Silicon Valley Bank Crisis: The Liquidity Crunch We Predicted Has Now Begun
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There has been an avalanche of information and numerous theories circulating the past few days about the fate of a bank in California known as SVB (Silicon Valley Bank). SVB was the 16th largest [...]
Everything is tied back to liquidity. With higher rates, banks are hard-pressed to borrow from the Fed and companies are hard-pressed to borrow from banks. This means companies that were hiding financial weakness and exposure to bad investments using easy credit no longer have that option. They won’t be able to artificially support operations that are not profitable, they will have to abandon stock buybacks that make their shares appear valuable and they will have to initiate mass layoffs in order to protect their bottom line.
Oil prices are kick starting the week by trading in positive territory. This is mainly because Hungary continues to resist an EU plan to prohibit Russ