Friday Market Follies – Nasdaq 12,000 Needs to Hold!


Here we are again:

NDX March 10 2023

We had HOPED (not a valid investing strategy) that the Nasdaq was safely over the Strong Bounce Line at 12,000 and we could go on to a constructive Q2 but here, in the last 3 weeks of Q1, we are faltering but most of the market sell-off is over Powell’s comments on Tuesday – which we saw coming a mile away – and now the collapse of Silicon Valley Bank (SIVB), which shows my age, as it’s now called SVB Financial Group.  

SIVB is a prominent bank that primarily serves the technology and startup industries. However, recent market turbulence has hit the bank hard, leading to a significant drop in its stock price and raising concerns among investors.  According to reports, SIVB needed to raise $2.25 billion in fresh capital to address the cash burn of its clients, many of whom are technology startups that have been struggling in the current market environment. However, concerns over the bank’s ability to cover its losses and liabilities have led to panic selling by investors, resulting in a steep decline in the stock price.

SIVB has issued an equity share raise of $1.75bn, after it sold its $21bn bond portfolio, which mostly consisted of US Treasuries.  The portfolio was yielding an average return of 1.79%, which was far lower than the current 10-year Treasury yield of 3.9%.  Despite the equity share raise, investors in SVB’s stock have expressed concerns over its sufficiency, following the loss-making bond portfolio sale.  As a result, SVB’s shares fell 60%, resulting in over $80bn in value wiped out from bank shares. SIVB’s CEO, Gregory Becker, has been calling clients to assure them that their money is safe.

Yesterday, the stock reached its lowest level since 2016 but this was quickly followed by a further 26% drop after hours and again this morning, leaving the stock trading at $35.83 in the futures market, down 86% from its 52-week high of $597.16. The sharp decline in SIVB’s stock price has also triggered a sell-off in other bank stocks that have exposure to Treasury bonds, which have suffered from rising yields and inflation expectations.

Investing and The Mark-to-Market Accounting Rule - Greek SharesFrom the perspective of mark-to-market accounting, the pain that SIVB is experiencing is due to the decline in the fair value of its Investment Portfolio, which includes investments in Treasuries and Loans to Small and Large Cap Companies. The mark-to-market accounting method requires financial institutions to value their assets at current market prices, which can result in significant fluctuations in Reported Earnings and Balance Sheets – something that we were concerned would show up in Q1 when we went to mostly CASH!!! in our PSW Portfolios last November.

In the case of SIVB, the decline in Treasury prices has led to significant losses in its investment Portfolio, which have not been fully reflected in its Financial Statements.  In addition, loans to small and large cap companies that have lost value during the Covid pandemic may not be fully reflected in the bank’s Financial Statements, as the bank may be holding these loans at historical cost rather than marking them to market.

All's fair | The EconomistTriggered by Powell’s more aggressive comments on Tuesday, Investors are now taking a long, hard look at all bank stocks that have steep Treasury losses to deal with, as well as outstanding loans to small and even large cap companies that have lost a lot of value during the pandemic.  This is because the losses may not have been fully reflected in the banks’ Financial Statements, which could lead to further Write-Downs and Losses in the future.

Investors may also be concerned about the overall health of the banking sector, given the long-term impact of the pandemic on borrowers and the potential for increased loan defaults and bankruptcies. This could lead to further losses for banks and a challenging operating environment for the Financial Iindustry as a whole.

The current situation facing SIVB is a stark reminder of the risks that come with investing in the technology and startup sectors. While these industries can offer significant growth opportunities, they can also be highly volatile, particularly during times of economic uncertainty.

8:30 Update:  Jobs are still coming in very strong with 311,000 jobs added in February – and it was a short month AND it had a holiday – so it could have easily been closer to 350,000 in a 31-day month.  Leading Economorons were expecting 220,000 so off by about 50% but at least it wasn’t a complete blow-out like January’s 504,000 new jobs.

The unemployment rate actually ticked up from 3.4% to 3.6% as more people entered the work-force and that allowed earnings growth to slow from 0.3% to 0.2% and even hours per employee slipped from 34.6 to 34.5 (less overtime) so wage pressures are easing somewhat despite continued growth – that’s a good thing!  

Will that be enough to turn the markets back up?  It should be for the Nasdaq, as it doesn’t have a lot of Finance stocks in it but a lot of damage has been done this week – mostly to Investor Confidence.  


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It took me 30 minutes of working with the free version CHAT GPT before I became a paid subscriber at $20.00 a month. I have so many uses for this in my profession it is insane.

Last edited 20 days ago by ce

un fricking believable

Does the paid subscription to ChatGPT give you more functionality or just ensures that it is available?

what is your profession, if i may ask?


nice call on si/ phil

Good Morning.

Phil – I think the sivb catastrophe has big implications. All of our startups bank with SIVB. All day we were getting calls .. should we move our money? Where? The tech sector has lots of cash sitting at sivb and one issue is that they cannot open bank accounts other places fast enough. Companies like Brex (that are not regulated) are allowing bigger transfers in. Yesterday I was thinking sivb was a deal, today I am scared. Sivb is the heart of Silicon Valley. It was a great bank. Someone will buy it, and likely get a great deal, But now look at First Republic. Down 50% today. They do a lot of wealth management for Silicon Valley. What if banks stop lending. A liquidity crisis is what sparked 2008/2009.

phil, PACW. down another 37%. its a california bank trading as of this moment at 75% of TBV. i’m pretty sure market is freaking out because they have 2 billion in loans to venture/private equity firms, the same kind of loans taking down SIVB. PACW has 41 B on the balance sheet, so my question is this, at what price would you take risk on buying some? they have roughly 2 billion in TBV, and 2 billion in venture loans at risk. do you buy some at some price or just don’t touch it?

i don’t think i want to pick a fight. sometimes, i know i want to do something i should not do, so i ask someone like you to weigh in, so you can tell me NOT to do it. and this is one of those times.

i really appreciate the timely advice.

do we assume, surmise?, that they will have to raise capital below TBV value? or just not assume anything? it’s getting awfully cheap

here is loan book

Screenshot 2023-03-10 at 4.02.18 PM.png

Cashy and Cautious! Gold getting a bid

does anyone think its a good idea to sell some BAC puts here?

Phil ( everything is proceeding as I have foreseen )





GPN getting cheap again.

$SPX 3901 if 3900 fails it could get ugly. I’m not making portfolio changes so taking the rest of the day off. Have a good weekend everyone.

just crossed now

Timeline for SVB SIVB debacle
Rumors emerge that it faces interest rate risk on $91 Billion in bonds
SVB announces fire sale of $21 Billion bond portfolio
Bond portfolio sale realizes a $1.8 loss
SVB announces a $2.3 share sale to cover bond losses
Bank run begins as account holder close out balances above $ 250,000 FDIC Insurance threshold
(FDIC does cover Stocks, Bonds, Mutual Funds, Muni, US treasuries- even if purchased at an insured Bank)
Credit Agencies cut SVB’s credit ratings
The issues are having to sell in a hurry. The bonds would have probably paid in full at maturity.
They also made that large of bet on bonds at a generational low.
I still have nightmares of the Friday years ago around Christmas when a major University board decided that they would not manage their endowment in house. The college portfolio manager was deep sea fishing in Mexico and was not contacted (nor could be reached after the news for consultation), the person on the trading desk that covered the University was at his son’s school play- with his phone turned off. That left me, a bench player, trying to manage billions of dollars in bid lists. The haphazard way they sold those bonds produced a huge loss.
It is like trying to sell a house in a few hours, very few people are willing to participate or give best pricing.

Phil are you back into /NG futures? Are you playing the Apr NJG23 or the May contract NJK23? What would be a good entry point?

Yes…got out at 3 and still holding some of the UNG spreads. Are we waiting for a drop below 2.20?

Phil,am new subscriber, just entered UNG trade you announced in feb, do you still suggest to hold ?

Hi Phil,
I realize I already have SQQQ in my account, so I’m tempted by the FAZ hedge, but can’t afford to sell the JPM and GS puts <sigh>. Could I do the 20 FAZ 2025 $21 puts for $7.60 ($16,200)? Or do you have a better recommendation?

Phil, I know this is a “dumb” question, but I don’t understand the meaning of these bounces. Is there a post where you explain what the significance of these bounces are?
I can see where you are getting the numbers from (like the bots, I can also do the math! 🙂 ), but I have no clue what the imply.
Do you enter very short dated (on the order of weeks) directional trades based on these bounces?

Phil / Hedging

Thanks for the FAZ hedging. Very timely. I have lots of exposure to Banking (JPM, BAC & WFC) and REITs (SPG, MAC, SRC, EPR etc) . I don’t have any office REIT exposure. I do have SQQQ & TZA hedging. The SQQQ and TZA doesn’t seem to cover relative to what I am losing in Banking and REITs.

I just started FAZ.

Do you have ideas on hedging REITs.?


Good point on the impact of premium on longs and shorts. I actually have more long 1000 SQQQ and short 800 SQQQ with the intent of selling the longs when SQQQ goes up. Still, they are not going up as much as the loss in the rest of portfolio. If the market continues to go down, I plan to sell 400 of the 1000 longs and keep 800 SQQQs hoping short SQQQs expire worthless.

An easy explanation to the Silicon Valley Bank collapse…


Looks like a fallout thus far