Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter birds run by a bank run

Financial Regulation and Policy

• Dodd Frank Was Never Gutted – It Was Barely Touched https://t.co/sRapmRVUrx  Interesting sidelights on how little Dodd-Frank got changed Mar 18, 2023
• Banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains after SVB’s collapse https://t.co/xq4nCKYON5  Things are that bad… Mar 18, 2023
• A federal appeals court in New York is asking the Securities and Exchange Commission to share its views on whether syndicated loans are securities https://t.co/N2xYrY6xE3  I think they are if securitized, and not otherwise. Mar 18, 2023
• Let me try again. They are securities if you don’t mark them as “held to maturity.” https://t.co/HdBSJotVWc  Mar 18, 2023
• President Biden called on Congress to pass legislation to impose tougher penalties on bank executives who are deemed responsible for the collapse of financial institutions. https://t.co/Xq4MpXLTRr  Better you should punish the Fed & the Administration for its lousy regulation Mar 17, 2023
• US banking system sound but not all deposits guaranteed, Yellen says https://t.co/PpAzFR5K37  Will they finally do stress testing of bank interest rate risk to the degree that life insurers do? Mar 16, 2023
• Banking in very uncertain times https://t.co/0fDg23dzHz  I know few will agree with me, but we need to rethink banks doing maturity transformation. Mar 15, 2023
• Gradually, Then Suddenly https://t.co/kfEJZD8csg  There were a few times as an investment actuary I got to review bank interest rate risk analyses. They were comically simplistic, and wondered why the regulators allowed it. The same applied to illiquidity mismatches. Mar 15, 2023
• STEVE HANKE And CALEB HOFMANN: Banks Have Now Become Gov’t-Backed Businesses — Just Look At Silicon Valley Bank https://t.co/5w2ZUmFQ9U  “Under such a government-backed regime, a massive amount of moral hazard will be injected into the commercial banking system.” Mar 14, 2023
• ‘People full of hubris and greed take stupid risks’ https://t.co/5gFk63iQfG  More hidden monetization of bad debts. Continuing to foster more moral hazard Mar 13, 2023
• After Silicon Valley Bank and Signature Bank closed, here are some questions and answers to explain what is happening now https://t.co/pCyCbmtTCl  The Fed further expresses its lostness via its new “Bank Term Funding Program.” The FDIC joins in by insuring some uninsured deposits. Mar 13, 2023

Odds & Ends

• “A lot of corpses and there was nowhere to put them.” Authorities are overwhelmed by the record number of migrants who die trying to cross the U.S.-Mexico border. https://t.co/ZmP3gIFwwI  Sad Mar 18, 2023
• The CFA Institute unveiled sweeping changes to its three-level financial analyst exam in the biggest reworking since the test was introduced in 1963 https://t.co/ERmkWJ94qS  Seems like a downgrade on investment knowledge to me. Mar 18, 2023
• 3 reasons to sleep more: avoid dementia, have great sex and become a better investor https://t.co/nh043CTvTB  When research is this sloppy, you can believe anything Mar 17, 2023
• They thought the artworks were in storage. Until they saw them on the news—hanging in the White House. A family art dispute worthy of “The West Wing”: https://t.co/XLaxNiPK1q  Real life can be stranger than fiction. Mar 16, 2023
• Check Fraud Is on the Rise. Here’s What You Can Do to Prevent It. https://t.co/UJ6g0tqIdW  Good article. Avoid mailing checks. Mar 15, 2023
• The surprise villain of Americans’ diets: sandwiches https://t.co/Kn4DGVRM0I  Moderation is the key; also ingredient freshness and diversity Mar 15, 2023
• Hospitals are tapping technology in a new push to reduce stubbornly persistent medical errors https://t.co/hEv9YaIupp  This will help, but hospitals will remain a dangerous place… too many sick people, and people with compromised immune systems. Mar 15, 2023
• LastPass was hacked. Columnist @nicnguyen explains why you should still use a password manager https://t.co/qCsU7vvIUP  One strong pass phrase & two-factor authentication Mar 14, 2023
• Stuck in the Sunbelt: In most U.S. cities, traffic is less congested than it was in 2019. In some Sunbelt cities, such as Miami, Nashville and Las Vegas, it has become worse  https://t.co/gejcKye5V7  A First World problem. Welcome to the disadvantages of growth. Mar 14, 2023
• After a decade of Pope Francis’s leadership, church teaching on issues once considered settled, such as homosexuality and contraception, is now hotly contested https://t.co/3WWfj8JykX  In a different way, he rivals the bad popes prior to the Reformation — little is Scriptural Mar 14, 2023

Monetary Policy

• This isn’t the start of a banking crisis, it’s markets waking up to the fastest rate-hike cycle since the 1980s — & the growing risk of recession https://t.co/jl4arf05a7  If the yield curve inverts, monetary policy is tight. Separation principle is wrong unless you want a crisis Mar 18, 2023
• Exactly a year into its rate-raising campaign, the Fed is likely to pay a price for its late start, & SVB could be just the beginning https://t.co/bBC68G2xBY  We forget Fed’s third mandate: protect the banking system. When that is threatened, inflation & unemployment don’t matter Mar 18, 2023
• This is no time for the Fed to retreat on tightening https://t.co/mYsAnSWdpc  Idiotic opinion from @Bloomberg. Bad things happen when you invert the yield curve, and you want to make it worse. Mar 16, 2023
• For all the concern about Silicon Valley Bank, the latest CPI shows why the Fed can’t abandon its inflation fight just yet https://t.co/foyr8JdGo3  The author & Waller are wrong — the Fed always cares more about banking stability over inflation & unemployment Mar 14, 2023
• Transcript: How the Federal Reserve Grew More Powerful Than Anyone Ever Imagined https://t.co/TzWD1uLLEY  @tracyalloway & @TheStalwart interview @jeannasmialek — we are waiting for the day when the Fed does something nonstandard & the markets rebel… too many balls to juggle Mar 14, 2023
• The Treasury market is signaling that a recession is all but inevitable, if history is any guide https://t.co/s68Zm031gu  I doubt the FOMC is intelligent enough to pause their rate hikes. They envy Paul Volcker, but don’t get that it is different than 1980 — too much debt Mar 13, 2023

Companies

• Elon Musk’s carmaker has been more active on his social media service since he acquired it for $44 billion https://t.co/gz1i6qJzcj  Just wait until $TSLA acquires Twitter. Mar 16, 2023
• Kroger and Albertsons are working on the supermarket of the future. https://t.co/rSykseLoz1  I’m not sure it matters if they merge or not. There are so many ways to shop today. Mar 16, 2023
• The maker of Cheez-It crackers and Frosted Flakes is splitting its business in two—a snacks business and one for North American cereals https://t.co/P1WHVHxHnn  This makes sense $K Mar 15, 2023
• BuzzFeed wants its scaled-down newsroom to produce more articles in an effort to boost traffic and revenue https://t.co/lbzqKKfJLS  This doesn’t make economic sense. How do you do more with fewer people? AI? Quality? Mar 15, 2023
• SVB wasn’t just important to the tech and startup scenes — it was a key player in affordable housing https://t.co/n5krF0ZdJK  This is just business, baby. Most journalists don’t get how affordable housing lowers corporate taxes. It’s not meritorious. Mar 14, 2023
• The London Metal Exchange finds bags of stones instead of the nickel that underpinned a handful of its contracts at a warehouse in Rotterdam https://t.co/Pb7BRAU416  Probably worth doing an audit of all LME warehouse inventories Mar 18, 2023

Non-US

• Pakistan says the International Monetary Fund is seeking the release of funds pledged by some third-party countries before signing an agreement under its bailout program https://t.co/mvvnFHGWw1  This usually doesn’t work Mar 18, 2023
• South Africa’s newly appointed electricity minister warns that record electricity outages could get worse before they get better https://t.co/ncptD1xdxJ  First clean up the corruption, and prosecute those stealing coal. Mar 18, 2023
• China’s Communist Party unveiled an overhaul to strengthen its role in managing finance, social affairs and technological development https://t.co/bICBlMpdAm  Will likely lead to a lack of competence if the CCP closely directs everything. There will hesitation to speak truth Mar 16, 2023
• Russia was able to save abroad about a third of the $227 billion windfall earned last year from its commodity exports https://t.co/nl3RU7snQI  Money frequently finds a safe home. Value is fungible, if not liquid. Mar 15, 2023
• Italy’s defense minister is seeking NATO and EU’s help to deal with a new influx of migrants from north Africa he says has been sparked by Russian meddling in the region https://t.co/opQpHr02pn  NATO was not designed to deal with migration issues Mar 13, 2023
• North Korea fires two cruise missiles from a submarine and issues a new threat to “mercilessly punish” the US as it starts large-scale military drills with South Korea https://t.co/6vIIA09qlY  Greatest possibility of accident is here Mar 13, 2023

Market Dynamics

• Markets are grappling with a $600 billion question right now: Are the half-dozen banks in the spotlight outliers or a warning sign of a wider malaise? https://t.co/95LCDU832W  Credit will be less available as the cost of capital has risen for banks. Mar 18, 2023
• Wealthy Executives Make Millions Trading Competitors’ Stock With Remarkable Timing https://t.co/5nfo6WZIsk  Fascinating that an article can write about this and not mention “mosaic theory” where a person doesn’t know for sure but has made an educated guess. Mar 16, 2023
• In the Hunt for Fraud, the Red Flags Start With the Auditor https://t.co/yLyAbkm3vq  Beware small auditors, and odd phrases in the audit report. Mar 14, 2023
• Asset managers including Invesco and Franklin Resources added shares of SVB Financial Group in the months before the collapse of Silicon Valley Bank wiped 60% off its stock value in a single day https://t.co/XHNW4uK7w6  They are value investors. They resist trends. Mar 14, 2023
• The ‘Investor Identity’: The Ultimate Driver of Returns @SSRN https://t.co/OzBVe4cCLg  This is too basic of an idea to think this is something special Mar 13, 2023

Contagion

• Schwab clients pulled $8.8 billion from the firm’s prime money market funds this week https://t.co/ZG5G247vZ3  So much for the commercial paper market Mar 18, 2023
• Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank to make uninsured deposits totaling $30 billion into First Republic Bank https://t.co/ga6k7xBKTM  Reminds me of LTCM and Wall Street Mar 16, 2023
• All your modern-day bank run questions, answered https://t.co/Zc2dqsv1Ea  Will we finally deal with repo and other types of short-dated margin funding as well? Have we just given permission to banks to take as much interest rate risk as they like? Mar 16, 2023
• Credit Suisse bonds tumble to levels typically associated with distress https://t.co/U0PDMmnj3T  It’s better to measure financial distress by looking at the dollar price curve by maturity — w/low prices & everything outside of 1 year trades at roughly the same price -> distress Mar 15, 2023
• In the wake of the Silicon Valley Bank collapse, those looking for the industry’s next threat should start with commercial real estate https://t.co/tyTeNsfPwR  Yes, look at banks have a lot of loans to office and retail real estate, and CMBS, etc. Mar 13, 2023

Politics & Policy

• The U.S. Needs a Budget Straitjacket https://t.co/xuFqLQ1NON  It’s a good idea, but it will never get enough political traction Mar 18, 2023
• Trump’s tariffs couldn’t save the California olive industry https://t.co/zHcGa6TZIC  In general trade wars aren’t worth fighting Mar 17, 2023
• Pensions are where the money is https://t.co/MtGusEwsUG  Using pension funds to fund government projects is a colossally bad idea. Mar 15, 2023
• Biden’s budget is dead on arrival — and deserves to be https://t.co/qsoUZwX7i2  Both the GOP & Democrats live in separate fantasylands. Mar 14, 2023

Corporate Life

• HR departments usually deliver the bad news of a layoff. What happens when they are the target? https://t.co/Phrym51dqX  Given my dealings with HR in my life, hearing that they are getting laid off makes me grin. Least productive department Mar 17, 2023
• Some white-collar training programs have become as selective as Ivy League universities https://t.co/dMqtiucPN1  An idea that is better than college for many young people Mar 16, 2023
• Communicating through technology may seem easier than meeting in person, but it leaves us more depleted in the long run https://t.co/YEMG6m01Io  We are designed to relate to each other in person. Mar 15, 2023
• CEOs often stay long past their prime due to their star power, spineless boards and a lack of succession planning. https://t.co/4HhDBvV4HB  Disagree. More often, effective CEOs get removed due to age. The opposite is far less common Mar 14, 2023

Artificial Intelligence

• OpenAI Unveils GPT-4, Months After ChatGPT Stunned Silicon Valley https://t.co/pTJXnIojvH  Interesting and affordable, but still you have to analyze whether the output is valid Mar 18, 2023
• What is ChatGPT-4 and how can I use it right now? Here’s everything you need to know about OpenAI’s new release https://t.co/Szr6pUQVgS  Reasonably good summary including costs Mar 15, 2023
• Here’s what it takes to run the latest AI chatbots in the cloud https://t.co/n5MmtMF750  Pretty ambitious, but will it be accurate? Mar 13, 2023

Economics

• US Homebuilder Sentiment Unexpectedly Rises for a Third Month https://t.co/prC3YZ8WOB  But will people have enough confidence to buy them in a recession? Mar 15, 2023
• Egg prices in the US fell for the first time in 5 months https://t.co/GyhGqlBU6j  A welcome change Mar 14, 2023
• The typical homebuyer’s monthly mortgage payment hit an all-time high of $2,563 https://t.co/JFWp16GtgO  There is still pressure lowering housing prices and mortgage rates, which would bring mortgage payments down in the short run Mar 13, 2023

California

• Farmers warn US strawberry prices are going to rise if disastrous California flooding continues https://t.co/3xWgX7dg7Y  It’s almost like someone is messing with the weather just to hurt California. Mar 18, 2023
• The unending storms pounding California are testing the state’s extensive but weakened system of levees, causing some to fail as happened last weekend in the farm town of Pajaro https://t.co/LK3DD7ABwY  These were known issues. California & its counties used their taxes badly. Mar 16, 2023

French Pensions

• French President Emmanuel Macron should press ahead with his plan to raise the retirement age in the face of public opposition, OECD head Mathias Cormann says https://t.co/vnlOMrKW1Z  Easy for him to say. He doesn’t face the consequences Mar 18, 2023
• The government of French President Emmanuel Macron invoked a special provision of France’s constitution to bypass Parliament and increase the country’s retirement age https://t.co/pFreR1Yf8K  Macron is right that it is unsustainable, but he just touched the “third rail.” Mar 16, 2023