Waiting for the $25 range that Prog called out

Hey Fam, if anyone is able to help, then I'll be eternally grateful. If not, I understand but please add Keenan to your prayer list. One of my dearest friend's daughter gave birth to him 2 days ago and he's in NICU. He had surgery yesterday and doctors say it went well, but he's going to be in there awhile. The mother, now grandmother, is a hardworking single mom and a great mom, that's why we're best friends.

https://gofund.me/ec4b51bf

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Greetings everyone,

I want to share an important update about my sister, Teagan who is due to have her baby/my nephew, within the next week. Currently, she is in the hospital under 24-hour care due to the baby being diagnosed with spina bifida and Chiari malformation. Emergency surgery, via a C-section, is urgent to address these health challenges.

The medical bills have been out of the roof and are expected to be high. Unfortunately, covering the full amount is a challenge as she has been in and out of the hospital, unable to work to support herself and her family. We are aiming to raise between $5,000 and $10,000 to help alleviate this financial burden.

Any contribution, no matter the amount will go a long way in supporting my sister during this critical time. We truly appreciate any help we can get. Thank you for taking the time to read and consider assisting. Your support means a lot to our family.

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Thank you guys

Prog

Donated some of that POWL money you set me up with-

beautiful kiddo! prayers for all of them

Relay this to them: don't pay the first bill, negotiate the heck out of it, especially if they are self pay.

Towns03 said:

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Donated some of that POWL money you set me up with-

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Thank you sir, that means a lot to me and I'm grateful.

Heineken-Ashi said:

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The FED and banks Fed Update: What's Going On With The Bank Term Funding Program | Seeking Alpha

TLDR

1. The FED provided an avenue after SVB collapse for banks to borrow assets through the Bank Term Funding Program. Banks would have to pay 10 basis points above the overnight swap rate (which is where they would normally access liquidity through the discount window) in interest to borrow assets from the FED. So slightly more expensive than the usual discount window, but very easily accessible.

2. When rates dropped, the rate to borrow from the BTFP was actually cheaper than the rate of the traditional discount window.

Why is this important?

In December, banks were borrowing assets from the FED, turning around and parking them back at the FED. The interest banks were paying to the FED was less than the interest the FED was paying the banks in this roundabout process.

The FED was literally handing out free money to banks, and only very recently announced they are going to close the BTFP. Either the FED was really really stupid, or all of this was on purpose. Either way, banks have been propped up moreso than usual because of a "loophole" in the system. And that loophole is going away very soon.

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So yesterday I attended an economic forum where one of the speakers was a former regional director of research for the FED. After his session, I asked him if we could chat. I mentioned the BTFP and, point blank, if the banks getting free money for the last two months was legitimately a loophole they found and took advantage of, or if the program was designed that way on purpose to bolster bank balance sheets. He claimed he wasn't even aware of the BTFP, that banks were getting free money, or anything about it. He said it was good that they caught it and are winding down the program.

Now, he hasn't worked for the FED in a decade and he's not expected to be in tune with their every move. He also wasn't on the decision making side of things. He was more of a general economist tasked with finding, tracking, and forecasting economic data for the FED to use. So I won't claim he's lying. He is a very bright economist. And for what it's worth, he thinks the FED is close to pulling off a soft landing and that this year is the last couple steps of the "escalator down" for the economy, that we step off and stabilize soon.

But I did come away wondering.. if this program (which was unprecedented even in a time when the FED was already providing so much liquidity to the system) was so little known and studied that their own former economists aren't even aware of it, is it to be deduced that it's even more likely that it was designed this way on purpose? In fact, very few people are aware of the BTFP that came about from the banking collapses last year and it's role in preventing what would have been immediate recession had the FED not stepped in with it.

The answer is ultimately still unknown. And I'm not sure I'll ever get access to someone closer to the mystery than I did yesterday.

I'm donating some money as a thank you for the POWL recommendation. Thank you!

What's your thoughts on hanging on longer to POWL? It seems like a very healthy business that pays a dividend, but may be fully and fairly valued now. Thoughts?

SMCI $ for me. And prayers. I saw some amazing results of prayers just this past weekend.

I'm back boys. Keep my presence quiet as I'm sure I'll get axed if seen.

Regarding banks: we are not out of the woods yet. Multiple years of back breaking inflation, with lagging wage gains, have caused a slow liquidity drain that is going to culminate in a MAJOR tipping point at the end of March.

When global liquidity peaked, after trillions in fiscal stimulus, Global citizens and global businesses had around $2.5 Trillion in excess cash in their bank accounts. This was in 2021. You can see this number in what's called the Reverse Repo Market. It's cash that banks had, that wasn't lended out yet, that the banks sent to the FED at the overnight rate. The FED paid the banks interest at the FED funds rate, currently 5.3%.

I'm a banker, this money was awesomely profitable for us. Banks can make damn good money for their shareholders at a 4.5% net interest margin, and the FED is giving us 5.3% risk free!

But inflation has been catastrophic since 2021, causing global citizens and global businesses to burn that cash, slowly. Since 2021 to date, that reverse repo market has slowly dropped from $2.5 Trillion to now just about under $500 Billion. The drop is accelerating. We will see it hit $0 sometime in March. Maybe April.

The FEDs decision to signal its rate pause past March is extremely significant because of the reverse repo market. Extremely significant. Why? Bank liquidity.

When the reverse repo market approaches $0 like it is now, banks don't have customer liquidity to lean on. They must lean on their equity as liquidity. But what if their equity isn't liquid? What if their equity is tied up in underwater bond investments? What if the only way to get liquidity is to sell those bonds at a loss taking a direct hit to equity? What if the only way to reduce those losses prior to liquidation is for the FED to signal imminent rate decreases, thereby dropping longer term yields on purpose? What if the FED just took that off the table today by announcing the pause was extending beyond March?

The FED royally screwed up its soft landing today. Banks that are not liquid need treasury rates to drop. It is a requirement. The FED just kicked em right in the balls.

Another way banks can raise liquidity is to sell loan portfolio. Think they can sell underwater CRE loans?

Nope. They act and behave just like the illiquid investments the banks made with their liquidity.

Note to you guys with local community banks: DONT CHASE YIELD IN CDS. If a bank is offering anything near the 5.3% fed funds rate in a CD, right now, run run run far away. The only reason to offer that rate when the FED is absolutely dropping rates this Summer, is because that bank can't afford to lose a freaking penny of liquidity. Not one. They likely have extremely bad CRE portfolios and extremely bad bond portfolios.

Lots of Texas banks fall into this category.

Straight to the point. Love it. Thanks for the clarity.

There he is…back with that pertinent info! Thanks for stopping in and providing an update on the banking sector.

RightWingConspirator said:

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I'm donating some money as a thank you for the POWL recommendation. Thank you!

What's your thoughts on hanging on longer to POWL? It seems like a very healthy business that pays a dividend, but may be fully and fairly valued now. Thoughts?

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Thank you for helping my friend's daughter and new son, I'm vey grateful.

If you were my client when I was a broker, then I'd advise you to book your profits because it's gone parabolic and iit will come back down, so will SMCI. When they do then you can re-enter them but have the ability to buy an even larger position and ride them back up. That's how you compound your returns and use them explode your account. POWL and SMCI were home runs, but I didn't know at that when I sold them. They both went much higher but instead of riding a win up, only to ride it down wishing I'd have sold at the top will hold you back. Spoiler alert: you'll never pick the top, nor the bottom, just play the middle and hit profitable singles. Every profitable single increases your buying power and ability to acquire larger positions when you see your entry point. 'RavingAgs'(sp?) asked how I grow my son's, and others, account every year with only 20-30 trades. Approach the market like climbing stairs. Every profitable step up gives you the opportunity to take on more risk in a stock you're familiar with and ride the wave back up. Trust me, this is the way to create wealth by using your mind while you're at your career. It's like getting paid twice for the same time.

Credit to 30K that posts here for posting this long ago, " You don't trade for money, you trade for freedom ". It was the most truest statement with regard to the market and refining your craft. I'm just pissed that I didn't post it first because it's the absolute truth.

Financially Healthy banks are offering CDs at 4.5%-4.9% with no more than 6 months maturity. Want a 1 year CD? Healthy banks should be at 4% or lower?

Why?

They don't need your money. That is a signal that they have liquidity and healthy loan portfolios. In other words, smart guys at the helm.

Sure your money is FDIC insured if you are chasing a 5.2% CD rate at a bank. That bank has bad liquidity and maybe bad loans. Yes your money is insured, but do you want your money at a bank run by idiots?

It'll cost you 40 basis points in yield, or $400 on a $100,000 CD, so what. It's worth it to partner with smart guys. Talk to those lenders, they didn't chase the sexy investments back during COVID. They smelled a rat, and you might learn a thing or two that's worth way more than the yield you are giving up.

Bonfire.1996 said:

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Another way banks can raise liquidity is to sell loan portfolio. Think they can sell underwater CRE loans?

Nope. They act and behave just like the illiquid investments the banks made with their liquidity.

Note to you guys with local community banks: DONT CHASE YIELD IN CDS. If a bank is offering anything near the 5.3% fed funds rate in a CD, right now, run run run far away. The only reason to offer that rate when the FED is absolutely dropping rates this Summer, is because that bank can't afford to lose a freaking penny of liquidity. Not one. They likely have extremely bad CRE portfolios and extremely bad bond portfolios.

Lots of Texas banks fall into this category.

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Everyone, when this man opines about banks, please don't discount it. He's one of only 2 people that I ask for their advice when it comes to banks. He can tell you the quality and risk of the bank you're at in under 15 mins.

Bonfire.1996 said:

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Another way banks can raise liquidity is to sell loan portfolio. Think they can sell underwater CRE loans?

Nope. They act and behave just like the illiquid investments the banks made with their liquidity.

Note to you guys with local community banks: DONT CHASE YIELD IN CDS. If a bank is offering anything near the 5.3% fed funds rate in a CD, right now, run run run far away. The only reason to offer that rate when the FED is absolutely dropping rates this Summer, is because that bank can't afford to lose a freaking penny of liquidity. Not one. They likely have extremely bad CRE portfolios and extremely bad bond portfolios.

Lots of Texas banks fall into this category.

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Feels like we need to look at publicly traded banks and find ones with high yield CDs and short them.

Interesting timing on this as I just got an email from Goldman Sachs touting a 5.40% 14 month CD.

Yall can thank me for putting BIG on sale after my purchase. It's back down to 5.70