David Rosenberg: The takeaway for investors from the SVB crisis? Get ready for deflation, more pain in stocks, and a rally in long-term bonds

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Contagion risks have been contained and the markets have breathed a sigh of relief, but the contraction in credit is not over

even if a full-blown crisis has been averted. Banks will be forced to raise deposit rates and that will cloud the sector’s earnings outlook and the regulatory backdrop is certainly going to become more stringent.

Silicon Valley Bank is more problematic in the sense that this was not some marginal financial institution. It was the sixteenth largest bank in the United States, it had been around for 40 years, and it was the lifeblood for helping fund high-tech startups. This is akin to the failure of Washington Mutual in July 2008 — on that scale. Or perhaps IndyMac at around the same time.

If there is a silver line in the clouds, it is that JP Morgan , Citigroup and Wells Fargo all saw their share prices hang in. So, this is an assuring sign that the big banks will be just fine, and why shouldn’t they since they have a well diversified business , are well managed for the most part, have become much more regulated since the Global Financial Crisis and, most importantly, they have liquidity.

If anything, this resembles the bubble of the day in the late 1980s which was the LBO craze that engulfed the commercial real estate market and started with the failure of Lincoln Savings and Loan in 1989 — this didn’t affect the big money center banks but it brought down most of the S&L industry , and caused a four-year credit contraction that, again, coincided with recession and a muted recovery. That is the major point.

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I guess this is one way of getting your attention away from the real J6 videos!

Why don't you post what's really happening? We are headed right for a total market collapse followed by a depression that will put the Great Depression to shame.

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Ripple discloses exposure to SVB; not caused business operations disruptionWhile the future of Silicon Valley Bank (SVB) is still being decided, another crypto player has declared exposure to the failed bank. And, this time around the firm in the headlines is Ripple – a popular blockchain-based digital payment network. In a Twitter thread, CEO Brad Garlinghouse stated that the company had exposure to SBV. […]
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