Hey, this is Tom Don't click nothing, Don't smash nothing. Don't buy nothing. Let's talk about what's going on with Deutsche Bank down as low as eight percent of the day. Bounce back a little bit towards the end of the day.

As of the making of this video, it's down three percent. So what's going on with Deutsche Bank and should we all be worried? So let's start with the obvious question why Deutsche Bank is dropping right now? Well, the simple answer and it is quite simple. Unlike what these Talking Heads with their expensive suits and their expensive Studios and mainstream video are trying to push on you, the answer is quite simple. Look, when people are making money, nobody's looking under the hood of these Banks When people are not making money and times are tough, people are flying from risk to safety and a lot of these problematic banks are getting punished.

They're getting priced in the risk that they're carrying now. Deutsche Bank has been known to be one of the more problematic banks in This Global Important System: Not as bad as Credit Suisse, but it has its problems. It has exposure to the German economy which isn't great exposure to Russia as well as a host of other issues. but the Crux of it isn't the problems of Deutsche Bank.

Because every single bank has problems and exposures. The problem is now after the collapse of Credit Twist. In the aftermath of that, people are looking under the microscope looking for the next Credit Suisse And obviously they're going to look at the weakest link in the global important system of big Banks And the natural candidate is Deutsche Bank because of their problems. Now Is Deutsche Bank going to fail? Probably not.

Will Deutsche Bank be bailed out by the German government if that happens 100? It's just too important. But at the end of the day, I'm here to explain to you this isn't a Deutsche Bank problem? No, this is a global banking crisis and it is a lot worse than what they're selling to you. Deutsche Bank is down. That's fine and ending.

But do you think Wells Fargo You think Bank of America are doing any better? No look at their share price for the past month, you're going to be shocked. Wells Fargo down 22 percent Bank of America down 20 Now they're suffering from the same fate as Deutsche Bank but people are talking more about Deutsche Bank today. But Wells Fargo Bank of America are getting beat up just as much and the reasons are quite fascinating. and this banking crisis might I add is further much further from being over than what they're leading you to think.

And in this video, I'm going to show you exactly why this is happening, how bad the situation is, and what comes next. First of all, you have to understand that the entire banking system has been bleeding money and it's been doing so for a while under your nose because the media was not talking about it. Now if you're a customer of a bank and you're getting, let's say half a percent for your deposit, you can put your money right now in a U.S treasury and get four to five percent on the three six month treasury. Literally almost risk-free get four to five percent.

What do you do? Well I Think the answer is quite obvious and it's obvious to a lot of clients. that's why a lot of the high net worth clients of the banks are taking money out and putting it in money market accounts. Why get half a percent when you get four to five with very similar risk profiles? In fact, some would argue that treasuries are way less risky right now than the banks and they're giving you higher interest. It's a no-brainer So that's problem number one for the banks.

Now this has been going on for a while and drove a lot of the issues of these. Banks Now the issue has gotten a lot worse since the FED decided to absolutely the banks. Now I Know the words are a little bit harsh, but this is exactly what happened. Look the Federal Reserve Let these banks in fact encourage these Banks to buy bonds because bonds is the safest place to hold customers money.

The problem is that the price of these bonds is determined predominantly by the interest the FED sits. As long as the interest is very low, the price of these bonds is extremely high. So these Banks were buying bonds at a very high price. Exactly what happened to Svb.

Now, at some point the Federal Reserve went from. well, it's not transitory. Let's raise interest at the highest paid since Paul Volcker Let's Go Crazy five percent in a single year. The moment the FED decided to do that, all of these Banks got slammed with their penis and their mousetrap.

Pretty much they couldn't do jack. Their interest rates drove the price of their bones down so low that they have a massive massive exposure right now in the US U.S Banks are sitting on 1.7 trillion dollars of unrealized losses from bonds because of this exact situation. This wasn't a Silicon Valley Bank limited situation. This is an issue for every single U.S Bank 1.7 trillion dollars in total.

we have about 20 trillion dollars of deposits into us. So this gives you kind of the figure of how bad things are now once the FED raise rates. The banks that had zero risk profile and the worst management and were an absolute freak Show of management. they collapsed signature bag and Svb they got knocked out first because how gruesome the management was.

Zero price profile no interest swaps so they got wiped out. Now the other banks are still alive, but they're shaking. They're pretty much holding onto their balls trying to figure out how they're going to get out of this now. It doesn't help when the Federal Reserve basically sends out Jerome Powell yesterday to talk about what's going on.

and for the better part of his speech, he does very well. He talks about Bank security. He talks about how important it is to keep Bank stability. He starts his whole speech we talk about Banks But then in the Q a section, the gentleman from Bloomberg TV asks him well John Powell do you think that you guys will drop rates sometime this year and instead of dodging the question instead of saying well, we don't know, we'll see.

He literally said no the minute he said no. This means that this problem for the banks is not going away in 2023. This means that the whole confidence in the banking system goes back to the floor because now everybody would have a brain that are basically analyzing these Banks Now know that they're sitting on a huge pile of unrealized losses and now the FED just said well, we're not long rates so your problem, your mismatch problem is going to continue all through 2023.. Congratulations John Powell You just played the entire banking system now again I Don't know if he's actually going to, you know, walk the walk having talked to talk but the damage, the confidence of the bank was done and that's why the next day you're seeing all the banks bleed because of what Jerome Powell said.

The Federal Reserve basically took a situation where every bank is under a microscope right now. and it made it a lot worse by saying categorically, there's not going to be any help from the fiscal policy. And don't forget, every Central Bank in the world is looking at the Federal Reserve. They're going to copy what the FED is doing and they'll implement the same policy in their country Because this how the the monetary system works.

All the central banks are heavily influenced by the position and the strategy of the Federal Reserve And if you thought that's bad, hold on. We actually have more. That was just half of the problem of the interest rate spikes. The other half is all these Banks They make money on giving out loans On lending money.

Now the banks who are giving a lot of loans when interest rates were low. So they were giving three percent loans and they look it up for three, four, five, six years. Whatever. Not even talking about the mortgages God forbid that are basically locked up at three percent.

Now the cost of capital right now for banks is very high, so their net interest margin that spread is gone, and every interest rate hike that goes up is basically eroding that. even more so when Jerome Powell comes out yesterday and says well, here's another 25 basis points hype. It's another uppercut to their chin. It's not a good situation.

So given everything I just told you giving what we just heard from the Federal Reserve I Think that the banking crisis is far far from over. Now what happens next is dependent almost entirely on the policy of the Fed. You see the banks run on confidence. As long as people have confidence in the bank, they'll be fine if they're not.

No, Bank can withstand a bank run and no bank will withstand a bank. Grant If people lose trust in the banking system, now, look the direct cause of all of this crisis. right now. this specific crisis is caused by elevated interest rates.

You cannot go from zero to five percent in a year and not expect the banking system to have major major pain. Now if you go from 5 percent to ten percent, it's a whole different situation. But you literally went from almost zero. Not really zero, but from almost zero to five percent in a single year.

You basically screwed all these. Banks Now the question is, now that we've seen things break, the FED has to decide what's more important that two percent goal, whether they can achieve it or not, or the stability of the banking system. Now, in my personal opinion, again, might be inaccurate, might be wrong. Might be the ramblings of amendment in my personal opinion.

I Don't see how the FED can keep being hawkish and attacking inflation while the banking system is on the verge of collapse because of elevated interest rates. The Federal Reserve is a paramedic. The paramedic is on the scene of an accident. A person is on the ground, he's bleeding from his head, and he has a broken leg.

If the paramedic decides to treat the broken leg, yes, the leg will be fixed, fixated, whatever. but the person is going to bleed from his head and die. So fixing inflation is like fixing the broken leg. When the entirety of the banking system is wobbling and shaking.

You have to prioritize which things you address first. And the question is very simple: Will the FED follow through on this strategy? If The Fed stays true to what they're saying. If they will walk, the walk, the banking system will be in trouble. And because we're coming off of an inflationary cycle with massive amounts of cash dropped on the market, the Federal Reserve does not have the usual time to wait and see what's going on in the usual normal.

Market. The FED would wait and see how bad this gets for the banking system before actually acting. But because we don't have that weapon of massive quantitative easing, we can't just throw money again in the market because we just came off of a huge inflationary cycle fueled by money piling on the market. So the FED cannot allow something serious to break because if we actually go to an absolute collapse of big Banks, the Fed's only solution will be to go heavy.

QE At that point, it's going to be too late. That weapon is already exhausted, so they can fix it right now when the problem isn't as big as it could be, when it's just a cavity and not wait for the tooth to rot completely. It's a little bit unsettling to me to know that the last time they had that opportunity, they screwed it up. They could have stopped inflation when it was small and slow by raising interest rates, but they chose to basically wait and see until the whole thing went absolutely boom And then they stepped in and then the late response caused more problems.

My Hope And my belief is they've learned from their mistakes and this time they will not let the banking system go too deep under so they can solve it with a few interest rate reductions and the slowdown in the quantitative tightening again. I Don't have a crystal ball, but that's how I see things if you agree. If you disagree, let me know below. And as always, don't forget to check out my platform stock.

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