Silicon Valley Bank, where a large percentage of Silicon Valley companies bank by taking out loans, transferring payroll funds, utility bills funds and utilizing credit card services today was shut down by regulators.
Basically, because of a bank run.
Well, this is serious, in my humble opinion.
Other local California banks' stocks prices are down 20 % to 30 %.
Silicon Valley bank has approximately 209 billion USD in assets. A very large notional number, even by US standards.
The technology sector boomed since 2013.
All the large money center banks like JPMorgan, Morgan Stanley, Citigroup, Bank of America, Goldman Sachs, Wells Fargo are moderately exposed to large technology companies like Apple, Microsoft, Meta, Alphabet and Amazon, etc.
Moderate is the exposure, however, only as a percentage of the US largest banks' assets or credit portfolios, but not in notional terms. I guess US Wall Street and Main Street Banks' exposure towards to the technology sector runs into trillions of USD.
If the Federal Reserve and US banking regulators do not act decisively and restore confidence quickly, I actually fear there could be a funds, credit crunch and Wall Street and the USA could relive something very close to the Lehman Brothers moment crisis and the global economy also, along with the USA.
Actually, Silicon Valley Bank could be the last shot, before a full-blown global financial crisis erupts, as Bear Stearns was, before a Lehman Brothers moment.
I personally think in this environment gold, silver and gold, silver companies' stocks are undervalued in the mid-term and also small, deep tech and future technology companies, which are developing moonshot technology are undervalued in the midterm, due to their idiosyncratic product nature, be it with a high volatility.
If a full-blown crisis erupts, I expect the EUR/USD exchange rate to break through 0.80.
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