, which keeps a lid on new bitcoins being mined and happens every four years or so… Litecoin has its own halving coming up much sooner: August 2023. Like Bitcoin, Litecoin has tended to run up in price before these halving events, and Joe considers it one to watch from here. Thereâs also the buzz thatâs sure to intensify around artificial intelligence (AI) with the launch of ChatGPT-4 last Tuesday. Cryptos saw the biggest price gains during the first wave of AI excitement earlier this year… And Joe recommends you look at AI cryptos like SingularityNET (AGIX) this time around, too. Whether large-cap stocks, options, or cryptos are more your cup of tea… Itâs comforting to see our analysts finding so many different opportunities in these trying times. And weâll be sure to keep you informed on all the hot trends they discover right here, in TradeSmith Daily. Take care, Team TradeSmith [Download now on the Apple Store](
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