SF REGULATOR HQ JUST 2.5 CITY BLOCKS FROM FRC GROUND ZERO…STILL MISSED IT

Headline:
True That…

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The Recent Tumult In The Global Banking Sector Is Nothing More Than A Financial Train-Wreck For Bank Equities…Especially The U.S. Regional Banks.

Not Many Foresaw The Specifics Of This Sudden Crisis…Highlighted By The Downfall Of SIVB…

And Subsequent Contagion To Many Regional Banks …Including FRC.

Nevertheless…It Certainly Seems That There Were Some Substantial Oversight + Regulatory Failures.

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And It Is Probably No Coincidence That Both FRC + SIVB Were Headquartered In Northern California…Home To Many Free Cash Flow Burning Zombie Companies.

Who Would Have Figured…

That The Zombie’s Bankers Were Just As Financially Incompetent As Their Clients…Though I Suppose We Ought Not Be Too Surprised?

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The Primary Regulatory Body Overseeing Both FRC + SIVB = The San Francisco Federal Reserve Bank…

Led By It’s Proudly Prioritizing Woke President…Mary Daly.

The Inevitably Detailed Scrutiny…

Of The Financial + Technical Ineptitudes Of Daly’s SF Fed…

Are Sure To Reveal A Dubious Treasure Of Embarrassingly Lax Oversight Of Both FRC + SIVB…

Even Worse…The Regulatory Failures Essentially Occurred In The SF Fed’s “Backyard.

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You See…First Republic’s Corporate Headquarters…Are Located In San Francisco/111 Pine Street..Just 2.5 City Blocks From The SF Fed/101 Market Street.

A Simple 4 Minute Saunter…According To Google Maps…To Perhaps…

Conduct A High Quality + Thorough Audit/Exam Of One Of Its Member Banks.

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But Then…Maybe The Auditors/Examiners Were Simply Unwilling To Negotiate The Dodgy + Nasty 2/10ths Mile Of SF’s Market Street…Connecting The SF Fed + First Republic Offices…

Weaving Through The Aggressive/Panhandling/Soiled Homeless Population + Open Air Drug Dens + Urine Soaked Sidewalks…

Could Justifiably Be Viewed…As A Gauntlet From Hell.

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Contact The Author: Dominate@GlobalSlant.com

CAPITAL STRUCTURES CURRENTLY MORE FRAGILE THAN DEPOSIT SECURITY

Headline:
You Can Ignore Reality…But You Cannot Ignore The Consequences Of Ignoring Reality.

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Bank Capital Structures = Debt + Equity

Which Are Both Structurally Supported By Deposits.

Deposit Instability/Outflows = Stress + Weaken Bank Capital Structures…

Thus…Severely Depressing Investor Confidence.

Furthermore And Importantly…Regional Banks Are Subject To A Less Stringent Regulatory Framework…Than The Systemically Important TBTF Mega-Banks…

Resulting…For Now…In Much Harsher Financial Market Punishment For The Regional Banks.

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So…UNTIL Investors/Traders Perceive ALL Banks As Sufficiently Capital Fortressed…

Architected By A Diversified + Stable Depositor Base…

Confidence In Most Financial Capital Structures…Especially The Regional Banks …Will Continue To Be Tremendously Scrutinized + Tested By Market Actors.

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However…When Investor Confidence + Perception Nadir…

The Subsequent Rally In Financial Equities Will Be Exceptionally Steep + Swift.

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Contact The Author: Dominate@GlobalSlant.com

FIRING THE WAYWARD CLIENT = NO PROBLEMO

Headline:
Necessary Cull.

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Managing L/S Equity Risk Capital…

Is Not A Democracy…Between Client + Portfolio Manager.

Rather…It Is More Symbiotic…

As Both Client + Portfolio Manager Serve A Distinct + Silo-ed Function.

Clients Provide External Capital To The Portfolio Manager…

And The Portfolio Manager…With Discretion…Invests/Trades The Capital…

In Order To Generate + Maximize Absolute/Risk Adjusted Returns.

Financial Interests Are Aligned…As The “High Water Mark” [HWM] Calibrant Brilliantly Overlaps With A Percentage Of Profits Application.

It Is An Acute + Durable + Practical Model…For Both Client + Portfolio Manager…Reinforced By The Absence Of A Management Fee.

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Of Course…Portfolio Managers Are Regularly On The Hunt For New Capital…

Staggering HWM’s In Order To Moderately Diversify Their Business Risks.

Still…Not All Capital Is Created Equal…

As Each Tranche Of Capital Is Attached To An Actual Client Or Client Agent…

Requiring Different Levels Of Attention + Touch-Points…To Accommodate Each Client’s Unique Needs.

And These Professional Relationships Require Proper Care + Nurturing…In Order To Deliver A Superior Client Experience.

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Most Client Relation Successes Begin With A Universally Cogent + Concise Expectation Baseline Articulated By The Portfolio Manager…

Outlining The Investment/Trading Process As Well As Protocols For Communication + Compensation + Performance.

More Often Than Not…Attractive + Enduring Risk Adjusted Returns…

Offer An Experienced Portfolio Manager…A Good Probability Of “Landing” A New Prospect Or Additional Capital From An Existing Client…

But Almost As Important As Returns…Are A Collection Of Intangibles…

Existing Clients + New Prospects Must Actually Admire The Portfolio Manager + Process/Strategy…In Order To Award Their Business.

In Turn…It Is Also Wise For The Portfolio Manager To “Size Up” The Potential Client…Primarily Measuring Their Particular Behavior + Demeanor…

As Calm + Balanced + Stable Is Preferred…But Not Always Possible.

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My Client Roster…For The Most Part…“Gets” My Investment/Trading Process…

Fundamentally Value Based Equities…Medium/Large Capitalization + FCF Producing Market Leaders…Investment Grade Credit Profiles…Savvy Senior Executives Leading Companies That Are Currently Out Of Market Favor.

Concentrated Positions Are Applied Across A Collection Of SPY Companies + Sectors…With Staged Capital Commitment…

Allowing An Investment Hypothesis To Gradually Evolve + Gain Traction …And Usually…That Takes Some Time.

Though…There Are Some Clients That ONLY Care About Bottom Line Numerical Returns…And That Is Just Fine Too.

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Nevertheless…When Market Stress “Hits”

The Occasional Client Will “Shake” With The Market…Which I Most Certainly “Get”.

Typically…The “Shake” Is Quickly Steadied With “Live” Communication + Re-Iteration Of Investment/Trading Process…

And That The Current “Shake”…Likely…Offers Supreme Opportunity For Future Returns.

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Very Infrequently Though…You Get A Really “Bad One”

AKA…A Toxic Client…

And They Are The Worst Type Of Person…

Frequently Complaining + Griping…

Not Only When Capital Draws Down…

But Ironically…

Even When Investment + Trading Performance = Stellar.

Some Of Their Other Distasteful Traits…

1. Condescending +
2. Disrespectful +
3. Frequently Wrong/Never In Doubt +
4. Ill-Mannered/Impolite +
5. Insulting “Back Seat Drivers” +
6. Judgmental +
7. Never Satisfied +
8. Righteous +
9. Sense Of Entitlement +
10. Unsolicited Advice

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Basically…They Are Classic Bullies…

With The Diplomatic Skills Of A Heart Attack…

Solely Operating With A Fear + Power Credo…

Believing The Only Effective Tactic To Motivate The Proverbial Horse…

Is Via The Whip…Rather Than The Carrot.

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Still…I Have A Considerable Threshold + Tolerance…

As They Are Paying Clients…

But A Threshold Nonetheless.

And If/When That Threshold Is Finally Breached…

That’s It…They Are Gone.

Capital Is Returned + The Client Relationship Is Permanently Terminated.

Then…I Simply Walk Away + Never Look Back…

Because…

ABSOLUTELY NOBODY Is Worth That Kind Of Grief.

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Contact The Author: Dominate@GlobalSlant.com

CRYPTO = AKIN TO FINANCIAL PORNOGRAPHY

Headline:
Crypto-Industry Littered With Illegitimate + Sleazy Financial Actors.

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The Cult-ish Crypto-Crowd Fancies Itself As An Alternative/Digital Currency…Powered By Legitimate Block-Chain Technology…In The Tech-World Of Decentralized Finance.

Yet…At Best…The Crypto Market Is Nothing More Than A Frontier-ed Asset…

Born In Illegality…By Criminally Intended Computer Geeks…To Provide A Uniquely Un-Traceable Electronic Barter To Shield Their Illicit Financial Dealings …Which…In Actuality…Is Rather Clever.

However…Crypto Has Now Gone Mainstream…Perceived As Legitimate Tender By Ignoramus’…Especially The Uninitiated Millennials…

And Is Also Actively Quoted [By Most Mainstream Media Co’s = Bloomberg +Reuters + Wall Street Journal].

Recently…High Profile Celebrities [Brady + Curry + Damon + Kardashian] Were Recruited To Brilliantly Promote…What Increasingly Could Be Viewed As Electronic “Snake-Oil”…Despite Trusted Data Exchange Enabled By Block-Chain.

Unfortunately Block-Chain’s Substantial Digital Attributes Have Been Clouded + Hijacked Into A Highly Volatile Monetary + Speculative Monster…aka Crypto…

By An Inexperienced + Unsavory Den Of Enterprising Thieves.

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Crypto’s Nerds Correctly Claim That Block-Chain Technology = Immutable.

Thus…Because Of Block-Chain’s Immutability…They Also Indicate That Crypto Is A Reliable + Secure + StableCurrency Platform…

Indeed…The Platform Might Be Stable If The Crypto Players Orchestrating The Platform Were As Reliable + Secure + StableAs The Block-Chain Technology They Rely On…But Alas…They Are Not.

Because If They Were…Then Crypto Would Not Be So Easily Steal-able…

As Demonstrated By The 2014 Mt. Gox Theft + The Many Digital Billions Of Crypto-Assets/Tokens That Have Been Pilfered In The 8 Years Subsequent.

Basically…It Seems This Industry Is Being Navigated By Both Naive/Neophyte Computer-Heads + Sophisticated Electronic/Financial Culprits…Or A Combination Of Both…

Which Certainly Does Not Transmit To Secure + Stable.”

Yet The Dodgy Crypto-Market Somehow Survives…On Increasingly Shaky Ground…Primarily Because Of That Perfect Marriage Between…

Greedy + Ignorant + Obtuse Speculators
+
Acute Digital + Electronic Thieves

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Ironically…Theft-Ability Could Be Crypto’s Most Reliably Un-Stable” Feature…

Clearly Reflecting The Massively Inexperienced + Questionable Evangelists “Running The Show” Across Crypto.

So The Slow Moving Crypto Train-Wreck Continues…Most Recently Thanks To FTX’s

1. Amateur +
2. Bizarre +
3. Dubious +
4. Freakish “Leaders”…

Who Are Now Cutting + Running For Legal Cover Around The Globe…Further Soiling Crypto’s Already Dirty + Stained Reputation…

And Likely Cementing Crypto’s Circuitous + Eventual + Lengthy Demise Into The Financial Market Wasteland…As The Industry’s Aggregate Market Capitalization Has Already Tanked 73%…In Just A Little Over 12 Months.

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However There Is A Great Paradoxical Twist To Crypto’s Inevitable Financial Atrophy…

That Is…In Judicious Commercial + Professional Hands…Block-Chain Survives + Thrives…As Its Applications Are Extremely Broad + Deep.

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Contact The Author: Dominate@GlobalSlant.com

FINANCIAL MARKET CHAOS REIGNS

Headline:
Free-Falling Markets In Full Fear Mode.

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Global Financial Markets Have Recently Been Slammed…

Especially Equities…As Beta Dominates + Dispersion Is Generally Non-Existent.

The SPY Has Cratered Almost 16% In The Past Month…

Longs Have Nowhere To Hide…Other Than Than A Well Bid $US…

And An Increasingly Spooked Volatility Complex…

Contributing To A Brutal Fixed Income Rout…

In All Likelihood…These 1-Way Price Movements Are Turbo Charged By Margin Calls + Counter-Party Settlement Concerns.

Meanwhile…Investor Sentiment Is Dismal…Probing Spring ’20 COVID Lows.

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“If It Bleeds It Leads”…Captures Global Market Headlines

1. Terminal Fed Funds Rate Expectations Ramp Toward 4.5%.
2. U.S. Quantitative Tightening Amplifies Rate Increases.
3. U.S. Financial Conditions Constrict To Contain Inflation.
4. Europe Is Natural Gas “Boxed” By Nuclear Russia.
5. British Politicians Panic With Absurd Budget Proposals.
6. Japanese Yield Curve Control Is Fortified…Despite Inflation’s Bite.
7. China COVID Lockdowns Perpetuate…Stifling Supply Chains.
8. Taiwan Braces For China Aggression.

And…No Doubt…It ALL Contributes To Much Market Angst.

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However…The Primary Culprit For Current Financial Market Volatility =

The Federal Reserve’s Bloated Balance Sheet…

BECAUSE 12 YEARS OF RIDICULOUSLY EXCESSIVE DOLLAR PRINTING + ZIRP PROVIDED THE FOUNDATION FOR TODAY’S INFLATION CONUNDRUM…

And Was Compounded Globally…As Domestic Debt Monetization Policies Were Intellectually + Practically Exported To Almost All Developed Economies.

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Since ’09…QE/ZIRP Proponents Frequently Articulated There Was Little Legacy Based Inflation Risk…Confirmed By Very Soft Traditional Price Metrics…

1. CPI +
2. PCE +
3. PPI

…Despite Stunningly Sharp Increases In The Money Supply.

Further, They Also Argued That A More Legitimate Longer Term Price Concern Was…Deflation/Dis-Inflation…Especially Due To Globalization Trends…

Thus…Validating Their Money Printing + ZIRP Strategies.

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However, There Was Plenty Of High Flying Inflation…Initiated By Their Monetary Policies…

IN PLAIN SIGHT

That Central Bankers Elected To Simply Ignore…Defined As…

GLOBAL FINANCIAL ASSET INFLATION …Comprising…

1. Equities = Private + Public
2. Fixed Income = Private + Sovereign
3. Real Estate = Commercial + Residential

…AND ALL DRAMATICALLY

1.  Ascended +
2.  Distorted +
3.  Inflated

…Which…Finally…Post COVID…

Transmitted To John Q. Public’s Real Economy…

…With Increased + Persistent Momentum…During Calendars ’21/’22.

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Then Suddenly…After 12 Months Of Consistent Denial…About The Durability Of Heightened Legacy Based Inflation Measures…

THE FED GOT REAL SMART…REAL FAST…

As The Monetary Baton Seamlessly Flipped…

From…Powerful Stimulus…

To…Bold Contraction…

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Fed Officials Broadly Articulated It Was Wise To “Front-End” Load Hefty 75 Basis Point Rate Hikes Combined With An Aggressive Balance Sheet Reduction Schedule.

In Actuality…With Headline Inflation Already Stampeding For 1+ Year…

During Which Time…The Fed Continued With Robust Monetary Stimulus…

Their Policy Tightening Is/Was As “Back-End” Loaded As The Caboose On A Freight Train.

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Recently…The Fed’s Hawkish Chatter Ratcheted Up…Especially After Last Month’s CPI Data…Which Was Just A Bit Firmer/Wider Than Market Expectations.

Then…Chair Powell Jawboned…At Last Week’s Fed “Presser”…That Real Interest Rates Ought To Be Positive Across The Entire Yield Curve…And That Did It.

Subsequently…Already Heavy Fixed Income Markets Tanked Again…The Dollar Received Another Adrenaline Boost + Fatigued Equity Markets Collapsed From A Further Lack Of Any Bullish Oxygen.

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So…Global Dollar Liquidity Is Currently Being Withdrawn…

At A Frenzied + Record Pace.

Financial Markets Now Price-In Dire Economic Consequences…And Risk Premiums Naturally Skew To The Downside…

As Borrowing Costs Quickly + Very Steeply Escalate.

Asset Managers…Dizzied By The Rapidly Changing Macro-Dynamics…Are Selling First + Asking Questions Later.

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So…When Will This Period Of Financial Market Dislocation…At Least…Begin To Subdue?

ONLY WHEN EXPECTATIONS OF U.S. INTEREST RATE INCREASES INITIALLY SLOW…AND THEN PEAK…

ALLOWING THE US DOLLAR TO WEAKEN…AND FINANCIAL CONDITIONS TO RELAX…

Of Which…We Are Likely…Closer Than Many May Conceive…

As Post COVID’s Incredibly Dramatic “Bull-Whip” Economic Impact Normalizes.

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Contact The Author: Dominate@GlobalSlant.com