Investing Thread

[Hards Alumni]

Does this count as receipts?

https://apnews.com/article/silicon-valley-bank-bank-run-twitter-fdic-fdbfc08ed00fcbdb9d83897b1b9f42ae

That's the same article I read... I just need the screenshots. 

[jesmu84]

Almost everyone is completely missing the downfall of SVB. It wasn't a credit issue at all. It was a cash management issue.

For those of you intrigued, SVB will turn out to be one of the most colossal regulatory failures this side of Bernie Madoff. The reason is the FDIC, State of California and the Federal Reserve failed to control risk and fast growth at SVB. That bank went from asses of $70.1 billion in 2019 to $211.4 billion at December 31, 2022. No bank can increase its size threefold in three years (absent a merger of equals) without taking excessive risk. If you don't believe me, examine the origins of the savings institution crisis in the early 1980s.

What happened was SVB, to bolster its earnings, took risk by betting that interest rates would not rise. That took the form of a large purchase of 10 year bonds. The bonds were backed by uninsured deposits, much of which was considered core. Core means that those deposits are less sensitive to market interest rates and will stay with a bank indefinitely. In effect, SVB was treating their deposit base the way a bank would treat your checking account -- it's going nowhere because you value things other than the highest rate. There are systems, measurements and analytics in place that measure interest rate risk and simulate the impact of rising interest rates on economic value of a bank's equity and on its net interest income. I'm wondering what SVB's systems said.

None of this is criminal. It's stupid! The regulators should and could have said, STOP!!!!! They have what's called a "Matter Requiring Attention" or "Matter Requiring Immediate Attention", which are orders to Management and a Board to change a business strategy. They also have  Cease and Desist Orders ("C&Ds") that require a Management to stop an abusive action or "else." "Else" is a Civil Money Penalty leveled against Management and the Board of Directors.

So, Management was stupid for failing to understand the risk they were taking and regulators were idiots for not stopping it. The markets are paying for it. The deposit insurance fund is paying for it and the American public is paying for it in a perception of lost confidence in the financial system.

Oh, and most of the media covering it still hasn't figured out what's really happening! Or that they're part of the cause!

They did.

https://www.foxbusiness.com/politics/federal-reserve-sounded-alarm-silicon-valley-banks-risk-management-2019-report

[dgies9156]

They did.

https://www.foxbusiness.com/politics/federal-reserve-sounded-alarm-silicon-valley-banks-risk-management-2019-report

Ok, first time I’ve seen this. However, if so and if it was done a couple years ago, why was the issue not elevated?

Why were their primary regulators not pushing he matter harder and expecting short-term answers?

[MU82]

Accenture (ACN) announced earnings today. Beat on top and bottom lines for the quarter but much of its guidance was lower than both its earlier projections and analyst estimates.

Meh guidance has been a killer this earnings season but ACN actually is up 7%+ as I write this because the company announced plans to lay off 19K employees in a cost-cutting effort, and Mr. Market LOVES layoffs!

The other big earnings report today was from General Mills (GIS). After a few years of struggles, the company has executed well, and the stock is up about 30% in the last year. It's up 3.6% today.

[MU82]

From the WSJ's "The Numbers":

191,000

Last week’s seasonally adjusted number of initial jobless claims, a proxy for layoffs. That’s down 1,000, the Labor Department said. The data shows that the broader labor market remains robust despite large companies announcing layoffs.

[Herman Cain]

From the WSJ's "The Numbers":

191,000

Last week’s seasonally adjusted number of initial jobless claims, a proxy for layoffs. That’s down 1,000, the Labor Department said. The data shows that the broader labor market remains robust despite large companies announcing layoffs.

A lot of these “Layoffs” are companies not replacing normal employe retirements and other attrition . Many businesses are short employees. That is what we are seeing.

[MU82]

It took Musk only 5 months to turn a company he valued at $44B into one he values at $20B. That's not easy!

From the NYT's DealBook:

Twitter employees were hit by two bits of tough news over the weekend — and only one was foreseeable. Both, however, underline the daunting challenges facing the social network under its owner of five months, Elon Musk.

The company is now valued at about $20 billion, Musk told employees in an internal memo announcing a new stock compensation program. That’s less than half of the $44 billion that he paid for it in October, and reflects problems Twitter has faced since he took over, including a steep drop in revenue as advertisers recoiled from the chaos that followed Musk’s takeover.

(The $20 billion figure emerges just months after news reports said that Musk had sought to raise new funds … at the $44 billion valuation.)

Even as Musk asserted again that Twitter’s financial health remained precarious, he also pitched the company’s low valuation as an opportunity. The fewer than 2,000 employees who remain will receive shares in X Corporation, Twitter’s current parent company, at the $20 billion valuation. In his email, Musk wrote that he believed Twitter could eventually be worth some $250 billion — or more than four times what the company has ever been valued at.

But part of Twitter’s source code has leaked online, via an anonymous poster on the online code repository GitHub. (The account’s name is “FreeSpeechEnthusiast,” an apparent riff on Musk’s declaring himself a “free speech absolutist.”)

Twitter sent a copyright infringement notice to GitHub, which has since taken down the code, and asked a California federal court to order the platform to reveal who was behind the account. Already, the social network’s executives suspect that one of the more than 5,000 employees who have been laid off or resigned since October was behind the post.

The leak could give Twitter’s rivals a leg up or, perhaps more worryingly, reveal security vulnerabilities. That said, Musk has promised to make public some of the company’s code — specifically the algorithms that power content recommendations to users — this week.

[Hards Alumni]

Gee, I wonder why he would do that.

[Skatastrophy]

A lot of these “Layoffs” are companies not replacing normal employe retirements and other attrition . Many businesses are short employees. That is what we are seeing.

I'm seeing multiple layoffs. First trimming fat, then cutting muscle. Capital markets are messed up for early stage growth companies, though.

[DegenerateDish]

This is not a political post, but this power move by Iger/Disney is something else. The King Charles III clause (to circumvent perpetuity claims), doing all this maneuvering legally and on public record with no one seemingly noticing…it’s pretty interesting.

https://twitter.com/deforestnews6/status/1641158253319974914?s=46&t=oK1MEkwGjSu5db4jVYWqDw

[Hards Alumni]

This is not a political post, but this power move by Iger/Disney is something else. The King Charles III clause (to circumvent perpetuity claims), doing all this maneuvering legally and on public record with no one seemingly noticing…it’s pretty interesting.

https://twitter.com/deforestnews6/status/1641158253319974914?s=46&t=oK1MEkwGjSu5db4jVYWqDw

I don't know why he thought poking the bear that supports his entire economy was going to be a good idea.

[MU82]

As a non-Floridian who likes dramedies, this is kind of fun.

[Uncle Rico]

This is not a political post, but this power move by Iger/Disney is something else. The King Charles III clause (to circumvent perpetuity claims), doing all this maneuvering legally and on public record with no one seemingly noticing…it’s pretty interesting.

https://twitter.com/deforestnews6/status/1641158253319974914?s=46&t=oK1MEkwGjSu5db4jVYWqDw

Man, he’s on The Scott Walker rocket sled to remember him

[Coleman]

LOL

[JWags85]

I don't know why he thought poking the bear that supports his entire economy was going to be a good idea.

"This essentially makes Disney the government"...well yea.  The Orlando Metro has grown 8x since Disney arrived.  Kissimmee went from a ranching and orange packing town of 7,000 people into a city of 75,000 to support Disney and its affiliates.  Disney is the gorilla in the room.

I'm not some rabid DeSantis hater and I don't necessarily think Disney is beyond reproach, but that is such a bizarre fight to pick.  Especially since beyond just the impact and influence...Iger is a REALLY good CEO and an incredibly calculating and shrewd executive.

[Hards Alumni]

"This essentially makes Disney the government"...well yea.  The Orlando Metro has grown 8x since Disney arrived.  Kissimmee went from a ranching and orange packing town of 7,000 people into a city of 75,000 to support Disney and its affiliates.  Disney is the gorilla in the room.

I'm not some rabid DeSantis hater and I don't necessarily think Disney is beyond reproach, but that is such a bizarre fight to pick.  Especially since beyond just the impact and influence...Iger is a REALLY good CEO and an incredibly calculating and shrewd executive.

Yup, it was just a silly fight to pick.  Personally, I don't disagree that Disney probably has too much power and autonomy in the region, but rushing in without a plan and creating this mess because of a culture war is a major political misstep for DeSantis.

[rocket surgeon]

disney is far different from what it once was.  wally is thrashing in his grave.  i doubt orlando and kissimmee would see the same type of growth now if disney is as such.  it doesn't have the same appeal to mainstream america plus it's EXPENSIVE as hell

[Uncle Rico]

disney is far different from what it once was.  wally is thrashing in his grave.  i doubt orlando and kissimmee would see the same type of growth now if disney is as such.  it doesn't have the same appeal to mainstream america plus it's EXPENSIVE as hell

And don’t forget how woke it is.  They put pants on Donald Duck

[forgetful]

disney is far different from what it once was.  wally is thrashing in his grave.  i doubt orlando and kissimmee would see the same type of growth now if disney is as such.  it doesn't have the same appeal to mainstream america plus it's EXPENSIVE as hell

You're right. It is probably a bigger name, with more renown, and likely even more beloved. Which is why it is expensive as hell, because people will pay it.

Extremely bizarre fight to pick with Disney. And Disney played them for fools.

[jficke13]

Disney parks have (or at least had) a sort of slogan that "the American Dream is to own a home, own a car, and go to Disney. Our job is to make everyone want to do the last thing at least twice." And, by and large, they are fairly successful at it.

People spend consciense-shocking amounts of money at Disney and I shudder at the moment we have to take the family because it's so expensive I just know I'll personally be hung up on how I'm getting taken to the cleaners. Here's hoping the magic with little kids will outweigh it.

Anyway, on the subject of picking a fight with Disney, it's the weirdest fight imaginable so long as you're not appealing to the narrowest band of high-engagement primary voters. Since he's gotta knock 45 off that territory to have a shot in the primary I guess it makes sense, but he's setting himself up to need a HARD pivot in the general.

[Golden Avalanche]

Disney is a unnatural carnal knowledgeing behemoth that appeals to every strata of society.

Any human with a scintilla of brainpower recognizes that.

[Hards Alumni]

disney is far different from what it once was.  wally is thrashing in his grave.  i doubt orlando and kissimmee would see the same type of growth now if disney is as such.  it doesn't have the same appeal to mainstream america plus it's EXPENSIVE as hell

Disney is the state's number one tourism draw and its largest employer. 

[Lennys Tap]

I

HAnyway, on the subject of picking a fight with Disney, it's the weirdest fight imaginable so long as you're not appealing to the narrowest band of high-engagement primary voters. Since he's gotta knock 45 off that territory to have a shot in the primary I guess it makes sense, but he's setting himself up to need a HARD pivot in the general.

His fight with Disney preceded his re-election. He won (in a swing state) by more than 1.5 million votes. Put in perspective, that’s approximately double the combined margin of victory by the governors of Illinois and New York (two totally blue states of comparable size). I don’t think it will be a particularly big deal.

[Pakuni]

His fight with Disney preceded his re-election. He won (in a swing state) by more than 1.5 million votes. Put in perspective, that’s approximately double the combined margin of victory by the governors of Illinois and New York (two totally blue states of comparable size). I don’t think it will be a particularly big deal.

Florida isn't a swing state. It hasn't had a Democratic governor since 1998. Hasn't had a Democratic majority legislature since 1994. Hasn't had a Democratic attorney general since 2002. Hasn't had a Democratic secretary of state since 1987. A Democratic presidential candidate has won Florida just three times since 1980.
It's as much a swing state as Illinois.
Don't take it from me. Listen to those libtards over at the National Review.
https://www.nationalreview.com/2022/11/florida-is-a-red-state-now/

Regardless, none of this changes the fact that Disney made a fool of him.

[rocky_warrior]

Lets uh...drop the politics and get back to investing...