Fundamental Analysis Wednesday 22 March 2023

Author: Steve Tee


Janet Yellen recently got grilled by Oklahoma Senator James Lankford about the banking crisis involving Silvergate, Silicon Valley Bank and Signature Bank and her response was far from pleasing. Smoothing out a lot of stuttering and unusual sounds, she basically said not all banks will be saved, only a selected few. Similar to C-19 pandemic, where in India, doctors have to make a decision who lives and who does not due to the overwhelming number of patients coming in at one time. Janet Yellen is the doctor and the banks are the patients now.

She made a press conference yesterday, stating that small banks will not be neglected by US Government and also mentioned US banking system is stabilizing. This was reported in major mainstream media. However, how much truth behind her words is subjective. They can only print more money or borrow more. How can US Government borrow more? They are sitting at $31 Trillion of national debt and counting. Something is brewing in the back scene.

There is a research study made by experts and they flagged 186 banks that are exposed to potential disaster, reported by MarketWatch. This is a bombshell. This study likely spans across the globe and this meant not only US is exposed. Moody’s did point out that APAC region markets are more robust and conservative. Hence, there are more resilient towards any financial crisis contagion in the near future. No doubt APAC will catch a cold, but the amplitude of damage may not be as severe as compared to Europe, UK and US. Recovery could potentially be quicker vs the Western economies.

Investors worldwide will be spooked now for sure and they will flee towards alternative safe havens such as Gold, Silver, Cryptocurrency and APAC domestic investment instruments such as REITs and Equities. No where is safe but there are least painful places to go to.