Financial Californication

The stock market has opened, but SVB Financial is still halted for news. It was off more than 40 per cent pre-market, with CNBC reporting that it’s looking for a buyer after its attempts to raise capital failed.

That indicated open would have left the shares down 80 per cent over the past week. (Chart below doesn’t include pre-market trading Friday.)

A handful of other regional West Coast bank stocks have been especially volatility this morning as well: First Republic, PacWest Bancorp, and Western Alliance Bancorp have all hit multiple trading brakes because of volatility limits. Crypto-friendly Signature Bank (based in NYC) has been halted a couple of times too, off 25 per cent at pixel. Even Charles Schwab is getting hit, which is still very confusing.

In other words, we’ve got a good old-fashioned bank run on our hands. It’s complete with irrationally directed investor panic and journalists tweeting photos of lines outside of SVB bank branches (no word on how many are hedge-fund research analysts).

Given the reports of venture-capital firms telling portfolio companies to diversify their exposure to banks, these rationalists and LessWrong forum participants seem at least as susceptible to bank runs as the normies.

All of this makes it tough to tell whether this 311k jobs print, which beat expectations, was seen as good, bad, too strong to be good for markets, or something else entirely.

The CME’s tool shows that investors have basically erased any chance of 6-per-cent rates by the end of the year, though.

It isn’t yet clear whether that’s because of encouraging data underpinning the jobs report, or because investors think the Fed is going to relent before letting any other banks take hits for unrealised losses on bond portfolios.