Crypto Bank Silvergate Asked by US Senators to Explain FTX Ties (Where Were The Regulators??)

Always behind the curve, US Senators (Warren, Marshall, Kennedy) want to get to the bottom of Silvergate’s decline and its relationship with Sam Bankman-Fried and FTX. This reminds me of the 2008 financial crisis when The Federal Reserve claimed they never saw it coming. Despite the data.

But back to crypto bank Silvergate.

Crypto bank Silvergate Capital Corp. was asked by three US Senators to release all records about transfers of funds for the collapsed FTX empire of Sam Bankman-Fried. 

“Your bank’s involvement in the transfer of FTX customer funds to Alameda reveals what appears to be an egregious failure of your bank’s responsibility to monitor for and report suspicious financial activity carried out by its clients,” Senators Elizabeth Warren, Roger Marshall and John Kennedy wrote in a letter released Tuesday. “The public is owed a full accounting of the financial activities that may have led to the loss of billions in customer assets, and any role that Silvergate may have played in these losses.”

Shares of the La Jolla, California-based bank fell as much as 8%. The slide extends Silvergate’s losses on the year to more than 84% and has it trading at a fresh 52-week low. Not surprisingly, Silvergates’ stock price is closely linked to cryptocurrency Bitcoin.

The letter cite concerns about the banking services that Silvergate provided to both FTX as well as Bankman-Fried’s trading firm, Alameda Research. It says the arrangement between FTX and Alameda depended on Silvergate’s depository services and puts the bank “at the center of the improper transmission of FTX customer funds.”

“Silvergate’s failure to take adequate notice of this scheme suggests that it may have failed to implement or maintain an effective anti-money laundering program, as required under the Bank Secrecy Act,” the Senators said.

Perhaps Silvergate should be renamed Silverfish. But seriously, no US Senator or DC regulator saw the following chart?? Bitcoin and other cryptos have been clobbered in 2022 as The Fed tightens monetary policy to combat inflation.

Here is our regulator, SEC’s Gary Genslar, keeping an eye on cryto exchanges like FTX.

Maybe US Senators and DC regulators thought Silvergate is a silverfish.

Fed Dead Redemption! US Treasury 10Y Yield Up 10 BPS As US Debt And Unfunded Liabilities Hits $204 TRILLION (50 BPS Rate Hike Expected At Fed’s 12/14 Meeting)

The start of a new week and the US Treasury 10-year yield is up 10 basis points, always a noteworthy change. And with it, the 30-year mortgage rate should climb.

Meanwhile, the political elite party in Washington DC as the US National Debt hit $31.4 TRILLION and unfunded liabilities (the amount that the political elites promised Americans) hit $173 TRILLION for a grand total of … $204 TRILLION.

Since Biden/Pelosi/Schumer are in a lame duck session with Republicans taking the House in January, let’s see if Republicans can halt the insanity in Washington DC.

Be that as it may, Fed Funds Futures are pointing at a 50 basis point rate hike at the December 14th FOMC meeting.

Seriously, how is The Federal Reserve going to cope with $204 TRILLION … and growing Federal debt AND unfunded liabilities?

Strange Days! Fed Remittances Due To Treasury Skyrockets As Fed Tightens, Strategic Petroleum Reserve Crashing As M2 Money Growth Dies

We are truly living in Strange Days under Joe Biden. And with Elon Musk’s release of Twitter’s suppression of the Hunter Biden laptop scandal, they call Joe Biden the Sleaze.

As The Federal Reserve tries to crush Bidenflation, we are seeing Fed Remittances to the US Treasury soaring (white line). At the same time, we see the Biden Administration draining the Strategic Petroleum Reserve (orange dashed line). And as The Fed tightens, M2 Money growth crashes (green line).

And with tech layoffs, I predict that 2023 job growth will be pretty bad.

As I have discussed before, I am a fan of ADP’s job reports and not a fan of the BLS NFP reports. As M2 Money growth slows, we can see declining ADP jobs added (yellow line), but BLS’s NFP report shows huge spikes.

Lastly, we have Sam Bankman-Fried and FTX. SBF should be in custody for being involved in one of the biggest fraud cases in history, but like Hunter Biden, is roaming free and trying to raise MORE funds. Why are these lapses in justice occuring with “10% for The Big Guy” Biden?

Corruption in Washington DC?

Recession Alert! ISM Prices Paid Crashes To Covid Shutdown Levels As Fed Tightens

Warning! Evidence of a US recession is appearing. And with a recession, prices will likely fall due to lack of demand.

Why might inflation be falling? Take a gander at ISM Prices Paid. They just fell to the lowest level since the infamous Covid economic shutdowns of 2020.

M2 Money growth YoY is the lowest in years, but The Fed’s balance sheet remains elevated. But apparently the Covid-related sugar rush has ended.

104 Days Later! US 10Y-2Y Yield Curve Remains Inverted For 104 Staight Days, Mortgage Rate Falls As Fed Tightens (Ethereum Rises > 4%)

Yes, The US Treasury 10Y-2Y yield curve remains inverted, for the 104th straight day. And Bankrate’s 30-year mortgage rate has dropped -57 basis points since November 3, 2022.

This comes after a gruesome Pending Home Sales and mortgage applications reports today.

At least Ethereum is up over 4% today!

Bad Sign! What Interest Rates Are Telling Us (US 10Y-2Y Curve Inverts To -80 Basis Points, Euro 10Y Yields Falling, Fed Funds Rate Priced At 2.301% By January 2024)

What interest rates are telling us is a bad sign.

With an impending railroad strike that can torpedo the US economy (but if that is possible, why is the Biden Clan vacationing in Nantucket for Thanksgiving weekend when Joe should be talking with railroads and the unions to not let this happen?), let’s see what interest rates are telling us.

First, the US Treasury 10Y-2Y yield curve continues to descrend into the abyss (now at -80 basis points).

Second, the latest Fed Dot Plot (from September, new one will be issued during December) show that The Fed thinks that their target rate, while rising in 2023, will likely start falling again in 2024.

Third, since it is Thanksgiving Day, US bond markets are closed. But in Europe, the 10-year sovereign yields are falling, a sign that the ECB is reversing course by increasing monetary stimulus and/or a European are slow down.

Fourth, US mortgage rates have cooled since peaking (locally) at 7.35% on November 3, 2022 and now sit at 6.81%, a decline of 54 basis points. A clear sign of cooling.

Fifth, how about Fed Funds Futures data? It is pointing to a peak Fed Funds Target rate of 4.593% at the June FOMC meeting. Then a decline in rates to 2.301% by January 2024.

Now, go and enjoy your Thanksgiving dinner with friends and family (up 20% since last year), courtesy of Jerome Powell, Joe Biden, Nancy Pelosi and Chuck Schumer.

98 Shades Of Gray! US Treasury 10Y-2Y Yield Curve Inverts To -73.5 BPS, Worst Since 1981 (98 Straight Days Of Inversion)

The Biden Administration is setting all sorts of records. One is the worst inflation rate in 40 years. Another is highest gasoline prices in history (until the latest global slowdown). The list goes on, but here is another one: the US Treasury 10Y-2Y yield curve is now at -72.5 basis points, the more inverted curve since 1981.

This is the US Treasury version of 50 Shades Of Grey.

Drivers To See Highest Thanksgiving Gasoline Prices Ever While Diesel-To-Gasoline Spread Soars (Food Prices UP 49% Under Biden, Diesel Prices UP 102%)

As Americans prepare to hit the road for Thanksgiving, average gas prices will be at their highest seasonal level ever, according to GasBuddy.

GasBuddy says the national average is projected to stand at $3.68 on Thanksgiving Day. This is nearly 30¢ higher than last year, and over 20¢ higher than the previous record of $3.44 set in 2012.

And diesel prices, the life blood of the shipping industry, relative to gasoline prices, are soaring. Highest since 2004.

As we approach Thanksgiving Day, it is important to be thankful … that things aren’t even worse under Billions Biden. US CRB foodstuffs are up 49% under Biden while diesel fuel is up 102%.

Now, gasoline prices fell recently as WTI crude prices slipped on slowing demand. And as stimulus wears out.

And its now only food.

Have a holly jolly Thanksgiving!!

My Thanksgiving dinner, because of the cost, will be a Jersey Mike’s turkey and provolone sub (mini). Or this canned dinner.

The Thrill Is Gone … From Cryptos? Bitcoin Resumes Downward Trend As Fed Tightens To Fight Inflation

The Thrill Is Gone … from cryptocurrencies.

The cryptocurrency market is getting hammered thanks mostly to two things: 1) Sam Bankman-Fried’s horrid failure with FTX (fraud, Enron, front-running, stupid investors, Democrat-Ukraine connection) and 2) Fed tightening to combat high inflation.

Bitcoin, the Mac Daddy of cryptos, is down another 2% today.

The rest of the story.

The NEW face of the US Federal government and why they will sweep the Bankman-Fried fiasco under the rug, just like Hunter Biden’s laptop fiasco.

Buying Typical US Home Now Requires Income of Over $100,000, Up 46% YoY (19 Straight Months Of Negative REAL Wage Growth Isn’t Helping)

Redfin had an interesting post where they showed that the “typical” US home now requires income of over $100,000.

Of course, it is easy to blame the figure on rapidly rising mortgage rates and Federal Reserve tightening.

But the rest of the story (as Paul Harvey used to say) is that US REAL wage growth has been NEGATIVE for 19 straight months. This alone makes housing unaffordable for the middle class and low wage workers.

Good day!

Again, why are Biden and Trudeau wearing Mao jackets in Bali? And why is Biden looking like a robot?? Biden does look like he is saying “Take me to my leader, Pei.”