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Your Quiver | Wednesday, March 15, 2023

CIO | Nadine Terman @SolsteinCapital details what she's seeing in global financial markets.

Suisse Miss

CS is down to hit another all-time low for a second day in a row after Saudi Natl Bank (it’s biggest backer) said it won’t provide additional fin’l support for the bank due to regulatory restrictions. A number of other EZ banks declined in sympathy, also being halted during trading hours because of their declines (e.g., UniCredit, Finecobank). US markets look to decline on the news as well, with even bellwethers getting hit pre-market. Basically, every bank is strengthening its balance sheet now, if it can.


NOSO points out that the cost of insuring CS bonds against default short-term is ~1,000bps or roughly 20x the cost for UBS, 10x for DB. Interestingly, the CDS curve is really inverted, so it costs more to protect against an immediate failure than a failure later on. While CS is licking its wounds, BofA is throwing a party—attracting >$15bn in new deposits in just days.

Back At It

Traders are now pricing in a full point of Fed cuts by the end of 2023, based on the idea that the Fed jacking up rates too hard and too fast caused the current bank crisis, which is extending abroad. The producer price print is supporting the idea that inflation is not that bad, with the print unexpectedly declining in Feb after downward revisions to the prior month. It fell -0.1% from Jan, although the print was up 4.6% y/y. Core PPI was flat m/m. Interestingly, per BBG, more than 80% of the decline in merchandise costs are related to egg prices dropping.

Something's Gotta Give

Buying longer-term higher yielding bonds and funding with short-term funds doesn’t work when there is steep yield curve inversion and downward pressure on the price of the long-term yielding asset. Just sayin’. So, something is going to unwind and “give.”

Secret Pipeline

A Russian was arrested for violating sanctions and procuring American tech to support Putin’s war in Ukraine. Supposedly he and others sold the chips needed in weapons systems by selling the tech via intermediaries in non-sanctioned counties. Sounds like Russia built a secret pipeline for procurement for years before the war to ensure the supply of semiconductors.


Dalio is out calling the SVB collapse a canary in a coalmine that will have further effects on vc and beyond.

AOL Analogies

No one wants to get an AOL comparison, but that’s exactly what’s happening to Meta/Facebook right now (can anyone call the company Meta with a straight face?). 10k more layoffs. 5k open positions removed. The “year of efficiency” is going to be hard to achieve when you tell your employees that they might hear they’re gone by May. LinkedIn usage is probably through the roof as everyone dusts off their resumes and starts pinging their network.

Almost Yahoo Finance

China’s bond trading was disrupted after its regulator told money brokers to suspend their data feeds on security concerns. Some platforms that provide real-time bond quotes were blank, so traders were using online social media platforms like Tencent’s QQ and WeChat to share quotes.