The Fed is Killing Banks. Will the Stock Market Crash Next?

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Silicon Valley Bank and Silvergate Bank collapsed in less than two days when FDIC regulators seized control. In that time, the bank’s stock price fell over 60%, a $42 billion bank run was sparked and a liquidity crisis ensued. Now, Credit Suisse is on the verge of collapse, looking to borrow more than $53 Billion to stay afloat. These bank collapses are making stock market investors ask whether Jerome Powell and the Federal Reserve can keep raising interest rates as fast as they have been in order to fight inflation. But the collapse of Silicon Valley Bank, Signature Bank, Silvergate Bank and potentially Credit Suisse all have two thing in common: very poor risk management and high amounts of uninsured deposits. Yikes!

Add in the most recent inflation data (Core CPI +0.5% month over month) and the picture changes. Here’s why the Federal Reserve may not pivot as much as the stock market currently thinks and why that could lead to a bigger crash for stocks (and bonds) in the future. Even the best stocks to buy now may not be safe.

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? Resources & References ?
@wsj How Silicon Valley Bank Collapsed in 36 Hours | What Went Wrong | WSJ

@allin E119: Silicon Valley Bank implodes: startup extinction event, contagion risk, culpability, and more

@CNBCtelevision To maintain deposits today, you have to pay up: ARK Invest CEO Cathie Wood on SIVB (CNBC)

The Credit Suisse scandal 2022: What went wrong this time?

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26 thoughts on “The Fed is Killing Banks. Will the Stock Market Crash Next?”

  1. Year-over-year inflation stood at 6.5% in December 2022—the lowest that figure has been in more than a year. Inflation was in line with what economists expected and gave many of them a reason to believe that the peak of inflation may be behind us. I have approximately $150k stagnant in my port_folio that needs growth. What is the best way to take advantage of this downturn?

  2. terrible, forgot about fractional reserve lending and it's impact, svb's successful attempts at finding a buyer that was blocked by FDIC, and it's crypto holdings, which is the main reason for this situation… so basically nothing contentious. Way to be noncontroversial!

  3. Damn Alex…this is such an excellent, succinct, smart and helpful summary. This is why I can't wait for your videos. My time is valuable and you simply just get to it! Thank you!!

  4. They have actually bailed out the banks. Not the collapsed few but the others that would have crashed without the deposit guarantees. SVB is just the sacrificial lamb, while others have dodged a bullet due to the Fed guarantees…thats a bailout.

  5. This is just the beginning !! Now other banks will fly into the trash !!The USA is waging war against the whole world, and planet Earth!!These freaks of their Washington, will stop at nothing, "when the rat is cornered..she begins to rush at EVERYONE "Europe , whose politicians lick the ass of the US administration , these are traitors to their citizens, critics of the Motherland and their fellow citizens.. Illegal and non-legal sanctions imposed by the United States against sovereign states that do not want to become slaves, or cannon fodder, or wage fratricidal wars with their own people, will kill those countries that support these schizoid and idiotic sanctions!!!So , wait for your complete poverty , the dominance of the dollar is dying ! Now more and more countries are switching to national currencies, because they do not want their assets to be simply stolen by the USA and their European slaves !!Schizophrenia reigns in Europe ! There will be nothing for Russia or China , because they are independent and free countries , with a normal economy , and not with a printing press , as in the USA !!!!

  6. ?Hm? Where does 155.000 unemployed [added in February] fits? Lay offs anyone?? How you gonna fix inflation if you always 'follow' it?
    You tell half a story buddy! And the other half is as important as the one you talk about, if not even more important (to get the full picture of the USA economy).

  7. With regards to the insurance. FED will create the money out of thin air backed by bonds created by the government out of thin air. All backed by future growth and tax revenue to pay it back, cancel the bonds out over time.

    It’s all one big Ponzi scheme.

    Now question becomes has three hundred years of fractional reserve banking reached a critical mass, what with our aging populations and below trend birth rates.

  8. Banks leverage the money supply hence why they call it fractional reserve banking. Savings etc represent the 10% reserve, held at the FED. All credit is created out of thin air, double entry book keeping. Backed by 10% hard asset savings/bonds etc held at the FED. All backs must maintain that 10% reserve to remain solvent. Hence why if everyone takes their mind out at the same time it triggers a run on the bank.

  9. The stock market has been a really tough one this past year, but I watched an interview on CNBC where the anchor kept mentioning "KATRINA VANRENSUM ". This prompted me to get in touch with her, and from August 2022 till now we have been working together, and I can now boast of $540,000 in my trading portfolio.

  10. rates collapsing banks umm not sure maybe it has to do with main holders getting their money out months ago, and while big money kept passing the word the more they got out. so i guess is true the rats leaves a sinking boat before people realize.

  11. It all depends on the knowledge and strategies employed, but I've seen people make seven-figure profits in declining markets just as easily as they do in rising ones. There is no denying that some people have benefited significantly from the recession and crisis.

  12. When I warned about this and coming devaluation of dollar, many people said it would take at least 10 to 30 years for dollar to get dethroned. Now do you see how things ended up. The fed is printing more dollars to bail out banks, and that will lead to more inflation. The US is definitely heading to a huge economic disaster.

  13. IF the FED, FDIC, or the Government… pays out more then $250,000 to ANY ONE INDIVIDUAL OR COMPANY…. THEN IT'S A BAILOUT!!!

  14. I don’t understand why the government did not reinstate to keep 10% cash in reserve. Personally, I think the banks should have to keep 20%. Re-regulate to keep banks and companies from being allowed to do stock buy backs.

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