Let's talk about the banking failures, what this means for the entire industry, why the US Dollar is no longer the leader for certain transactions, and how GDP could affect the next interest rate hike - Enjoy! Add me on Instagram: GPStephan
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THE BANKING CRISIS:
On Monday, April 24th, First Republic reported that their deposits declined by 40% in the first quarter - which, was much worse than expected. On top of that, this also included their $30 billion dollar cash injection from larger banks - which meant, according to CNBC, “If those deposits were excluded, First Republic’s deposits would have fallen by more than 50%.
At the same time, their stock continued to plummet - while talks about a “rescue deal” began to surface after their statement that the bank “was reviewing strategic options to help reshape its balance sheet.”
Advisors to the bank were also alleging trying to “sell the banks on the idea that letting First Republic fail would be even more expensive if it led to higher regulatory costs and fees” - and, there’s also been the idea that they would issue more stock to dilute shareholders as a way to raise additional capital.
Because of this volatility, US Banking Regulators were considering DOWNGRADING the entire bank, which - would result in reduced borrowing capacity from the Federal Reserve, and - would further hurt their chances of successfully turning around. It also appears as though the Government is no longer willing to step in, either….with sources saying that they refuse to intervene.
At this point, the bankers involved are reportedly still expecting a government takeover…but, the government is hoping that First Republic “can hash out a deal to ensure the firm doesn’t fail and take some of their money with it.” Essentially, this is becoming a game of chicken to see what happens first: a government takeover, a cash injection from other banks, or - a collapse - and…as of now, it’s too early to tell exactly what’s going to happen.
THE US DOLLAR:
As of the other month, the Yuan has just overtaken the US as the most used cross-border currency. Since 2010, China has been on a path of slowly reducing its reliance on the US dollar. It’s speculated that, around this time, the United States launched the first $600 billion dollar round of Stimulus, which - caused the dollar to depreciate, and applied pressure to keep the value of their currency stable.
Over time, this resulted in China relying less - and less - on our own currency, until it came to a head in 2020, when they created a financial alliance to ditch the dollar altogether. More recently, Brazil and Argentina also hopped on the bandwagon to transact with China using the Yuan - which, makes sense, with “Brazil being the largest recipient of Chinese investment in Latin America.”
Essentially, all of this is simply referred to as “de-dollarisation,” which - in basic terms - suggests replacing the US dollar as the world’s reserve currency…or, at least reducing its dominance by introducing more competition - and, in terms of whether or not its cause for concern - it really depends on how you look at it.
On a global scale, the reality is: not much has changed and the Yuan is still ONLY used in 4.5% of all transactions, worldwide. But, it is a sign that their dominance is growing, while the US dollar is shrinking - and, that is something to be mindful of - even though, it could be a complete non-issue in the big picture.
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THE BANKING CRISIS:
On Monday, April 24th, First Republic reported that their deposits declined by 40% in the first quarter - which, was much worse than expected. On top of that, this also included their $30 billion dollar cash injection from larger banks - which meant, according to CNBC, “If those deposits were excluded, First Republic’s deposits would have fallen by more than 50%.
At the same time, their stock continued to plummet - while talks about a “rescue deal” began to surface after their statement that the bank “was reviewing strategic options to help reshape its balance sheet.”
Advisors to the bank were also alleging trying to “sell the banks on the idea that letting First Republic fail would be even more expensive if it led to higher regulatory costs and fees” - and, there’s also been the idea that they would issue more stock to dilute shareholders as a way to raise additional capital.
Because of this volatility, US Banking Regulators were considering DOWNGRADING the entire bank, which - would result in reduced borrowing capacity from the Federal Reserve, and - would further hurt their chances of successfully turning around. It also appears as though the Government is no longer willing to step in, either….with sources saying that they refuse to intervene.
At this point, the bankers involved are reportedly still expecting a government takeover…but, the government is hoping that First Republic “can hash out a deal to ensure the firm doesn’t fail and take some of their money with it.” Essentially, this is becoming a game of chicken to see what happens first: a government takeover, a cash injection from other banks, or - a collapse - and…as of now, it’s too early to tell exactly what’s going to happen.
THE US DOLLAR:
As of the other month, the Yuan has just overtaken the US as the most used cross-border currency. Since 2010, China has been on a path of slowly reducing its reliance on the US dollar. It’s speculated that, around this time, the United States launched the first $600 billion dollar round of Stimulus, which - caused the dollar to depreciate, and applied pressure to keep the value of their currency stable.
Over time, this resulted in China relying less - and less - on our own currency, until it came to a head in 2020, when they created a financial alliance to ditch the dollar altogether. More recently, Brazil and Argentina also hopped on the bandwagon to transact with China using the Yuan - which, makes sense, with “Brazil being the largest recipient of Chinese investment in Latin America.”
Essentially, all of this is simply referred to as “de-dollarisation,” which - in basic terms - suggests replacing the US dollar as the world’s reserve currency…or, at least reducing its dominance by introducing more competition - and, in terms of whether or not its cause for concern - it really depends on how you look at it.
On a global scale, the reality is: not much has changed and the Yuan is still ONLY used in 4.5% of all transactions, worldwide. But, it is a sign that their dominance is growing, while the US dollar is shrinking - and, that is something to be mindful of - even though, it could be a complete non-issue in the big picture.
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What's up? Graham It's guys here, and if you thought the banking collapse was over, well think again in the middle of mass withdrawals and declining savings, First Republic could be the next Bank to fail, even after two multi-billion dollar bailouts. In fact, their stock price has already fallen 95 year-to-date 41 of their deposits are gone, and experts are saying that the bank is seeking another Lifeline just to stay afloat. This also comes at the same time that the Yuan has officially overtaken the US dollar as China's most used cross-border currency. A new debt ceiling proposal is about to be rejected by the Senate and the latest GDP numbers came in below expectation, suggesting that our economy is indeed slowing down.
So with all of that said, we should really break down exactly what's going on, what this means for you, Why some experts are now calling for stagflation and the reason parrots are video calling other parrots to make themselves feel less lonely. Anyway, before we go into that, in the ways that you could potentially use this information to make money: I Want to show you how to subscribe Thrive If you haven't done that already, once you click the button for the low cost of nothing, you'll get to see new updates like this every single week. And as a thank you for doing that, here's a picture of a cookie. so thank you guys so much.
And now with that said, let's begin all right. So first we got to talk about the latest banking crisis because unfortunately this is a situation that continues getting worse. See all of this began about two months ago with the collapse of Silvergate Signature. In the most prominent: Silicon Valley Bank At the time, each of these companies set a very specific clientele that was mainly focused around business banking of the tech industry, which meant the vast majority of their deposits were above the limits of FDIC insurance.
Now, typically this wouldn't be a huge issue since banking failures are relatively uncommon, but in this case with Venture Capital slowing down, more and more of their customers were drawing in their deposits, forcing Banks to begin selling off their assets at a loss which worried even more customers that the bank could potentially be facing some issues which caused even more people to begin selling off until eventually they were shut down and overtaken by the the FDIC. As you would expect, this caused a panic throughout the entire industry because if One Bank shuts down, who's to say that can't happen again if everyone decides to withdraw their money after all, banks are only required to keep a small portion of customer deposits available for withdrawal. So if everyone rushes for the exit at the exact same time, that could be a disaster. Or wouldn't you know it? After 52 billion dollars were lost in market value, the FED stepped in and several Banks received an injection of cash to stay afloat including the topic of this video, First Republic Bank Though even though some could say that they were simply a victim of being jinxed by Jim Cramer who called them a very good bank just days before their decline on a more basic level, they did share a lot of similarities with Silicon Valley Bank and that caused a large portion of their customer base to leave at first. First Republic Bank Tried to calm their clients down by saying that they had Beyond a well-diversified deposit base, including over 60 billion dollars of available unused borrowing. Although it quickly became apparent that the bank's issues weren't so much with their Invest assessments, but instead they're lending. As the Wall Street Journal pointed out first, Republic showed a large gap between the fair market value and the balance sheet value of their assets. All told, the fair market value is 26.9 billion dollars less than their balance sheet value, which basically means First Republic issued and held on to substantial loans from wealthy clients at low interest rates.
and today, those loans are worth substantially less if they, for whatever reason had to sell them to raise up liquidity. So here's the thing: Banks Don't just take your money and stuff it under a mattress. instead they invest and they loan it out to continue operations. And if everyone wanted to take out their money at the exact same time, the bank would be forced to liquidate everything.
They have to raise up enough money, which would be very difficult without taking a loss. So to prevent an all-out banking contagion, several larger Banks put together a 30 billion dollar rescue package to keep First Republic afloat. along with the Federal Reserve bailout that allowed Banks to borrow as much money as customers wanted to withdraw to being honest, that seemed to work quite well to calm everything down until just recently on Monday April 24th, First Republic reported that the deposits declined by 40 percent in the first quarter, which was way worse than expected. On top of that, this also included the 30 billion dollar cash injection that they were given by other Banks, which meant according to CNBC if those deposits were excluded first, Republic's deposits would have fallen by more than 50 percent.
At the same time, their stock began to plummet while talks of a rescue plan began to. Surface After their statement that the bank was reviewing strategic options to help reshape its balance sheet, advisors to the bank were also allegedly trying to sell the idea to other banks that letting First Republic fail would be even more expensive if it led to higher regulatory costs and fees. and there's also the idea that they would issue more stock to dilute current shareholders if that meant that they could raise more. Capital Because of this volatility, U.S Regulators were actually considering downgrading the entire bank, which would result in reduced borrowing capacity from the Federal Reserve and would further hurt their chances of of successfully turning around. It also appears as though the government is no longer willing to step in to help with sources saying that they refuse to intervene. At this point, the bankers involved are reportedly still expecting a government takeover, while the government is hoping that First Republic could hash out a deal to ensure the firm doesn't fail and take some of their money with it. Essentially, this is becoming like a game of chicken to see what happens first: a government takeover, a cash injection from other Banks, or a collapse, and as of now, it's too early to tell what's going to happen. To be honest, I think the Wall Street Journal probably has the most balanced perspective of the entire situation.
They say that first Republic is probably going to become a template for what happens with other Banks and the steps that they take today is probably going to have an effect on playing whack-a-mole with future issues. On top of that, it's a very unique situation because if larger Banks bail them out, they could very well be throwing good money after bad. But if they let them fail, that creates higher expenses for all the other Banks through larger assessments, That's why it's incredibly important to see exactly how this develops, because the last thing thing anyone wants to see is an ongoing banking crisis, even if Jim Cramer says thereby, of course, separate from that. while we're on the topic of dollars, China just found a way around them entirely because the one has just overtaken the Us as their most used crossed border currency.
That's a bit of a background. Since 2010, China has been on a path of slowly reducing its Reliance on the US dollar. It's speculated that around that time, the United States launched its first 600 billion round of stimulus which caused the dollar to depreciate and applied pressure on China to keep their currency stable over time along with tariffs. This resulted in China relying less and less on the US dollar until it came to a head in 2020 when they created a Financial Alliance with Russia to ditch the dollar altogether amid sanctions.
Essentially all of this is simply referred to as the dollarization, which in basic terms suggests replacing the US dollar is the world's Reserve currency, or at least reducing its dominance by introducing more competition. And in terms of whether or not this is cause for concern, it just depends on how you look at it on a global scale. The truth is really not that much has changed, and the Yuan is only used in four and a half percent of all transactions worldwide, which is really not that much to worry about. but it is a sign that the dominance of the US dollar is indeed shrinking, and that is something to be mindful of, even though for the near future, it could very well add up to nothing.
But speaking of shrinkage, things are certainly slowing down for the US economy. with GDP falling to 1.1 percent. As CBC reports, the slowdown in growth is due to a decline in private inventory investment and a deceleration in non-residential fixed investment. or I guess they could have said more. Simply put, companies are investing in buying less because consumer spending is often. In essence, this is really good news for retail investors because this means that the Federal Reserve's plan is working, inflation is slowing down, and there's a chance they may pause sooner than expected. It's also really solidified that they're almost certainly going to be going with a 0.25 interest rate increase on their next meeting on May 3rd with an 87 percent. like being priced into the market.
So even though falling GDP is in any other Market bad news today, bad news is good, and if we continue seeing the economy slow down, that may very well be reason for the stock market to celebrate. Of course, it's still too early to tell if we'll see the dreaded stagflation which occurs when inflation is high will growth is low, which is kind of what we're seeing now. but if inflation continues cooling down or at least begins to level off, we might be able to avert the so-called hard Landing that everyone's been worrying about now for almost a year. And finally, we gotta talk about the debt ceiling, which is getting no closer to a resolution.
See, the United States is a limit in terms of how much money the country could borrow. It was previously said at 31.4 trillion dollars, but that was already hit back in January. This means unless Congress agrees to a higher budget, the United States is scheduled to run out of money and default as early as June, which would be a nightmare for the entire country. As a result, the house passed a bill that would extend the debt ceiling by another one and a half trillion million dollars.
However, in that bill were a variety of spending cuts, concessions, and other measures that would remove most of the provisions that were enacted through the last few years to bolster the economy. Because of that, the Senate is expected to reject the entire proposal altogether and instead reiterate that the budget should be increased at the same time that current spending initiatives remain in place. Or I guess more. Simply put, Democrats want to spend more money while Republicans want to spend less and both sides have to come to an agreement if something is to pass, which to me sounds like a nightmare today.
We currently have about 60 days left until the United States is scheduled to default, which no one actually believes is going to happen. but then again, sometimes politics makes absolutely no sense and that's why I choose to make YouTube videos here in a half converted garage instead of trying to convince people for National spending policies. But overall, in terms of my thoughts on everything, let's start with First Republic Bank I Would expect for most people, they're probably not going to be directly affected by this unless they own stock in the company and investor in the bank itself, or you have a whole bunch of cash with them. Just like every other bank failure this year, I Would expect that if something were to happen, account holders would be okay. Will investors get wiped out? Unless of course there's some sort of rescue? But again, that's just my best guess. Really, the biggest concern in my opinion is that if the bank does fail, it sets the stage that the banking crisis is not over yet. It sends Panic for people to wonder who's next, and if enough people believe a bank to fail, they might. now.
In terms of China though at this point, it doesn't surprise me. China has been actively trying to distance themselves from the United States and with the recent sanctions on Russia, they're using this as an opportunity to gain market share. globally. it's still not an issue and it currently only impacts cross-border transactions with nearby countries wanting to do business with China, but it is something to be mindful of because they are expanding at a rapid rate.
It's separate from all of that, though. This does really serve as a good reminder of why it's important to stay invested with the market. Having recently posted its best Day since January Look I know it, get some. Sometimes be tempting to want to sell everything when the market is down for fear that maybe it'll go even lower.
but study after study has shown that those who stay invested long term see the largest returns than those who exit and wait for the ideal time to buy. That's why I just continue to dollar cost average into the markets on a regular basis through the ups and the downs and long term I'm really hoping for the best. Oh, and also if you want to get a head start on that, you could get a free stock Slice Worth all the way up to a thousand dollars with our sponsor Public.com when you use the link Down Below in the description and make a deposit with the code Graham Enjoy! Thank you so much for watching and until next time.
Buy silver & gold & Copper
Thank a biden voter !
The HOPE Framework seems to be a pretty reliable argument for a hard landing – can't see much of an argument for a soft landing being feasible.
the country is trillions in debt yet here I am required to pay back my 20,000 student loan debt 🙂 yay
What’s up Graham, it’s Graham here.
First SVB, then Signature bank and now first republic bank, these are all the signs of 2008 market crash 2.0, so my question is do I still save in the US dollar or is it okay to move all emergency and savings to precious metals?
Update…first Republic failed
dawg im just tryna not lose the little savings that I have 💀
You have a car in your house?
I'm really worried about the current bank crisis. If a bank as big as SVB could fail, I fear for a lot more. I know a friend who is running a high-growth startup, and was badly hit by the bank run. I have pulled out more than $340k from my bank. After all, the FDIC covers only up to$250,000, and the implosion could have bad effect. Looking to invest into the stock market now. Does anyone know how I could go about it?
It’s these woke banks that are going out you know the ones who only cared for diversity and that’s it, you can’t make a good bank just out of that
Woke banks
Buy gold , hold and easy money that betas inflation. Gold is the only money in the world rest are all fiats
America's banks will continue to fail, because the U.S. government refuses to give reparations to the Black American people. And as such money continues to go to Ukraine for war, even as in ancient Egypt whereas Pharoah refused to let the people of God leave, today's modern American Pharoahs/Babylonians also want a racially based poor class to grow on. Do the right thing and give the reparations for slavery, or continue to slide into the abyss! It will be what it will be.
Whats new… One side wants to spend money they don't have and the other wants to stop spending money they don't need to spend.
Things are gone so wrong in USA banking system collapse, stock markets crashing, businesses are slowing down we Americans people are struggling who should we blame for all these things are happening, may be we should blame all of these because of China??? Massive shootings going on and on across the country because of China toooo lol
Graham are you Italian? You talk too much with your hands man.
Your intro should be that every time lol
It will get worse…commercial property loans are now toxic too. I’m buying precious metals. And firing up my nano ledger -getting all my digital assets off these exchanges
The current situation is tragic and fiscal policies are possibly a factor in the recent events. Investors are scrambling to figure out what the next best investment is. I have started looking into gold personally once all the dust settles and I am also imitating a bot in this comment section because this comment section is absolutely infested.
Heres a cookie
WHAT'S UP GRAHAM, IT'S GUYS HERE 😂
you should to buy gold
Gold and Silver speaks all foreign languages…
All – remember that Graham has no qualifications on this topic, it is simply a clickbait title based on current headlines. He read a couple articles and threw the video together. Remember, he took money from an obvious Ponzi scheme (FTX) and told you to put your money there without doing any due diligence. Thousands of people lost their money because of his “advice”. Please be careful of finance influencers!!
Did they steal my pension money?
My pensions are always direct deposits the first of every month and today I didn't get the bigger one. I'm worried sick and Huntington bank told me it's not there.😭💔
Good to know my ammo will still be worth something when the depression hits.
Maybe we should look back to FDX failure after shills on social media pumped them up?
Really Scary 👁️
Why First Republic failed. Are other banks to follow? Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom:
Everything is collapsing….a corned beef sandwich in manhattan now costs $33.00…
We just may need Trump back
Bank run happens in China…
Youtubers & MSM: "The Chinese economy is about to collapse!!!"
Youtubers & Bank run happens in US
MSM: "Everything is fine!"
"WhatsUp Graham, it's guys here"?