$30 Billion in Aid Stems Risk of Contagion. First Republic Bank Short Squeeze coming.
April 5, 2023 - Avoid Crisis hosts Reynaldo Arellano and Allen Plyler studiously postulate that the Jamie Dimon led $30 billion balance sheet injection to First Republic Bank will stop the spread of contagion in the banking crisis.
Key Points from Rey:
- First Republic Bank (FRB) had big banks come to their aid, but we still don’t know if it was a rescue
- FRB has lost key employees and their earnings may suffer
- Do we have too many banks, does the market need this many
- The Federal Reserve's next report on M-1 will be interesting to watch.
- Money may be going back to the market
- To hold a short on FRB now, you must think it is going to tank completely, which I don’t think is going to happen
- The rebound could be steep for the stock price of FRC, you will be competing with other buyers
- Interest rates went up a quarter a point, and inflation seems to be coming down some
- More money paid in interest is less money to pay for a house, and housing prices may come down further
- OPEC cutting production made oil go up in price, the long cycle and going green has to be thought of
- Companies that need to raise money now may not be able to get the cash they need. A lot of good ideas won’t get funded.
- Easy cheap money isn’t here anymore and it won’t be for a long time. This will have a big negative hit on our economy.
- Everyone listening to this podcast should tell their friends to listen too
- Rey added to his list of invited guests of Warren Buffet and Jamie Dimon, a new guest, Mike Roffler, CEO of First Republic Bank.
Key Points from Allen:
- Earnings season release for banks are about to come out and we will hear more on the economy
- Jamie Dimon indicated the banking crisis is not over
- The big banks are not necessarily the winners here
- FRB lost employees even after the injection of $30 billion
- Deposits are coming out of banks internationally
- Can banks consolidate until they are too big to fail?
- Local lending is important, big banks may not understand the local community lending needs
- The banking crisis we are in is leading to people taking deposits out of banks. Where is money going?
- If you were a winner with the short of FRB, take your win, there could be a short squeeze coming. The short volume has gone from 5 million a quarter before to 9 million now.
- If you are shorting FRB, you are betting against the city of San Francisco
- Regional banks may be losing employees in this banking crisis
- Local banking is needed because big banks don’t have the same understanding of the local community
- Analyst questions with the banks will focus on deposit inflows and outflows
- It is going to be harder for individuals to get a loan now
- The Fed should pause on raising rates now
- People should be looking to reduce their debt now
- Shaquille O’Neal, an invited guest, just showed how he helped a teen in a crisis and helped get the teen Size 22 shoes.
- Jamie Dimon and Janet Yellen orchestrating the injection of funds into First Republic Bank was significant and we don’t know what would have happened if bank runs continued.
Connect with Rey
linkedin.com/in/reynaldoarellano
Connect with Allen
linkedin.com/in/allen-plyler-cpa-mpm-3803992a/
Leave a review on Apple Podcasts or Podchaser
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linkedin.com/in/reynaldoarellano
Connect with Allen
linkedin.com/in/allen-plyler-cpa-mpm-3803992a/
Leave a review on Apple Podcasts or Podchaser
Subscribe to the Avoid Crisis podcast in your favorite podcast app!
Creators and Guests
Host
Allen Plyler, CPA, MPM
Allen Plyler, CPA, MPM is an experienced CFO in Technology, Start-ups and Financial Services with focus on large scale accounting implementations, evaluating emerging accounting Standards and SEC external reporting for publicly held companies. He is experienced in structuring capital markets and equity deals while also providing consulting to CEO and CFOs for business strategy.
Host
Reynaldo E. Arellano, CPA PFS CGMA
Reynaldo E. Arellano, CPA PFS CGMA is a Certified Public Accountant (CPA) with professional designations as a Personal Financial Specialist (PFS) and Certified Global Management Accounant (CGMA). In addition to providing traditional CPA services such as bookkeeping, accounting, and taxes (planning, compliance, and representation) his Firm also offers tactical CFO services and strategic business advisory services. Mr. Arellano started in the financial profession as a Big 8 auditor, then an accounting software consultant, then a Controller eventually becoming a CFO, and held NASD and life insurance licenses (presently inactive). Mr. Arellano has consistently proven to have the highest levels of integrity, intelligence and innovation. He has held numerous managerial (C-suite) and leadership (board of directors) positions within corporations and non-profit organizations.
