”There cannot be a crisis next week. My schedule is already full.”— Henry Kissinger
Eight of ten of the top big insider trading purchases listed in the past week were banks. That news came from OpenInsider— an SEC Form 4 Insider Trading Screener.
The question arises naturally. If insider trading clues us in… and the mainstream narrative is the banking crisis is over… Why not?
Not so fast…
First Republic Bank received a $30 billion dollar rescue package from 11 of the biggest U.S. banks when the crisis began. They used the money to stabilize accounts and make sure depositors felt safe.
The markets, however— and big institutional investors, mostly— don’t believe the First Republic bailout will hold.
The reality is the Fed still has to rein in money supply and demand. That is their quandary, their dance. The Greenback Boogie.
And the whole picture is muddied further when interest rates rise.
The upcoming Fed meeting in May is the first committee in a while where the ball is still up in the air… Pivot? 25 bips?
We forecast 25 basis points; if they pivot now all confidence will dissipate, vaporize. But in continuing to press interest rate levers forward, pressure will continue to rub up against smaller banks like First Republic.
Rising interest rates mean banks who made bad investments are unable to rein it back in, and when there’s a bank run and consumers lose confidence in the bank, they simply don’t have the funds to dish out. Simply put: The assets under management are less than the deposits they’d have to give back if their customers lost confidence in the bank.
The only recourse at that time is to use “special measures” to assure the broader market that the banking system is still functioning properly.
That’s what the FDIC is for. The FDIC can and has— was even created to— insure the depositors. Thing is, it’s kind of a first-in-line situation.
And who’s to say how many tiny banks the FDIC can bailout?
Regardless, somebody is buying right now and somebody will make a lot of money, while others run and hide. It’s like sports betting. You gotta be a good trader to handle this stuff. Or just super high risk-on.
So it goes,
The Wiggin Sessions
P.S. The real danger is a continued demise of the dollar, as we explain explicitly in this freshly printed book:
The copies are so newly minted you can still smell the water and ink on the pages. You can get your own copy off the press here »
Addison Wiggin is an American writer, publisher, and filmmaker. He was the founder of Agora Financial and publisher for 18 years. An acclaimed New York Times best-selling author, his books include: Financial Reckoning Day, Empire of Debt, The Demise of the Dollar, and The Little Book of the Shrinking Dollar. Addison is also the writer and executive producer of the documentary I.O.U.S.A., an exposé on the national debt, shortlisted for an Academy Award in 2008. He lives in Baltimore, Maryland with his family. Addison started his latest project, The Wiggin Sessions, powered by Consilience Financial, in March 2020. He films from a homegrown studio in his basement.