Bank Bloodbath, Gold Soars as Anti-Goldilocks Manifests

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Authored by Goldfix, ZH Edit

Bottom Line: It is open season on regional banks now. Based on yesterday’s FRC takeover by JPM1, no regional bank is safe. The death spiral of a whole industry has begun. Zerohedge's coverage which we recommend is here

The day so far:

Tomorrow is Fed day, and today’s data showed deepening recessionary signs, almost assuring the end of rate hikes is here. That normally is bullish Gold, Bearish the dollar, and bullish stocks. However… Given the backdrop of yesterday’s FRC Bank failure, and the market’s desire not just for a Fed stop to hikes, but a Fed easing.. stocks are taking this badly. Gold is taking this well. Today’s behavior is indicative of a market once again in fear of bank solvency at key financial institutions affecting broader markets.Bonus At bottom: the JPM FRC presentation, and TD on FRC.

Comment:

Tomorrow could bring a complete reversal here, But stocks are down *despite* the expectations of a rate- hike cycle ending. This is Anti-Goldilocks manifest: Our first post on the phenomenon witnessed today was called. Weekly: Structural Stagflation. One logical manifestation of Anti-Goldilocks happening currently is de-financialization:

Without high real estate prices, you don’t need banks, You don’t need insurance companies, you don’t need employees, you don’t need offices, you don’t need money. The whole financial side of the world industry will collapse, while the real side will inflate. This is the end of all the financial bubbles in a microcosm.

The government is doing everything it can to redirect money away from areas It believes we can no longer use to keep world leadership (Just like when they abandoned manufacturing in the 1970s) It is now directing money into industries and things it thinks it can save or needs to regrow.

Meaning: save only the big banks and grow industries that it believes will propel us to the next level of controlling the world. Just like it did when it encouraged financialization after the 1970s. After the gold standard was abandoned. Guess what: we are already on the gold standard again.- VBL Twitter

We are witnessing he end of excessive financialization taking hold of a system with flight to assets that have a higher chance of remaining solvent. The highest chance of solvency of course, being something with absolutely no associated debt or leverage. Gold and Silver

Chronologically:

Post FRC Banking collapse yesterday, more regional banks opened under water….

*KBW REGIONAL BANK INDEX FALLS 3.8%, LOWEST SINCE NOVEMBER 2020
*PACWEST SHARES PLUNGE AS MUCH AS 19% TO LOWEST SINCE MARCH 13

And Today’s Data was recessionary….

JOLTS job openings 9.590MM, Exp. 9.736MM, Last 9.931MM
Factory Orders 0.9%, Exp. 1.3% Cap Goods orders nondef ex air -0.6%, Exp. -0.4%
BLS: "the number of quits decreased in accommodation and food services (-178,000)" - means people are getting fired

Markets react:

Gold rallies as flight to safety
Dollar weakens in expectations of fed easing
Bonds rally on growing expectations of Fed easing and safety flight
***Stocks, which you’d expect to be up, are focused on the bad news alone so far.***

U.S. STOCKS EXTEND FALL, S&P 500 .SPX DOWN 1.01 PCT…

SPOT GOLD RISES 1%…

TREASURY YIELDS DROP AROUND 10BP OR MORE OUT TO 10Y MARK…

THE DOLLAR DROPS…

Then Regional Banks dropped even more…

SHARES OF U.S. REGIONAL BANKS EXTEND LOSSES;
KBW REGIONAL BANKING INDEX .KRX LAST DOWN 4.4%
PACWEST BANCORP DOWN 16.4%,
WESTERN ALLIANCE BANCORP DOWN 24.6%,
KEYCORP DOWN 8.8%,
COMERICA DOWN 8.9%,
ZIONS BANCORP DOWN 7.3%

How does it end? It ends when there is one bank.

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