To The Moon

24/3 (Fri) ➡️ Germany’s Deutsche Bank led a sell-off in European banking shares amid mounting fears another 🏦 could slip into trouble after the emergency merger of UBS & Credit Suisse last week. Deutsche Bank is Germany’s biggest lender. The Euro Stoxx Banks Index (SX7E) slipped 5%. However, some strategists & investors cautioned that it might be a fear-induced sell-off, rather than having been triggered by concerns over liquidity at Deutsche. Stock markets in London, Germany🇩🇪& France🇫🇷 were all lower. The 3 major exchanges in the 🇺🇸 were also down in opening trade, dragged lower in part by falls in shares of financial firms, including Morgan Stanley, JP Morgan Chase & Goldman Sachs $Deutsche Bank AG(DB)$ $UBS Group AG(UBS)$ Bullish$JPMorgan Chase(JPM)$ Bearish$NASDAQ(.IXIC)$ Bullish$S&P 500(.SPX)$ 

What Caused The Panic For Deutsche🏦❓

Deutsche Bank (DB) fell 11.6% in Frankfurt trading & 🇺🇸-listed shares fell 6% after the cost of insuring the lender against default rose. The move followed a spike in the price of the lender’s credit default swaps to a 5-year high on 24/3 (Thu) ➡️ This is indicative of a wider loss of confidence in the banking sector, spooking investors to 🏃‍♀️🏃‍♂️💨

📝 Explanatory: A credit default swap, or CDS, is a financial product that acts like insurance for corporate bonds. A buyer of a CDS pays a fee to hold it, & the seller of the swap makes a payout if the company can’t repay its bonds. Unlike typical insurance products, a CDS buyer doesn’t have to own the corporate bond it corresponds to in order to purchase the CDS or get paid out in a credit event.

🚨Bank Crisis Not Over🚨

⚠️ One problem for 🏦🏦🏦 is that the recent market turmoil has raised the price of selling bonds for funding. The wider spreads make it more expensive for 🏦🏦🏦 to fund their operations, the impact of which will come through only slowly as banks advance with their funding programs.

⚠️⚠️The Fed reported that 🏦🏦🏦 continue to take advantage of emergency lending. Borrowing from its discount window was $110.2 billion as of 22/3 (Wed), lower than the record $152.9 billion a week ago but still higher than usual. 🏦🏦🏦 also increased borrowing from the new Bank Term Funding Program to more than $50 billion.

➡️ If 🏦🏦🏦 are liquid & as well-capitalised as Yellen & Powell have repeated said to calm the public, then why are 🏦🏦🏦 borrowing so much 💵💵💵 from The Federal Reserve Bank🤨😅

⚠️⚠️⚠️ Recent events in the banking sector have resulted in substantially increased uncertainty😰🥵, which is likely to continue to be reflected as substantial short-term volatility in credit markets.

➡️ There's a gathering fear that central banks may have overdone it with interest rate increases. These rate rises have hit the value of investments that banks keep some of their money in, & contributed to the bank failures in the 🇺🇸.

⚠️⚠️⚠️⚠️ Share prices have fallen across the sector, as high-profile investors warn the collapses are symptoms of deeper problems in the system, with other pockets of distress yet to emerge.

⚠️⚠️⚠️⚠️⚠️ Higher interest rates have also raised the possibility of recession, & if that happens, 🏦🏦🏦 will be hit🐻🐻🐻

Fellow 🐯🐯🐯 hope this 🏦Crisis Analysis helped you to understand the current situation better so that you can make better investing decisions😉 Do follow me if you enjoy reading analytical stock research🔍 presented in a fun & easily understandable way😉 & for the Latest Stock & 🗞🗞🗞 Updates🕵🏻‍♀️❣️

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