Big Banks Are Back: The Volcker V-Bound
The Boys Are Back in Town
Guess who just got back today? Them wild-eyed bankers that had been away. Haven’t changed that much to say. But man, I still think them banking cats are crazy.
They were askin’ if credit default swaps were around — how they were, and where more derivatives could be found. The FDIC said they were living downtown, driving Wall Street crazy.
So, who or what brought the boys back to town? The Federal Deposited Insurance Commission (FDIC). Regulators at the FDIC are preparing to undo some of the belts on the Volcker Rule straightjacket that keeps banks from repeating 2008’s financial crisis.
(Curious about the Volcker Rule? Click here.)
Because of the FDIC’s actions, it’ll soon be easier for banks to make large investments in venture capital and similar funds. The loosened rules will also mean that banks can avoid setting aside cash for derivatives trades between affiliates, thus freeing up banks’ cash reserves.
Where have we heard that before? Oh, yes! Back in 2008. Credit default swaps (CDS) are derivatives! Remember those?
And that time over at Bear Stearns place? Well, CDS’s got up and they slapped Bear Stearns face. Man, stocks just fell about the place. If Bear Stearns don’t want to know, forget ‘em.
But the boys aren’t completely back in town yet. The FDIC still needs to vote on the proposed rule changes, and the Federal Reserve needs to sign off on the deal.
But, let’s be honest. This will happen. Today’s rally in bank stocks — and the market’s sharp reversal on the news — pretty much gave that away.
Pretty soon, they’ll be dressed to kill, down at Jerome Powell’s Bar ‘n’ Grill. The stocks will flow, and the money will spill. And if the banks want to trade, you better let ’em.
Now, if all this talk of banks in straightjackets and CDS has you a bit nervous, that’s completely understandable. If it doesn’t raise any red flags, maybe you started trading in just the past 10 years? (Not that there’s anything wrong with that … we welcome newbies and previous bank-tomfoolery survivors alike.)
Either way, the current climate sets up an extremely rare profit situation in the gold markets right now.
Gold? Don’t talk about gold! Gold?
Well, if you say so… But, the last time this situation showed up, investors had the chance to make ridiculous gains. I’m told as high as 4,558%. (Like I said, ridiculous.)
If you’re content to chill at Powell’s Bar ‘n’ Grill, be my guest. Just don’t order the fish.
But, if you want in on a truly rare profit opportunity … click here for the details!
You won’t regret it.
Today’s Reader Feedback might as well be called the “Thank You” edition.
Oh great, he’s still feeling sappy…
Maybe just a tad. Even though the banking boys are back in town, so is the feel-good spirit in our inbox! Thank you for all your “thank yous” … and thank you for keeping up with Great Stuff. Let’s dig in:
Top o’ the World
Just stopping by to thank you for the smiles. Up here in the North Pole, where the rain is nonstop right now and the SUMMER temp is a warm 51 degrees, the virus is surging, and the bear hunters are staying home so our taxidermy business is slow, your postings really do lighten my day. Even if I don’t ALWAYS follow your advice — lol? Thanks.
— Paulette M.
Paulette, are you Mrs. Klaus? I just want to let you know that we’ve been good boys and girls this year … well, mostly. I feel like you have more stories to share with the great wide ‘Stuff family — bear hunters included.
Thanks for your in-the-trenches insight on the taxidermy industry, Paulette. Sadly, I have yet to find a pure-play taxidermy stock, but if y’all plan to go public, let me know. (Now that’s Great Stuffed.)
Past Predictions of Future Friction
They want to catch the bottom of the “V.” This time it’s an “L,” though.
By end of May, most airlines in the world will go bankrupt. Restaurants, bars, gyms, taxis. Hotels, travel agencies, tourist attractions. Shops, malls, import/export companies. Trucking, railways, bus liners. Cinemas, museums, stadiums…
Investment banks with derivatives exposure, ETF spinners, trading houses, oil companies, automakers and aerospace are in trouble. Possibly miners too. And schools.
But investors want to believe that the FED is going to fix it all. Thing is, we should hope the FED doesn’t try. If they do, we’re all going to wake up with 1000s of $ in our pockets, and nothing to spend it on.
— Dan W.
Yup, we dug through the inbox archives for this one. If Dan’s email looks familiar to you, I envy your sharp memory, first off. We ran Dan’s future-telling email on March 24 — right around the bottom of the “V” that may turn into a “W” … or a “VWVWV.”
High marks on the foresight front, Dan! Let’s check in on some of your points of devastation.
Shops and malls? The retail sector’s churn of department store bankruptcies and landlord-renter leniencies agrees with you. You can count cinemas in there too. Travel agencies? Those still existed pre-pandemic?!
It’s the end of June, and airlines have kept playing the touch-and-go game with bankruptcy. Can’t go bankrupt if you sell the Feds your debt, suckers!
It’s funny you mention those investment banks with derivatives exposure… I mean, we should’ve expected the ol’ regulation rollback at some point. If you can’t win … change the rules so you can, right?
Oh man, now I might be feeling the feel-good feelings leave me. Let’s feel out what’s next:
Sappiness Switched Off
You asked for my response, so here it comes.
When I pay significant amounts of money for advice on trading opportunities, I expect significant amounts of advice on trading opportunities. That is not a difficult concept to understand, is it?
With all the meaningless chatter aimed at the 25 to 35 crowd, I feel my time is being wasted slogging through the useless gibberish contained in your newsletter while I am trying to find anything significant.
As a former owner of several businesses in my career, I always emphasized the “under promise and over deliver” principal as a key to customer satisfaction and resulting business profitability. You seem to be promoting the “over promise and under deliver” side of things in what must be your attempt to make your writing “interesting” to the readers.
My limited time for fun reading must take a back seat to tracing down real timely advice — for which I am paying significantly.
— Richard H.
Richard, Richard … Richard. (Can I call you Dick? No?)
Richard, it’s worse than I feared. You need Great Stuff’s research more than you realize. Why?
Because Great Stuff is a FREE newsletter. A FREE newsletter that, as of last Thursday, sits on three triple-digit winners … and an average total gain of 31.83% since we kicked off this meme fest.
A FREE newsletter with triple-digit winners? How’s that for under promising and over delivering? As a former owner of several businesses, I’m sure you can appreciate the appeal of getting something for nothing. The “interesting” writing is just a bonus. If I don’t amuse you, fair enough. I’m not everyone’s cup of tea.
Getting serious, it sounds like you are a Banyan Hill subscriber. I completely understand paying for something and then getting me on the regular. Complete bummer, right?
If you’re indeed having trouble getting emails, correspondence or trade alerts from your paid service, please contact Banyan Hill customer service.
You can make a toll-free call to 866-584-4096. Or, if talking on the phone fills you with anxiety and heebie-jeebies, click here to send a message.
Great Stuff: Did You Miss Out?
Whoa there, buddy. Did you miss your chance to make it into this week’s edition of Reader Feedback? Never fear! Every week is another shot at Greatness. So why not write to us today? We’d love to feature your email in next week’s issue. It’s not all trolling and snark, I promise.
Until next time, be Great!
Editor, Great Stuff