The Deep Woods: The Trouble with Bank Tribbles

You are receiving this email because you signed up to receive our free e-letter The Deep Woods, or you purchased a product or service from its publisher, Eagle Financial Publications. [The Deep Woods] [Successful Investing]( [I]([ntelligence Report]( [Bullseye Stock Trader]( [About Jim]( In This Issue: • The Trouble with Bank Tribbles • ETF Talk: Getting the Most ‘Bank’ for Your Buck with This ETF • Make Every Day Someone’s Birthday • Spock Wisdom The Trouble with Bank Tribbles by Jim Woods Editor, [Successful Investing](, [Intelligence Report]( & [Bullseye Stock Trader]( 03/29/2023 Sponsored Content [Silicon Valley Bank Collapse: Steps You Must Take To Protect Yourself]( This is the 2nd largest bank failure in United States history... and the most massive bank failure since Washington Mutual. That should send chills down your spine because Washington Mutual was the first domino to fall in the2008 financial meltdown. We could be staring down the barrel of the next collapse right now. [Discover how]( The Trouble with Bank Tribbles Fans of the Sci-Fi classic “Star Trek” no doubt know about “[The Trouble with Tribbles](.” That was the title of one of the most memorable episodes from the original TV series, an episode that first aired on Dec. 29, 1967 (for all you Trekkies out there). The episode also happens to be my favorite, and for two reasons. First, it featured cute, fluffy and purring creatures called “tribbles,” which resembled the teddy bear hamsters I raised as a kid. The second reason it’s my favorite is because it warns us that “trouble,” left unchecked, has a way of multiplying exponentially. That’s what happened with the tribbles, as the trouble they caused was their rapid reproduction and their near takeover of the USS Enterprise. Sure, a few are cute, at first, but when they multiply and then eat up all of the ship’s food, well, that’s a big problem. This episode reminded me of another “trouble” of sorts, only this trouble is far from science fiction. Unfortunately, this trouble is fact, and it might just be trouble that’s far bigger than we suspect. In fact, the trouble with banks and the recent bank failures is that they could be about to multiply just like those adorable tribbles! In today’s issue of my daily market briefing, [Eagle Eye Opener](, my “secret market insider” provided a detailed look of what he calls, “the true indicator of banking stress.” Let’s check that out now, as the following excerpt will explain to you why the trouble with banks might not be over just yet. More importantly, you’ll discover the one indicator I’m watching to make sure I know if this situation is going to multiply like tribbles… Determining whether the regional bank crisis is over is the most important near-term issue for markets right now. And while analysts in the financial media often give opposite opinions, luckily, we have a resource that tells us whether the crisis is getting worse or better, and so far, it’s getting worse. There are currently two loan programs from the Fed that are specifically designed to help regional banks that are experiencing liquidity issues. The first is the Fed discount window, where banks can pledge U.S. Treasuries to access liquidity. It’s been around for a long time, although it’s likely very few people have paid attention to it since the beginning of the great financial crisis (when all of us were paying attention to it!). The second program is new, the Bank Term Funding Program, which the Fed just created to alleviate the liquidity issues that brought down SVB and SBNY. Think of these two programs as “bridge loans” the Fed extends to banks which need cash. These are ­­not facilities that banks use regularly, and just like a company (or person) needs a bridge loan to “stay afloat,” there’s a stigma in the banking industry attached to using these facilities. Put simply, if a bank is using them, it’s a sign it is in trouble, which can make the problem substantially worse. Here’s why this matters. The usage amounts of these two facilities are updated every Thursday after the close. We literally can see how many banks are using both the discount window and the BTFP, and just like any emergency loan program, the higher the usage, the worse the problem. - Since the start of March, the usage of the Fed’s discount window has spiked from about $4 billion (prior to the crisis) to $110 billion. - Since the creation of the BTFP, use has surged from $0 (because it didn’t exist) to $12 billion two weeks ago, to $53 billion last week! So, between the two programs, the Fed has had to lend $160 billion in quasi-emergency loans to banks since the beginning of March. As the chart here shows, that dwarfs what was needed during the pandemic, and equals what was needed during the great financial crisis! As the old adage goes, “Put your money where your mouth is.” So far, banks’ money and their mouths are telling us that the regional bank crisis is not over, and if anything, may be getting worse under the surface. Now, that does not mean that stocks are going to automatically fall based on this data. These Fed “bridge loans” are designed to prevent bank runs, and so far, they are working. But the fact that more is needed each week implies that stress is very much in the marketplace, and as such, I think that should directly push back on the idea that, while there have been no more bank failures since SBNY, we are not out of the woods yet! Looking forward, we will be watching this weekly release, and the analysis here is simple: The bigger these numbers get, the worse the stress (even though it may not seem that way on the surface). That isn’t a reason to dump stocks or withdraw money from a bank, but it is a reason to resist the urge to think that the crisis has totally passed. As long as these borrowing numbers are rising, it has not. Conversely, if these numbers drop, that’s a sign that stress is legitimately easing, and it will mean the lower probability of a looming bank-inspired “air pocket” in stocks. For insights like this delivered to your inbox every trading day by 8 a.m., then you must check out my [Eagle Eye Opener](, right now. [The Hottest EV Investment of 2023]( Last year, electric cars made up just 2% of U.S. sales. By 2025, EV sales are expected to rise to as much as 20% of the pie... and as much as 50% by 2030. So which stock stands to make the biggest bang for the buck? One company has already led investors to an incredible 1,450% gain – inside just 12 months. And, according to recent World #1 Stock Picker Jim Woods, it's about to embark on another epic run. [Click here now]( to get ahead of the story, and ahead of the herd. ETF Talk: Getting the Most ‘Bank’ for Your Buck with This ETF For investors looking to get the most “bank” for their buck, one such banking exchange-traded fund (ETF) may be an interesting play. While banking sector stocks have sunk to depths not seen since the 2008 financial crisis, it has been abundantly clear that the Fed is willing to move mountains to resolve this problem… for better or worse. Moreover, while it cannot be negated that the sector- and industry-related ETFs lost a good chunk of their sparkle, there is still a glimmer of hope here: market volatility. With such price dips, this may be the time to get in on a sector sure to recover. So, for bargain-loving investors, the Invesco KBW Bank ETF (KBWB) could hold some interest. Created in 2011, KBWB is based on the KBW Nasdaq Bank Index, and the fund generally invests at least 90% of its total assets in the securities that comprise the Index. KBWB provides investors with good exposure to the overarching U.S. banking market. Its portfolio is made up of national money center banks, regional banks and thrift institutions. Given the fund’s narrow exposure to the banking sector, it may be of more interest to investors looking for a more short-term play, but as it holds both large- and small-cap stocks, both with significant weight, it can also be complimentary as a long-term play, as well. However, investors should note that the fund has only 25 holdings and dedicates a decent chunk of its total assets to the top five, which does add a bit of company-specific risk. KBWB’s top five holdings include JPMorgan Chase & Co. (JPM), 9.50%; Citigroup Inc. (C), 9.42%; Bank of America Corp. (BAC), 8.66%; Wells Fargo & Co. (WFC), 8.40% and U.S. Bancorp. (USB), 7.87%. Courtesy of [stockcharts.com](. Now, while the chart above shows an unavoidable plummet, that should be of no surprise for any bank-related stock or ETF at this time. However, for the bargain-savvy and brave, it is wise to look at this ETF’s past strength, which was rather impressive, until the fatal March blow. KBWB’s 200-day moving average was as steady as could be, and while its 50-day moving average saw a small decline, it simply went from its peak to slightly less than its peak. Now, looking at the light at the end of a perhaps very long tunnel, KBWB is already starting its recovery journey, seeing a recovery in share price already, and the month isn’t even over. Further, KBW Bank has strong fundamentals, with over $2 billion in net assets and $1.29 billion in assets under management. It even rewards investors with a dividend yield of 3.80% and paid $1.57 per share in the past year. The dividend is paid every three months and its most recent ex-dividend date was March 20. So, KBWB may scratch the itch for investors looking to get the most “bank” for their buck. With strong fundamentals, large- and small-cap stocks and a rewarding dividend, the current banking sector volatility may be the time to expand into this corner of the market at a deep discount. However, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals. And, yes, there will always be the naysayers, but as Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful." As always, I am happy to answer any of your questions about ETFs, so do not hesitate to [send me an email](mailto:askjim@successfuletfinvesting.com). You just may see your question answered in a future ETF Talk. [Join Jim Woods at the Las Vegas MoneyShow on April 24-26, 2023]( Join financial expert Jim Woods live at the [Las Vegas MoneyShow]( from April 24-26, 2023. Woods will have two discussions on “Be Quick or Be Dead: How to Use High Velocity Options to Capture Alpha” and “Always Know When to Sell Your Stocks and ETFs”. [Click here now to reserve your spot!]( In case you missed it… Make Every Day Someone’s Birthday Today, March 22, is my mother’s birthday. And as fate would have it, she is a spry and spunky 86-year-old with a penchant for literature, current events and cats. Now, if you know me, you know the idiom “the apple doesn’t fall far from the tree” applies here, as I also have a fondness for literature, current events and cats (thanks, momma). If I am lucky, and if I make smart life decisions, perhaps fate will smile upon me as well, and grant me a spry and spunky 86 years and counting. Interestingly, this celebratory occasion got me thinking about one aspect of life that, if I could, I would love to change. You see, why do we just celebrate someone’s existence on the anniversary of their birth? Why don’t we choose to live every day as if it was that person’s birthday? Of course, I realize that if every day was cause for a birthday celebration then the unique occasion would inevitably blend into the norm, and that the meaning and special nature of the day would be lost. Yet, what if we can use the feelings of goodwill and love and the celebratory mood of the birthday occasion as a sort of meme that can re-orient our disposition toward others every day? Think about how you feel when you give someone a birthday gift, and when they smile back at you with gratitude, warmth and affection. That’s just about the best feeling one can have, and the best thing about that feeling is it’s open to all of us right this moment, if we choose it. To prove this point, I challenge you to do a little experiment. Pause for a moment, close your eyes and try to recall a time when you gave someone a birthday present, and they looked back at you with eyes that involuntarily divulged profound happiness. Now look within yourself at how you feel right now, this moment. I suspect you’ve already felt a wave of happiness wash over your spirit (see, I told you I could prove it to you). The next step is to take that feeling you have and harness it toward the people that matter most to you, and not just in theory, but right this moment. Here, I challenge you to do another little experiment. Think of someone that matters to you (husband, wife, boyfriend, girlfriend, child, grandchild, co-worker, friend, neighbor, etc.). Now pretend that it’s their birthday, and that you are going to greet them with a “happy birthday” disposition. I suspect negative thoughts such as anger, fear, jealousy, envy, etc. are not part of that happy birthday disposition. Rather, I suspect that positive thoughts such as gratitude, joy, delight and pleasure now animate your spirit. Now, take that duly animated spirit and contact one of those people right now and wish them a great day. Heck, why not even wish them an early happy birthday? I mean, even if their birthday just passed, there will likely be another one in no more than 364 days. So, today, I challenge you to channel that positive disposition that comes with celebratory well wishes and go out and make every day someone’s birthday. And if today is that special someone’s birthday, as today is my mother’s birthday, then make sure you treat that person with the love and kindness they deserve. Because in addition to making them feel great, you will make yourself feel equally great — and that’s a present you can give yourself any moment you want. ***************************************************************** Spock Wisdom “Insufficient facts always invite danger.” --Spock “Spock” is a veritable fountainhead of wisdom in the "Star Trek" series, as his logical mind cuts through issues with a razor sharper than [William of Ockham]( could ever hone. Yet, what makes Spock’s character so wise is that he is part Vulcan and part human. And while his Vulcan logic leads, his human nature provides him with the requisite emotions that make being human the greatest gift the universe can ever bestow. Remember this the next time your laments engulf you. Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. [Click here](mailto:askjim@successfuletfinvesting.com) to ask Jim. In the name of the best within us, [Jim Woods] Jim Woods Editor, Successful Investing & Intelligence Report About Jim Woods: [Jim Woods]Jim Woods has more than 25 years experience in the markets, as a stock broker, hedge fund money manager, author, speaker and independent analyst. Today Jim serves as editor and investment director of the long-running newsletters [Successful Investing](, the [Intelligence Report](, [Bullseye Stock Trader]( and a new Live Coaching service offered exclusively to his readers. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, and many others. 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