March Market Pulse

The sands of time have quickly ushered out the first quarter of 2023. With the new quarter upon us, if nothing else, we can at least bask in the freshness and rejuvenation that spring extends.

And yet, as the winter season was drawing to a close, economies and markets threw fits that made many people cringe, if not full out panic, for a brief moment in time. A reality began setting in that, American banks, once again, were not completely the bastions of safety as many presume. Silicon Valley Bank’s demise before March’s halfway mark highlighted this reality.

A very telling state of economic affairs. Touted as the bank for all those Silicon Valley tech darlings, the very companies we’re mocked at for not investing in because they are a “sure thing”, one can’t help but pause in wonder. Are the markets as sound as they’re sold to be? Its collapse marks the second largest bank failure in US history and the largest bank debacle since the Great Financial Recession of 2007-2009.

What’s noteworthy but not widely appreciated is that Silicon Valley Bank was not the first US bank in turmoil in March. With a primary business focus on the cryptocurrency space, Silvergate Bank was winding down before Silicon Valley Bank even hit the headlines.

But the buck did not stop with those two banks. Two days after Silicon Valley Bank convulsed with a massive bank run, perhaps at the behest of tech billionaire Peter Thiel, another cryptocurrency-focused bank, Signature Bank, was shut down, apparently in an attempt to choke off any further “systemic risk”, or risks of further contagion spreading elsewhere.

I know what you’re thinking. Silvergate Bank? Silicon Valley Bank? Signature Bank? None are behemoth banks so why chafe at the news. The “too big to fail” banks are still fine, after all.

Au Contraire. The bank issues were not contained to “small” US regional banks. Caught up in the action was none other than Credit Suisse. You know, a major bank from the bastion of banking power in Switzerland? After a frenzied few days, a once stalwart of the Swiss banking scene was gobbled up by UBS, another Swiss banking conglomerate, under the direction of the Swiss National Bank. What seemed absurd only weeks earlier soon became reality in the span of a few short days.

With little surprise, central bankers swooped in to stabilize these new cracks in the “system”. Besides, as pointed out in a recent Speculator’s Digest newsletter:

“People losing trust in banks is the stuff central bankers’ nightmares are made of. With fractional reserve banking, there isn’t enough physical currency in existence to cover the need. And once people start hearing that their banks don’t have their money…well, panic is the least one can expect.” 1.

No doubt, a terrifying scene to paint for those invested in the markets. I can imagine you shuddering with anxiety and delaying turning the page to assess the market performance. Surely, it must be a sea of red!

Amazingly, much of the investment board has registered positive green. Of considerable note is the evisceration of the price of natural gas so far, having shed almost half its value in three quick months. Another quirk is the decrease in bond yields, given the continued push by central banks the world over to keep nudging lending rates higher. And astoundingly, the Swiss yield also swung in a positive direction.

Ensuring your investment portfolio doesn’t succumb to the market’s lulling hum involves unconventional wisdom and an approach not engaged by most financial advisors. If you recognize the value of thinking differently, lets connect so we can discuss how we are better arrayed to grow and preserve your money so you can enjoy and share it long into the future.

All My Best,

Adrian Harasymiw Investment Advisor Pinnacle Sovereign Investments of ACPI

P.S. To review the March market numbers or download a PDF copy of this commentary, head over to the Monthly Market Pulse page on our website.

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(1.) Speculator’s Digest – Is This It? – Lobo Tiggre – March 18, 2023