The more capital a bank holds, the more losses it can take before going bust. Dr. Martien Lubberink, professor at Victoria University of Wellington, joins Forward Guidance to define regulatory bank capital and put it in context of the conspicuous bank meltdowns in March. Lubberink opines on the issues at Credit Suisse & Silicon Valley Bank through the lens of bank capital, and he shares insights on the health and nature of the banking system of New Zealand, where he currently resides. Filmed on April 6, 2023.--Follow Martin Lubberink on Twitter https://twitter.com/cetier1Read Martin Lubberink’s blog at https://capitalissues.co/Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_--Pieces discussed in the interview:“The Value of Kiwibank”Fresh RBNZ Dashboard data shows New Zealand’s largest banks on track to meet increasing capital ratio requirements”Apply to host the “Lightspeed” podcast on Blockworks____Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.Timestamps:(00:00) Intro(01:39) Lubberink's Background In Bank Capital During The Great Financial Crisis (GFC)(08:04) What Is Bank Capital?(13:37) Silicon Valley Bank Was A Masterclass In "How To Not Run A Bank"(18:16) Banks' Hedging Of Interest Rate Risk(25:55) Permissionless(26:59) Important Regulatory Bank Capital Ratios(37:26) Credit Suisse & Additional Tier 1 Bonds(46:14) Operational Risks(48:11) "New Zealand Banks Are Among The Most Resilient Banks In The World”(51:32) Interest Rate Hedging Again (Jack Is Obsessed)(55:10) Blockworks Research(56:11) Kiwi Bank(01:01:33) Monetary Policy Of Reserve Bank of New Zealand (NZ's Central Bank)(01:04:08) Real Estate Boom in New Zealand(01:06:59) Relaxation Of U.S. Banking Regulation

Danielle DiMartino Booth, CEO and chief strategist of QI Research, returns to Forward Guidance to share her findings on the problems brewing in commercial real estate, the collapse in money supply (M2) growth, and her updated views on the auto and housing markets.--Today's show is sponsored by Public.com: Get a 5.1% yield when you open a government-backed Treasury Account by going to https://public.com/forwardguidance--Follow Danielle DiMartino Booth https://twitter.com/DiMartinoBoothFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_--Timestamps:(00:00) Intro(04:33) "Deathly Silence" In Private Equity World(16:13) "There Will Be A 'Mark-to-Market' Moment"(19:31) Issues In Commercial Real Estate (CRE)(21:47) Public ad(22:50) Auto Loans Are In Distress(30:36) The Residential Housing Market(36:39) ill Inflation Fall?(38:08) Fed Expects A Recession(41:12) Money Growth Is Lowest Since Great Depression(44:30) The Debt Ceiling(51:09) The Bernanke Doctrine In Jeopardy? (QE whil rates are above zero)(01:03:40) Quantitative Easing Is NOT Back, Says Danielle(01:09:28) Closing Thoughts On Credit Crunch--Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Jerome Schneider, managing director at PIMCO, is a maestro of short-term funding markets. He oversees PIMCO’s >$300 Billion pool of short-term liquidity for investors (the asset side) and also devises strategies to efficiently and robustly fund PIMCO’s longer-term investments (the liability side). Schneider gives in-depth insight on how key indicators in the short-term funding world have changed during and after the March 2023 banking crisis, such as liquidity, repo, and the shape of yield curve. Filmed the afternoon of Monday, April 17th, 2023.To learn more about PIMCO, go to http://pimco.com/Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_____Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.____Timestamps:(00:00) Intro(07:47) Why Are 1-Month Treasury Bills Trading So Expensive ("Rich") To Other Interest Rates?(11:42) The Debt Ceiling(19:02) Permissionless(20:05) The Fed Has Done A Tremendous Job In Cutting Off Tail Risks For Funding(30:43) Thoughts On An Inverted Yield Curve(36:27) The Fed Pivot(41:59) Credit Risk In Short-Term Assets(44:16) Liquidity As Offense Rather Than Liquidity As Defense(48:44) Blockworks Research(49:44) Funding PIMCO's Leveraged Strategies(56:03) Closing Thoughts On Opportunities in Short-Term Markets(59:55) Will Banks Have To Pay More For Deposits?

On todays episode of Forward Guidance Simon Ree Author & Founder of The Tao Of Trading joins the show for a discussion on the key principles for becoming a successful trader. Simon takes us back to March 2020, a period which kicked off an aggressive bull market leading all the way up to 2022. In 2022, many market participants got caught offside as the aggressive rally suddenly turned into an equally as aggressive bear market. Now in 2023, the bulls and bears standoff at a cross roads waiting for the next indicator of where markets are heading. Simon walks through the difficult past 3 years in markets, and explains the key principles to remember when investing in this current market paradigm. --Follow Simon: https://twitter.com/simon_reeFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeyw--Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/--Timestamps:(00:00) Introduction(00:18) Simon's Entry To Finance: Black Monday(03:37) What Makes A Successful Trader?(05:10) Consistency Is A Superpower(07:29) I am Not A Trader, I am A Risk Manager(09:50) The Process of Making A Trade(12:54) Trading A Bull Market(17:41) Trading A Bear Market(19:14) Permissionless ad(20:17) Trading The Inflationary Bear Market of 2022(29:05) Market Positioning, Sentiment & Short Squeezes(34:13) Blockworks Research(35:13) The Principles of Technical Analysis(37:19) Trading The Bull Market of 2020(40:01) Assessing Current Market Conditions946:02) The TAO of Trading(52:53) The Biggest Opportunities In Markets(56:26) How To Compound Your Returns(01:02:54) Finding The Right Trading Strategy For You--Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Chris Whalen, chairman of Whalen Global Advisors, returns to Forward Guidance to comment on the ample and growing earnings of the big banks (particularly JPMorgan Chase, whose stock surged over 7% on rosy net income and increasing deposits). Whalen argues that banks’ unrealized losses on their securities due to interest rate risk have gone down dramatically as interest rates have fallen since the collapse of Silicon Valley Bank (SVB) on March 10. However, he expects banks’ cost of funds (what they have to pay for deposits) to continue to rise and he makes the case that the primary headwind for banks is not interest rate risk, but credit risk. Whalen argues that while there could be more bank failures ahead, he expects it will be the outlier banks that fail, not the mainstream banks.This interview was filmed the morning of Friday, April 14th, shortly after large American banks such as JPMorgan Chase, Wells Fargo, and Citigroup reported their earnings for the first quarter of 2023. __Today’s show is brought to you by VanEck. Go to https://vaneck.com/ForwardGuidanceto access VanEck's Income Investing Yield Monitor.__Follow @vaneck_us on Twitter, this episode's sponsor https://twitter.com/vaneck_usFollow Chris Whalen on Twitter https://twitter.com/rcwhalenFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks___Timestamps:(00:00) Intro(04:55) "Banks Have Lots Of Commercial Real Estate Exposure"(06:24) Banks' Unrealized Losses Have Gotten Smaller Over The Past Month(08:25) The Return Of Credit Risk(16:06) Is The Banking Crisis Moderating? If So, Why?(19:18) Van Eck Ad(20:06) There's A Slowdown in Lending(22:08) Quantitative Easing's Distortion Of Bank Balance Sheets(24:32) Chris Suggests The Fed Sell Securities Into The Market(28:27) "The Bid For Risk Free Dollar Assets Is Still Off The Scale"(30:12) Recent Rally In Bonds Has Helped Bank Book Value(36:23) "People Love To Say The Word 'Hedge' And Then Change The Subject"

Dan McNamara, veteran commercial MBS trader and founder of Polpo Capital, joins Forward Guidance to argue that the commercial real estate (CRE) default cycle has only just begun. McNamara notes that the fall of Silicon Valley Bank (SVB) and Signature Bank is causing regional banks to curb lending to commercial real estate projects, and that as a result many property developers will strategically default and walk away from the buildings. McNamara shares why he has been shorting the riskier tranches of CRE loans via the CMBX, and he tells Jack Farley why the cascade of defaults he expects will cause tremendous damage to the securitized market for CRE loans.Key terms for this interview:CRE = Commercial Real EstateCMBS = Commercial Mortgage-Backed SecuritiesCMBX = a synthetic tradable index referencing a basket of CMBSCLO = Collateralized Loan ObligationLTV = Loan-to-value ratioFilmed on April 11, 2023.Follow Dan McNamara on Twitter https://twitter.com/danjmcnamaraFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_____Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.____Timestamps:(00:00) Intro(08:01) Office Properties Could Decline by 50% Or More(15:25) Defaults WIll Lead To Forced Selling(20:03) Why Rising Interest Rates Has Imperiled Many Commercial Real Estate Deals(23:25) Regional Banks Are Curbing Lending After Fall of Silicon Valley Bank (SVB)(30:01) Differences Between This and The Great Financial Crisis (GFC) And "The Big Short"(35:03) Shorting Tranches of Commercial Mortgage-Backed Securities (CMBS)(42:09) Views on Highly-Rated Tranches (AAA- and AA-)(45:03) Interest Rate Risk (Duration) Of Commercial Mortgage-Backed Securities (CMBS)(47:45) "We Are Pretty Market Neutral”(50:17) "We Think The Credit Curve Is Still Too Flat"(54:44) The "Refinancing Game" Is Over(01:11:54) If McNamara Is Right About Commercial Real Estate, How Systemic Will This Be?

On today's episode of Forward Guidance Lou Crandall, Chief Economist of Wrightson ICAP & Joseph Wang CIO at Monetary Macro join the show to discuss the fallout of the recent bank panic. With two monetary plumbing experts on the show, we take the opportunity to cover a wide range of topics including the real reason bank deposits were leaving banks, the impact of the record $2 trillion parked in the reverse repo, how the Fed can use interest rates to control financial stability and the looming debt ceiling.In the opaque world of financial plumbing, there are no two better guests to welcome to the show, but to hear all this and more, you'll have to tune in!--Today's show is sponsored by Public.com: Get a 4.8% yield when you open a government-backed Treasury Account.* That's a higher yield than a high-yield savings account.** Go to https://Public.com/forwardguidance*26-week T-bill rate (as of 10/4/23) when held to maturity. Rate shown is gross of fees.**As compared to the national high-yield savings average of 3.43% (Source: Time.com/NextAdvisor as of 12/30/22).--Follow Lou: https://twitter.com/FedwatcherFollow Joseph: https://twitter.com/FedGuy12Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--Timestamps:(00:00) Introduction(00:54) Silicon Valley Bank, Reminiscent of The Savings & Loan Crisis?(06:08) Why Are Deposits Leaving Banks?(11:30) The Plumbing of Treasury Debt(21:34) The Reverse Repo Is A Danger To The Banking System(34:12) Public.com Ad(35:18) How The Fed Can Control Financial Stability Using Interest Rates(50:39) The Debt Ceiling(01:05:56) The Reserve Gap(01:07:43) The 2019 Repo Crisis: Everyone Has A Plan, Until They Get Punched In The Nose(01:13:57) Will Banking Turmoil Lead To A Credit Crunch?--Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Liz Ann Sonders, chief investment strategist at Charles Schwab, joins Jack Farley to share her data-driven investment outlook at a challenging time for global markets. Sonders argues that before the turmoil in the regional banking sector, the U.S. was already in a “rolling recession” where weakness rolled throughout different parts of the economy. Now, after the fall of Silicon Valley Bank (“SVB”) in early March, Sonders thinks an official recession (i.e. one declared as such by the National Bureau of Economic Research, or NBER), is more likely, and she says that she thinks a recession is “somewhat unavoidable.” Given these headwinds, Sonders’ investment outlook is that it could be a “bumpy ride” in the short-term. However, Sonders and Farley discuss the importance of a long-term outlook and how market timing very frequently underperforms buy-and-hold strategies. Filmed on April 4th, 2023.__Today’s show is brought to you by VanEck. Go to https://vaneck.com/ForwardGuidanceto access VanEck's Income Investing Yield Monitor.__Follow @vaneck_us on Twitter, this episode's sponsor https://twitter.com/vaneck_usFollow Liz Ann Sonders on Twitter https://twitter.com/LizAnnSondersFollow Charles Schwab on Twitter https://twitter.com/CharlesSchwabFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks___Some of Liz Ann Sonders’ recent research at Charles Schwab:“Under Pressure: Fed Hikes in Face of Bank Turmoil”: https://www.schwab.com/learn/story/fomc-meeting“2023 Quarterly Market Outlook: Fed on the Brink?” https://www.schwab.com/learn/story/quarterly-market-outlook“Another One Bites the Dust: Banking Saga Continues”: https://www.schwab.com/learn/story/another-one-bites-dust-banking-saga-continues“Caveat Emptor: Important Market Shifts Underway”: https://www.schwab.com/learn/story/caveat-emptor-important-market-shifts-underway“The Price You Pay: A Look at Equity Valuations”: https://www.schwab.com/learn/story/price-you-pay-look-equity-valuations__Timestamps:(00:35) The Fed Has Broken Something(03:09) Rate Cuts Might Be Further Away Than The Market Thinks(05:58) Already In A "Rolling Recession"(17:37) Have The Odds Of A Severe Recession (Rather Than Mild) Increased After The Collapse Of Silicon Valley Bank (SVB)?(19:59) Investment Outlook For Stocks(23:11) VanEck Ad(23:59) Equity Valuations: Are Stocks Cheap or Expensive?(33:37) Short-Term Outlook: "Some More Bumps In The Road"(36:12) Time In The Market vs Timing The Market(39:27) Liquidity and Gold(41:28) Sectors And Factors Leading The Stock Market(44:14) "Growth vs. Value" Is A False Choice(49:59) International Developed Markets and Emerging Markets__Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

On todays episode of Forward Guidance, Professor Emeritus of Economics at Leonard N. Stern School of Business, author and financial historian Dr. Richard Sylla joins the show for a discussion on one of his most widely studied areas... interest rates. After authoring "A History of Interest Rates", a book which examined over four millennia of interest rates trhoughout periods of inflation, financial crises' and recessions, there's no one better equipped to discuss the Fed's current tightening cycle and how it impacted banks such as SVB in the Fed's current quest to fight inflation. Just how severe is this current tightening cycle when compared to other times in history? According to Dr. Sylla, this is nothing new as "history doesn't repeat, but it often rhymes". To hear all this and more, you'll have to tune in!--Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_--Referenced In The Show:A History of Interest Rates: https://www.amazon.co.uk/History-Interest-Rates-Wiley-Finance/dp/0471732834Alexander Hamilton on Finance, Credit, and Debt: https://www.amazon.com/Alexander-Hamilton-Finance-Credit-Debt/dp/0231184565Alexander Hamilton, Central Banker: Crisis Management During the U.S Financial Panic of 1792: https://w4.stern.nyu.edu/research/alexander_hamilton_central_banker.pdf--Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin: https://blockworks.co/event/permissio... Research, news, data, governance and models – now, all in one place.As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/--Timestamps:(00:00) Introduction(00:39) A Return To Normalcy For Interest Rates(05:10) How Interest Rate Rises Led To SVB's Collapse(09:24) The First Bank of The United States(13:36) Paul Volcker's Historic Interest Rate Rises(20:35) Why We Have Inflation Now... But Not Post 2008(28:03) Permissionless(29:06) The Fed's Between A Rock & A Hard Place(32:03) The Savings & Loan Crisis(37:41) All Signs Point Towards A Recession(44:59) Blockworks Research(45:59) What An Inverted Yield Curve Really Indicates(48:49) A Banking Panic Solution, Through The Eyes of Alexander Hamilton(57:03) How ZIRP Caused Problems In The Financial System--Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

John Maxfield, banking specialist and author of the Maxfield on Banks Substack, joins Jack to discuss the history and future of the U.S. banking system. Drawing on his wide-ranging historical knowledge, Maxfield notes that when it comes to banks, failure is the norm, not the exception. Maxfield argues that the acute phase of the banking panic in the U.S. is likely over, as loan yields will rise and deposit flight will slow down. Maxfield makes the case that, paradoxically, a serious cause of bank failure is not just not enough liquidity: often banks fail because there was too much liquidity. Maxfield and Farley take an in-depth look at Silicon Valley Bank’s enormous influx in deposits, which more than tripled since the first quarter of 2020, which they used to buy an enormous amount of securities that lost value as the Fed raised rates. Filmed on April 3, 2023.____Follow John Maxfield on Twitter https://twitter.com/MaxfieldOnBanks“Maxfield on Banks” Substack: https://maxfieldonbanks.substack.com/Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_____Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timestamps:(00:00) Intro(03:14) "Failure Is The Rule, Not The Exception" When It Comes To Banking(06:51) Diagnosing Silicon Valley Bank's (SVB) Collapse(16:45) Excess Liquidity Is The Problem, Not The Solution(22:58) "Interest Rate Risk Can Be As Deadly As Credit Risk"(27:04) Permissionless(28:08) Some Banks' Unrealized Losses Exceed Book Value(36:22) Is The Bank Panic Over? (John Says Yes)(39:51) "Banks Will Always Make Money"(44:33) Will Banks Decrease Their Lending?(52:17) Blockworks Research(53:15) How Did Banks' Manage Their Interest Rate Risk?(58:02) Assumptions About Deposit Duration Play A Key Role In Asset Liability (Mis)Matching(01:05:03) About The Maxfield On Banks Substack(01:07:40) Parallel To The Savings & Loan Crisis(01:10:55) Big Banks Get Bailed Out, Small Banks Don't (Unfair?)(01:11:47) Executive Compensation And Bank Performance (An Inverse Relationship)(01:13:27) Bank Insolvency Is Not Necessarily A Death Sentence(01:21:01) What Banks Need To Learn From SVB's Collapse____Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.