27.03.2023 – The situation on the international banking market has apparently calmed down for the time being. Apparently. We wouldn’t be surprised if this is the calm before the really big storm.
A look at the S&P 500 shows that investors are vacillating between hope and trepidation. The index – here the daily chart – has apparently stabilized.
Source: Bernstein Bank GmbH
However, it is quite possible that we will run into a wave of bankruptcies in which many more small, woke blinder banks will topple over. And along with them, many incredibly great startups from the high-tech as well as biotech sector. In other words, things may get really uncomfortable before they get better. We could be looking at a major purge in the market. Which will bring tremendous opportunities to savvy traders. Our advice is to look at companies very closely and especially analyze management to pick out short candidates.
Because in the wake of years of low interest rates, money was flowing out of the venture capital sector in torrents and no one was looking that closely. That’s changing right now. To understand more clearly what we mean, you should check out the article “Habeck and the Charlatans of Big Promise” on the blog “Publico.” The piece deals with the arrogant posturing of the academic elite, who, loosely based on sociologist Helmut Schelsky, secrete unfulfillable promises of salvation but leave the work to the ordinary people they look down upon.
Get woke – go broke
Brilliant at “Publico” is the analysis on the failed Silicon Valley Bank, which you won’t read like this in our mainstream media. It is well known that SVB had invested a lot of money in bonds that had been outstanding for a long time. The price of these fell because investors preferred to buy newly issued bonds with higher yields during the interest rate turnaround. Since, stupidly, borrowing from high-tech companies declined at the same time as interest rates were higher, SVB slipped into difficulties. And that brings us to the charlatans: According to “Publico”, Silicon Valley Bank had hired a savior named Jay Ersapah as risk manager. But she didn’t do her job, preferring to take care of LGBTQ+ initiatives, such as “Lesbian Visibility Days” or a “Trans Awareness Week”. This went down very well with the woken clientele. But unfortunately, the manager didn’t see the real financial risks.
Impending energy collapse
Just by the way and to understand the reference to our environment minister in the title: The article in “Publico” also points to an impending energy gap – according to the management consultancy McKinsey, the Federal Republic of Germany faces an electricity gap of 30 gigawatts by 2030. Specifically: “If electricity consumption rises steeply, the last nuclear power plants have to be taken off the grid soon and all coal-fired piles by 2030, and storage facilities are largely lacking, there will thus be a shortage of electricity in times of low wind and low sun equivalent to the output of 30 smaller or 15 large power plants.” Which, according to “Publico,” apparently doesn’t interest the priesthood in the Ministry of the Environment. And what will lead us to the DAX at some point, but not today.
Our conclusion: the market shakeout is probably not over yet. It may well be that problems at small and medium-sized banks and companies in the U.S. and Europe will plunge the overall market into a crisis. That could extend to a freeze in lending. Or to put it in the words of Tony Pasquariello, Head of Hedge Funds Sales at Goldman Sachs, “Nothing has gone as planned: more things will beak and a credit crunch is coming.” And his specific advice regarding the S&P 500: “I now worry a lot more about the downside tail than the upside tail — don’t mess with the flow of credit — so I’d be a seller of strength on a move back above 4000.” In this spirit: Bernstein Bank wishes successful trades and investments!
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