If you cheat, money will follow

Chapter 656 The Fourth Meltdown

Jiangzhou, Leda Investment.

Chang Le asked Gu Jiahui: "Lao Gu, are you ready?"

Gu Jiahui nodded: "Boss, everything is ready, just waiting for you to give the order."

Chang Le said: "Don't be too excited. Arrange for employees to rest during the day and prepare for battle at night."

"Boss, I've driven them home."

…………

North American time, March 3, 13:9 am.

The Treasury Department, the Federal Reserve Board, and the Federal Deposit Insurance Corporation (FDIC) jointly held a press conference.

At the press conference, the three institutions jointly announced that they would intervene in the failure of Silicon Valley Bank and jointly implement the Bank Term Financing Plan (BTFP).

At almost the same time, the Sleeping King gave a public live broadcast speech from the White House for more than four minutes.

Sleep King said: "Thanks to all government departments for their quick actions in the past few days, our people can have confidence in the security of the banking system..."

"Small businesses with deposits at Silicon Valley Bank and Signature Bank can also breathe a sigh of relief because they will be able to pay their employees and pay their bills."

"All depositors with deposits at both banks can rest assured that they are protected and will be able to access their deposits from today."

"Taxpayers don't have to worry, they will not bear any losses and the funds will come from fees paid by banks to the Deposit Insurance Fund."

"Investors will have no protection and when venture capital investment does not return, the money invested is lost, which is how capitalism works."

"These two banks will be taken over by the FDIC, the management will be fired, and they should no longer be working there."

"How did these banks get into this situation? We must fully understand what happened and hold those responsible accountable."

After the Sleeping King finished speaking, he was about to accept the cheers, but his assistant told him bad news: the US stock market had melted down.

Sleeping King almost fainted: "..."

This is the fourth circuit breaker since he took office as president.

It’s one more time than someone who understands the king.

"WHY? We have taken decisive measures to protect all those who should be protected." Sleeping King was very surprised.

"Mr. President, Mr. Powell just faced reporters' questions about interest rate hikes at the press conference. He did not answer decisively and had some hesitation. This gave the outside world room for imagination..." the assistant explained.

"Interest rate hike?" Sleeping King asked.

"Yes, the market interpreted Powell's hesitation as a rate hike." The aide nodded.

"Is he crazy? Does he want the banking system to collapse?" Sleeping King was very surprised, surprised at why the other party was so stubborn and didn't even want to perform.

Here's the thing.

At press conferences held by the Federal Reserve, the Treasury Department, and the Federal Deposit Insurance Corporation, Powell was frequently asked by reporters about raising interest rates.

Many people, including reporters, want to know what the Fed’s next interest rate policy will be.

Powell hesitated and said politely: "We are studying the possibility of suspending interest rate hikes."

However, he added: "The problem of high inflation is very stubborn, the labor market continues to strengthen, and our primary goal is to curb inflation. People should not doubt this."

This sentence seemed like a nuclear bomb blasting into the stock market.

Powell's words were spoken at 9:35. By 9:36, the three major U.S. stock indexes changed their trend of opening higher and took a vertical dive, all the way down.

Four minutes after Powell's words, the S&P index plunged 4 points, a drop of more than 269%, reaching 7%, triggering the first-level circuit breaker.

Brief suspension.

After the resumption of trading, market panic eased, and the decline narrowed and rebounded slightly.

At the close of trading, the S&P index closed down 6.5%;

The Dow Jones Industrial Average fell 8.6%;

The Nasdaq fell 7.9%.

As of the close, the U.S. banking sector plummeted across the board.

Citibank fell 6.12%;

Bank of America fell 6.57%;

JPMorgan Chase fell 5.62%;

Wells Fargo fell 6.70%;

Goldman Sachs fell 4.06%;

Morgan Stanley fell 5.86%;

......

First Republic Bank, a regional bank with the same customer base and similar business model as Silicon Valley Bank, was severely affected, with its stock price plummeting 31.34%.

The Chicago Board Options Exchange's VIX Fear Index, which measures market panic, rose 30%.

This is the highest level of the panic index in recent years.

Why did the market react so violently?

Chang Le spread his hands: It has nothing to do with me.

Analysts at financial institution Oanda (an Internet currency trading company) said:

"The Fed's desire to raise interest rates is very strong, and more regional banks will face difficulties, which makes investors uneasy about risks in the banking system."

The director of stock trading at WedBush Securities Inc. believes:

"The concerns caused by Silicon Valley Bank are spreading to the entire market. If you link the interest rate hike with the collapse of Silicon Valley Bank, it can easily trigger concerns about the entire market."

“In the face of uncertain expectations, investors’ response is to reduce or clear their positions.”

"What is certain is that the market is going to be very unstable for some time to come."

Analysts at JPMorgan Chase believe: "There are obvious loopholes in this system, and people are worried that if the Fed raises interest rates by 50 basis points next time, it will destroy something (trust) in the banking system."

"That's why bank stocks are selling off, and then the crisis may spread, but you don't know which bank it is."

It’s not a bad thing if Silicon Valley banks go bankrupt and the market melts down.

At least the "smart money" on Wall Street saw business opportunities and flocked to it.

They are shorting the S&P Regional Bank ETF like crazy.

And caused the ETF to fall 15% in just three days, thus reaping huge profits.

In addition, technology stocks were also shorted.

The reason is simple. The failure of Silicon Valley Bank is essentially a financial risk related to banks.

However, the bank is closely related to the technology innovation industry and has supported many technology start-ups.

Therefore, on this trading day, many technology stocks such as Fruit, Microsoft, Google, Amazon, Nvidia, Meta, Tesla... all fell by more than 5%.

In one trading day, the total market value of these companies evaporated by US$100 million.

In view of this, that night, the Sleeping King urgently convened relevant departments and agencies, especially the Federal Reserve Board, for a meeting to study.

In the conference room, the Sleeping King, who was in the middle position, looked livid, with blue veins popping out under his old, pale skin.

It fully shows the level of anger in his heart at this moment.

Anger, on the one hand, comes from the fact that he broke the record of understanding the king;

On the other hand, the king of understanding stood up and ridiculed wantonly.