SBV collapse & backstop

It's not money, it's loneliness

Morning Market Download from Invincible Money

Personal finance + economics + markets

Staying on top of the markets, economics and the global issues that affect your money takes a lot of time and effort. We distill it down to a quick 5 minute read to help you make better money decisions.

First Silvergate, Now Silicon Valley Bank

What a wild week for banks! What a crazy few months!

Crypto's main bank, Silvergate, closed last Friday, now the bank most used by Silicon Valley startups is done too. About 44% of all US VC-backed startups used SVB. Silicon Valley Bank was the 16th largest bank in the U.S. and became the 2nd largest bank failure ever. Silicon Valley Bank stock was down 60% on Friday after they failed to raise new funds and investors headed to the door causing a classic bank run. Their troubles largely stem from the tech sector taking a big hit the past year but mostly due to bad risk management, namely investing their deposits in 10 year treasuries that have lost value when interest rates rose. When the bank announced they were having trouble, investors started pulling their deposits, which snowballed into a bank run, causing the bank to have to sell 10 year treasuries at a big loss.

All eyes are on the US regulators to see what they will do when markets open today. Many are calling for the bank to be bailed out for fears of contagion, but Treasury Sec. Yellen said on Sunday that a bailout won't happen, but it was announced late Sunday that the FDIC would provide a backstop of depositors and financial institutions associated with the bank. More from Yellen and the situation in this New York Time's article or from this CNBC article.

Bank stocks took a beating on Friday, so it appears investors are taking the cautious approach.

Crypto spooked - AgainCircle is the issuer of the second largest crypto stablecoin, USDC. They held about 10% of their assets at SVB, so when word spread of the bank run, investors holding USDC starting selling, causing USDC to depeg. Then, when Circle disclosed they hold assets in 6 banks and SVB is only one of them, USDC began to repeg. It has since regained nearly back to peg.

South Dakota Helps CryptoThe governor of SD, Kristi Noem, vetoed a bill that would have classified CBDC (Central Bank Digital Currencies) as money, but would exclude cryptocurrencies. This is one step toward making sure CBDC don't become the only allowed currencies in the U.S.

Payroll at 311,000 for FebruaryNon-farm payroll beat expectations of 225,000 for February. Unemployment is up to 3.6%, which is good for inflation. Wages rose 4.6% from a year ago, which is still less than inflation, meaning real wages are still negative. Job creation slowed in February which will make the Fed happy as they want the economy to slow. We've still got a long way to go, but it's a little step.

Retirement Fears - LonelinessA Harvard study has found the #1 challenge of retirees isn't missing work, but missing the people they work with. It's a big reason people go back to work after retiring. They just want to be around people.

Having deep social connections is one of the things many studies have found makes us happy and content. They recommend building strong relationships as much as possible with family and friends.

What are you doing today to build relationships? Also, call your mom.

U.S. Debt to reach $51 Trillion in 10 yearsPresident Biden released his budget $6.9 trillion proposal proposal which includes more spending and more taxes. Republicans, who control Congress, say the proposed tax cuts are unlikely to pass. Congress is charged with legislating spending.

If the debt ever gets that large it will means the U.S. will pay more on interest on the debt than on actual projects. The debt to GDP ratio would increase from the current 120% and break the post-WWII record.

Be a Better Investor

"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

- Benjamin Graham

Investor Spotlight David Einhorn, founder of Greenlight Capital, is known for his value investing style, where he looks for undervalued companies with a catalyst for change.

Earn Extra Money Now IdeaRent out your space: If you have extra space in your home, consider renting it out through Airbnb or other vacation rental platforms. There are also a number of other sites that allow you to rent your garage, pool, extra storage space, RVs, motorcycles, jet skiis, boats and other "fun" toys.

What section did you like the most in today's newsletter? Please reply to this email and let me know!

Thanks for reading,

Trajan King

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