The pros and cons of a CD: how to know if a certificate of deposit is the right investment for you

Yahoo! Finance: Top Stories / 2023-03-28 20:07



Mapping out plans to build your savings can be challenging, especially when interest rates fluctuate. A certificate of deposit (CD) is a good alternative if you're risk-averse when investing.

A CD is a type of savings account that allows people to earn interest at a fixed rate that's often higher than what's available with traditional savings accounts. However, CDs can also have some downsides given their nature of holding funds for a set term. Here are a few important things to consider to help you decide if a CD is right for you.

How does a certificate of deposit work?
A CD has an interest rate that will not change nor the time your money is locked in for. So after the term of the CD you choose ends, you'll have access to the deposited funds and interest earned on it.

Brad Stark, certified financial planner and co-founder of Mission Wealth, a wealth management firm in Santa Barbara, CA, says you can purchase CDs in brokerage accounts to help with simplicity. Many brokerage firms have relationships with different banks, allowing people to diversify their investments without opening multiple accounts.

By buying CDs, Stark explains, people are essentially making a promise with a bank. That promise is providing funds to an institution in exchange for being paid back with interest later.

"It's a loan you're making to the bank for a set period of time," Stark says.

Pros of certificates of deposit
Aside from a strong fixed interest rate, there are even more reasons that make CDs appealing, from the low level of risk associated with them to the options that can fit someone's ideal savings plan.

Higher APY than other types of savings accounts
While it's true that the APY will likely be higher than a traditional savings account, it's important to consider the timing of when the CD will be opened. If it's done when savings rates are on the lower end, it doesn't rack in as much growth as it could have if it'd been done at a time when savings rates are high.

And another factor you'll want to pay close attention to when you shop around for CDs is considering the interest rate in relation to the timeframe of the CD. "As you commit your money to longer periods of time to lock it up, you should be compensated with higher interest," Stark says.

Your money is secured
A CD comes with coverage from either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), a major draw for people who want the peace of mind that their money is safe even if a bank fails as some did during the 2008 recession. Banks typically insure up to $250,000 per ownership category.

Flexible account options and wide selection of terms
There's plenty of room to find a CD that matches people's varying savings plans and the time they're hoping to reach them. Whether it's saving for just a few months to boost an emergency savings stash or collecting extra cash years before starting a family, CDs offer an option to fit those needs.

On top of being able to choose a CD that matures anywhere from three or six months to five years, the rates to choose from will also have differences. As of March 23, 2023, the average rate for a one-year CD is 1.49%.

CD laddering
One method to consider is placing money in multiple CDs rather than one. This approach of layering CDs can help maximize your savings and get the funds placed in them returned at a steady pace. Scott Van Den Berg, a certified financial planner at Century Management, a financial advisory firm in Austin, TX, says building out a portfolio of CDs can have major benefits.

For one, it helps CD users deal with instances in which an unforeseen expense arises, and they need access to their savings. With laddering, some risk associated with not having immediate access to the funds is mitigated since the maturation date for the funds could be just around the corner. One way to approach it is by getting a CD that matures in six months, one in a year, and another in 18 months.

"That at least gets you that money back and you can then just reinvest it," Van Den Berg says.

Cons of certificates of deposit
To an extent, CDs can be a way of playing it safe. And in doing so, there's an opportunity cost that comes with not pursuing other savings options that could have resulted in more money or drawn in money more quickly. This is particularly important to consider if you haven't reached retirement age.

"If you're 85 or 90 years old, you want all your money to be safe and your time horizon is really short, you could put CDs in an IRA," Stark says. "If you're 40 years old, and you have an IRA and CDs in there, what an opportunity [to earn more] you're missing." Plus, the time agreement of a CD can be inconvenient if you can't hold the funds there for the duration of the agreement and are then subjected to early withdrawal fees.

Returns aren't as high as investing in other places like stocks or bonds
Both Stark and Van Den Berg note other areas where it's possible to have stronger investment growth than with a CD.

Stark suggests considering stocks in a diversified portfolio if the time horizon for your financial needs is longer than 10 years.

"While this path is volatile, time tends to heal most short-term investment wounds," Stark says. "Whereas time is the enemy to CD investing."

Inflation isn't factored in with a locked APY
Although CDs might not seem risky at first glance, they can hurt your savings goals in times of inflation. That's because the APY can't be adjusted, Stark explains, so an interest rate that once seemed stellar would no longer keep up with the demands of the moment.

"Inflation really took a toll on you and your interest went from double digits to zero," Stark says. "And in the meantime, prices and everything went higher. So your purchasing power just got decimated."

Taxes owed on accrued interest
Interest earned is always taxed unless it's in a retirement account, so that's a factor to consider when deciding if a CD will provide the desired savings results after accounting for taxes.

It's also not something you can put off. Those earnings must be reported if you've earned $10 or more in interest on a short-term CD that matured the same year you bought it. And if the CD has a life beyond a year, then the person must pay taxes on the interest accrued yearly.

Penalties for accessing funds early
When people sign up for a CD, they agree not to touch the money for a set period. Of course, things happen and sometimes people need the funds they had initially thought could be set aside.

Chances are, the bank won't allow people to pull their funds. In exchange for taking the money back before it has matured, banks will charge a penalty, often calculated as a number of days' simple interest at the rate of the CD. But the federal government has no cap on early withdrawal penalties, so it can vary.

What you need to open a certificate of deposit
Social Security number for U.S. citizens or an individual taxpayer identification number for others.

Date of birth of the account holder. It helps to present documentation such as a birth certificate to prove identity.

A government-issued ID like a driver's license or state identification card.

Proof of address. Think bills or a lease agreement.

Contact information such as a phone or email

Information for the funding account, such as the routing and account number.

Frequently asked questions
Is it worth putting money into a CD?
Experts say that, generally, it can be. At the very least, it's preferred over simply having the money in a checking account or cash under your mattress at home where it can't grow any interest. If you're looking for a low-risk option from a bank you trust, then a CD is better than nothing. It all comes down to making a fully informed decision where you've read the fine print and know the penalties for withdrawing early.

What is better, a CD or IRA?
Since an IRA is a retirement account that can own stocks, bonds, and CDs, it's better to ask if CDs are appropriate to hold in an IRA. And, they can be, depending on your age. That's because CDs aren't the most lucrative long-term move if you still have a ways to go before retirement.

How much does a $10,000 CD make in a year?
It's hard to say with certainty as it depends on the rate of the specific CD. But, as an example, a CD with a 5% APY earns $500 in one year. So if you have a CD with a 12-month term, you would withdraw $10,500 once the CD matures.

This story was originally featured on Fortune.com

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Top 10 Safest Monthly Dividend Stocks Now

por Nikolaos Sismanis

Sure Dividend / 2023-03-28 22:021
Published on March 28th, 2023 by Nikolaos Sismanis

Monthly dividend stocks can be a fruitful investment option for individuals seeking stable income because they provide a predictable and consistent stream of cash flow. Unlike quarterly or annual dividends, monthly dividends allow investors to receive more frequent payments, which can help to cover living expenses or supplement other sources of income. Monthly dividend stocks can also be great for compounding returns, as investors can reinvest the dividends received to grow their wealth over time. Generally speaking, monthly dividend stocks can also help to offset market volatility and support their long-term financial goals.

There are just 86 companies that currently offer a monthly dividend payment. You can see all 86 monthly dividend paying names here.

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter, like dividend yield and payout ratio) by clicking on the link below:

However, not all monthly dividend stocks are created equal, and the safety of a dividend-paying stock is not solely determined by the frequency of its payouts. In fact, there are lots of examples of monthly dividend companies, which in their pursuit to attract investors through monthly payouts, have ended up overdistributing dividends. Consequently, several monthly dividend stocks have had to reduce their dividend payments when their profits take an unforeseen hit. Overall, despite the positive attributes attached to monthly dividend stocks, their risk profile can be elevated as they strive to maintain their frequent payouts.

That's why, in this article, we have cherry-picked the ten monthly dividend stocks from our Sure Analysis Research Database, which we believe rank best in terms of dividend safety based on our Dividend Risk Score rating system. The stocks have been arranged in ascending order based on their Dividend Risk scores, and if there is a tie, their ranking is determined by their payout ratio, with the lowest payout ratio earning a higher place.

Table of Contents
Monthly Dividend Stock #10: STAG Industrial, Inc. (STAG)
Dividend Risk Score: D
Dividend Yield: 4.5%
Payout Ratio: 65%
STAG Industrial is a Real Estate Investment Trust, or REIT. It is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has 562 buildings across 40 states in the United States.

The focus of this REIT on single-tenant properties might create higher risk compared to multi-tenant properties, as the former are either fully occupied or completely vacant. However, STAG Industrial executes a deep quantitative and qualitative analysis of its tenants. As a result, it has incurred credit losses that have been less than 0.1% of its revenues since its IPO. As per the latest data, 52% of the tenants are publicly rated, and 59% of the tenants generate over $1 billion in revenue.


Source: Investor Presentation

Another great quality of STAG Industrial is that the company generally has business ties with established tenants, which helps enhance its risk profile. Simultaneously, the company has limited exposure to any specific tenant. Amazon is the largest tenant, generating 3.0% of annual rent revenue, while the next largest tenant generates only 0.9% of annual rent revenue.

Income-oriented investors are likely to appreciate the stock's 4.5% yield, especially considering the company has never cut its dividend throughout its short history. In fact, it has increased its dividend for 12 consecutive years. Moreover, while rising interest rates are likely to be a headwind to STAG Industrial, being a REIT, it's worth noting that the company's payout ratio has been on the decline for six consecutive years.

Click here to download our most recent Sure Analysis report on STAG (preview of page 1 of 3 shown below):



Monthly Dividend Stock #9: Apple Hospitality REIT, Inc. (APLE)
Dividend Risk Score: D
Dividend Yield: 6.7%
Payout Ratio: 57%
Apple Hospitality REIT is a $3.3 billion hotel REIT that owns a portfolio of 220 hotels with an aggregate of 28,983 rooms located in urban, high-end suburban, and developing markets throughout 37 states. Concentrated on industry-leading brands, the company's portfolio consists of 94 Marriott-branded hotels, 119 Hilton-branded hotels, four Hyatt-branded hotels, and two independent hotels.



Source: Investor Presentation

Apple Hospitality's growth prospects will mostly come from an increase in rents. They were also selling less-profitable properties to acquire more beneficial properties. For example, in 2022, the company sold one hotel, a 55-room independent boutique hotel in Richmond, Virginia, for $8.5 million and acquired two hotels in Kentucky and Pennsylvania for $51 million, and $34 million, respectively.

The company does not have a long dividend history, as it became public in 2015. In 2016, the company did increase its annualized dividend substantially by 50%, from a $0.80 rate to a $1.20 rate. However, in the following years, the dividend stayed at that same rate until 2020, when the COVID-19 pandemic forced the company to cut its dividend and freeze it to a $0.20 rate for the year. In 2021, the company reinitiated the dividend by paying it every quarter instead of every month as it did before. Today, it pays a $0.08 monthly dividend.

Click here to download our most recent Sure Analysis report on APLE (preview of page 1 of 3 shown below):



Monthly Dividend Stock #8: Superior Plus Corp. (SUUIF)
Dividend Risk Score: D
Dividend Yield: 6.7%
Payout Ratio: 54%
Superior Plus Corporation is a relatively small industrial company but one of the larger propane distributors in North America. The company is the dominant distributor in Canada (30% of EBITDA), has significant operations in the U.S. (60% of EBITDA), and is also a propane wholesaler (10% of EBITDA). Superior Plus generates around $3.8 billion in annual revenues and is based in Toronto, Canada.

The company previously had a large Specialty Chemicals segment but sold this business in 2021 as part of a broader restructuring. Superior Plus is reorganizing its business to become a pure-play distribution company.



Source: Investor Presentation

Like many energy companies, Superior Plus was negatively impacted by the coronavirus pandemic and the resultant recession in the United States. As a result, the company incurred a 26% decrease in its earnings per share, from $1.63 in 2019 to $1.21 in 2020.

However, the company has stabilized its performance in recent quarters. In Q4 of 2022, the company generated an adjusted EBITDA of $135.7 million, a $30 million increase compared to the prior-year quarter.

The dividend yield will likely make up most of the returns of Superior Plus going forward, given the lack of share price growth over the last decade. Superior Plus currently distributes a monthly dividend of $0.06 per share in CAD, or C$0.72 per share annualized. In fact, the company has distributed the same dividend for several years in a row. U.S. investors need to keep in mind that the company pays its dividend in Canadian currency, which will have an impact on actual capital received based on the fluctuations in exchange rates. Based on an annualized dividend payout of $0.53 per share, Superior stock has a current dividend yield of 6.7%.

Click here to download our most recent Sure Analysis report on SUUIF (preview of page 1 of 3 shown below):



Monthly Dividend Stock #7: Phillips Edison & Company, Inc. (PECO)
Dividend Risk Score: D
Dividend Yield: 3.6%
Payout Ratio: 50%
Phillips Edison & Company is an experienced owner and operator that is exclusively focused on grocery-anchored neighborhood shopping centers. It is a Real Estate Investment Trust (REIT) that operates a portfolio of 271 wholly-owned properties. The company has a 30-year history, but it began trading publicly only in the summer of 2021. Its management owns 7% of the company, and hence its interests are aligned with those of the shareholders.

Shopping centers are going through a secular decline due to the shift of consumers from brick-and-mortar shopping to online purchases. This shift has accelerated in the last two years due to the coronavirus crisis. However, Phillips Edison is well protected from this trend. It generates 71% of its rental income from retailers that provide necessity-based goods and services and has minimal exposure to distressed retailers.



Source: Investor Presentation

We believe Phillips Edison's 3.6%-yielding monthly dividend be considered rather safe due to the company's robust qualities, its low payout ratio, and solid balance sheet. Specifically, the trust has a payout ratio of 50% and an investment grade balance sheet, with a BBB- credit rating from S&P and a Baa3 rating from Moody's. Moreover, it has well-laddered debt maturities and no material debt maturities for the next two years. Furthermore, 85% of its total debt has a fixed rate, which is paramount in the current environment of rising interest rates.

As a side note, while Phillips Edison has an investment-grade balance sheet, its leverage ratio (Net Debt to EBITDA) currently stands at 5.3. This is above the upper limit of our comfort zone (5.0) and reveals the eagerness of management to invest in the aggressive expansion of the trust. Nevertheless, we believe that a lower leverage ratio is necessary in order to render the REIT more resilient to unexpected downturns.

Click here to download our most recent Sure Analysis report on PECO (preview of page 1 of 3 shown below):



Monthly Dividend Stock #6: Whitestone REIT (WSR)
Dividend Risk Score: D
Dividend Yield: 5.4%
Payout Ratio: 50%
Whitestone is a commercial REIT that acquires, owns, manages, develops, and redevelops properties it believes to be e-commerce resistant in metropolitan areas with high rates of population growth. The REIT currently owns 57 properties with about 5.1 million square feet of gross leasable area.

Its properties are located primarily in the southern United States, in areas with favorable demographics, such as income and economic growth. The trust's properties are located primarily in Phoenix and Houston, with smaller allocations to other major cities in Texas.



Source: Investor Presentation

As a retail REIT, Whitestone was not spared from the coronavirus pandemic of 2020. As a result of the steep economic impact of the pandemic, Whitestone REIT reduced its monthly dividend by 63% in April 2020, from $0.095 to $0.035. The reduction was expected. Whitestone's dividend-per-share was higher than its FFO-per-share every year between 2013 and 2019. A reduction during COVID-19 was both prudent and necessary. As the pandemic has subsided, Whitestone's financial position has improved, which has allowed the company to raise its monthly dividend modestly to $0.04, where it currently stands.

Whitestone's dividend seems secure going forward. We expect Whitestone to maintain a dividend payout ratio of 49% for 2023, based on our projected FFO-per-share of $0.97 for the full year. A dividend payout ratio below 50% is highly unusual for REITs and likely implies a high level of dividend safety. With such a low payout ratio, we believe the dividend is likely to increase from its current low base over the next several years. The stock currently has a 5.4% yield.

Click here to download our most recent Sure Analysis report on WSR (preview of page 1 of 3 shown below):



Monthly Dividend Stock #5: Itaú Unibanco (ITUB)
Dividend Risk Score: D
Dividend Yield: 4.6%
Payout Ratio: 31%
Itaú Unibanco is a very large bank that is headquartered in Brazil. ITUB is a large-cap stock with a market capitalization above $44 billion.

Itaú Unibanco conducts business in more than a dozen countries around the world, but the core of its business is in Brazil. It has significant operations in other Latin American countries and select businesses in Europe and the US.

Its scale is huge in relation to other Latin American banks. Itaú is the largest financial conglomerate in the Southern Hemisphere, the world's 10th–largest bank by market value, and the largest Latin American bank by assets and market capitalization.



Source: Investor Presentation

It's not uncommon for banks like Itaú Unibanco to try to cater to every type of consumer and business, just like major US banks have done by offering a range of services such as deposits, loans, insurance products, equity investing, and more, in order to attract customers. What sets Itaú Unibanco apart is its focus on emerging economies such as Brazil. However, emerging markets have struggled for many years. This is a cause for concern as economic growth is crucial for a bank's expansion, and without it, Itaú Unibanco may face challenges in producing profit expansion.

Regarding its dividend, Itaú Unibanco has a conservative approach. The bank pays out dividends to shareholders based on its projected earnings and losses, with the goal being the ability to continue to pay the dividend under various economic conditions. Along with providing its recent quarterly results, the company also slightly increased its monthly dividend from $0.0033 per share to $0.0034 per share. Still, the yield is quite low at 0.83%. Thus, Itaú Unibanco isn't a pure income stock by any means, as its yield is simply too small to be attractive to most income investors.

Click here to download our most recent Sure Analysis report on ITUB (preview of page 1 of 3 shown below):



Monthly Dividend Stock #4: U.S. Global Investors, Inc. (GROW)
Dividend Risk Score: D
Dividend Yield: 3.5%
Payout Ratio: 24%
U.S. Global Investors began more than 50 years ago as an investment club. Today, it is a publicly-traded registered investment advisor that looks to provide investment opportunities in niche markets around the world. The company provides sector-specific exchange-traded funds and mutual funds, as well as an interest in cryptocurrencies. U.S. Global Investors produced $24.7 million in annual revenue in 2022 and has a market capitalization of just $44 million.

The company is currently experiencing rapid topline growth, which we expect to continue over the next half-decade as its network and brand power continue to improve incrementally. The company is betting heavily on its precious metals, crypto, and airline funds to drive assets under management higher. Furthermore, its economies of scale should drive enhanced profitability, enabling it to grow its dividend as well. Finally, management currently has a share repurchase program underway that could also drive earnings-per-share growth over time.

U.S. Global Investors has an impressive track record of paying monthly dividends for over 14 consecutive years, which is commendable. The current payout of $0.09 per share annually results in a yield of 3.1%, which, on a yield basis, may not be very attractive. However, it is noteworthy that the company has tripled its dividend since the onset of the pandemic.

It is important to mention that the company has a history of cutting its dividend. In the past decade, GROW has reduced its dividend, with the annual dividend per share being as high as $0.24 in 2012.



Source: Koyfin

Given the uncertain outlook for earnings growth, we anticipate that dividend growth may be challenging to achieve in the near future. Nonetheless, the company's strong balance sheet suggests that it can continue paying dividends for a while, especially if it funds them with cash on hand rather than relying solely on earnings.

Click here to download our most recent Sure Analysis report on GROW (preview of page 1 of 3 shown below):



Monthly Dividend Stock #3: Realty Income Corporation (O)
Dividend Risk Score: C
Dividend Yield: 5.0%
Payout Ratio: 79%
Realty Income owns more than 11,000 properties and has a market capitalization in excess of $40 billion. Realty Income focuses on standalone properties rather than ones connected to a mall, for instance. That increases the flexibility of the tenant base and helps the trust diversify its customer base.

The trust has earned a sterling reputation for its dividend growth history. Part of its appeal certainly is not only in its actual payout history but the fact that these payouts are made monthly instead of quarterly. Indeed, Realty Income has declared 633 consecutive monthly dividends, a track record that is unprecedented among monthly dividend stocks. Impressively, the company has increased its dividend more than 120 times since its initial public offering in 1994. Consequently, Realty Income is a member of the Dividend Aristocrats.



Source: Company's IR

We believe the company's dividend growth prospects remain robust, powered by the company's proven recipe for driving accretive growth through its expansion strategy. The trust has a very long history of growing its asset base and its average rent, which have collectively driven its FFO-per-share growth. We don't believe this has changed.

That said, Realty Income's FFO-per-share and dividend growth may modestly slow down in the coming years due to the ongoing increase in interest rates, which affects all REITs. Still, we believe Realty Income's balance is rather healthy, with its credit profile featuring a net-debt-to-EBITDA ratio of 5.3x and a weighted average term to maturity of more than six years.

Click here to download our most recent Sure Analysis report on O (preview of page 1 of 3 shown below):



Monthly Dividend Stock #2: TransAlta Renewables Inc. (TRSWF)
Dividend Risk Score: C
Dividend Yield: 7.8%
Payout Ratio: 68%
TransAlta Renewables, based in Calgary, Alberta, is a renewable energy infrastructure company that holds the title of Canada's largest wind energy producer with a market capitalization of $3.2 billion. They have been involved in renewable power generation for over a century and were spun off from TransAlta in 2013. With a diversified portfolio, TransAlta Renewables has economic interests in several facilities, including wind, hydroelectric, natural gas, solar, natural gas pipelines, and battery storage projects, with an ownership interest of 2,965 megawatts of generating capacity.



Source: Annual Report

Investors are drawn to TransAlta Renewables because of their high dividend yield, which has been maintained or increased annually since 2014 at an average growth rate of 2.5%. However, rising interest rates may compress its CaFD, putting dividends at risk if the company doesn't deleverage quickly enough. In 2018, the payout ratio was 71% based on earnings and 82% using distributable cash, but this ratio decreased to 66% in 2021 and 75% in 2022.

We expect a payout ratio of approximately 64% in 2023, assuming recent deleveraging efforts have a positive impact on the bottom line. Hence, despite this concern, we anticipate that the company will maintain its payouts in the near future.

Click here to download our most recent Sure Analysis report on TRSWF (preview of page 1 of 3 shown below):



Monthly Dividend Stock #1: Banco Bradesco S.A. (BBD)
Dividend Risk Score: C
Dividend Yield: 1.6%
Payout Ratio: 11%
Banco Bradesco is a financial services company based in Brazil. It offers various banking products and financial services to individuals, corporations, and businesses in Brazil and internationally. The company's two main segments are banking and insurance, including checking and savings accounts, demand deposits, and time deposits, as well as accident and property insurance products and investment products.

The 2020 COVID-19 pandemic year was very difficult for Banco Bradesco, as the global economy was negatively impacted by the coronavirus pandemic. Fortunately, the company has recovered notably during the past two years.

In FY2022, the company reported it expanded its loan portfolio to R$891.9 billion ($171 billion), a 9.8% growth year-over-year, or 1.5% quarter-over-quarter. Additionally, its client base in its AGORA digital investment brokerage app grew by 19.2% to 886.2K, with $13.2 billion of invested funds.

While we would typically price in positive growth in the company's EPS results based on its continuous product expansion, such growth could be wiped once again by FX changes. This has been a consistent theme for the company. Its EPS has been improving gradually in constant currency, but it is shown as flat or reduced over the years when converted into USD due to the BRL's depreciation against the USD.



Source: Investor Presentation

The company usually pays around $0.0036 per share each month, accompanied by one or two special dividends per year, which define the final amount. It is worth noting that the company had consecutively grown its dividend annually from 2012 to 2019, but again, FX changes have distorted that amount. The annual dividend should be higher than Banco Bradesco's $0.04 annualized monthly dividend, as it only includes the base payouts. The company has a history of paying special dividends as well. Still, it's almost impossible to forecast their value, especially given the FX factors involved.

Click here to download our most recent Sure Analysis report on BBD (preview of page 1 of 3 shown below):



Final Thoughts
In conclusion, monthly dividend stocks can be an attractive option for investors seeking a steady source of income, whether that's for covering one's everyday expenses or for regular compounding. While no investment comes without risk, some monthly dividend stocks have demonstrated a history of financial stability, consistent earnings, and reliable dividend payments.

Our list of the ten safest monthly dividend stocks presented in this article includes companies from a variety of industries that rank high based on our Dividend Risk scoring system.

Nevertheless, there are numerous other monthly dividend stocks available, each with its unique features and benefits. We recommend exploring these options to find the ones that align with your requirements and preferences. However, it is essential to keep in mind that every investment carries its own inherent risks, so be sure to conduct thorough research before making any decisions.

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Thanks for reading this article. Please send any feedback, corrections, or questions to support@suredividend.com.

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Portugal Bids To Boost Green Energy With First Hydrogen Auction

por Michael Kern

Oilprice.com / 2023-03-27 19:055


On Monday morning, Portugal announced that it would launch a pioneering auction for rights to sell hydrogen for injection into its natural gas grid in the second half of this year. This will be the first auction in Europe and is part of the country's efforts to reduce greenhouse gas emissions.

The Portuguese government has set ambitious targets to reduce emissions by 2030 and is now looking to green hydrogen to meet those goals. Hydrogen can be produced from renewable sources such as wind and solar energy, and when injected into the natural gas grid, it can replace fossil fuels like coal and natural gas.

The auction will be managed by a new body called Gás Natural de Portugal (GNP), which will buy renewable hydrogen and biomethane at auction and then sell it on to gas companies. The aim is to increase the amount of green hydrogen in the natural gas grid from 1% today to 10% by 2030.

"This is an important step towards achieving our climate objectives," said Gabriel Sousa, GNP's representative in Lisbon. "We are confident that this auction will help us reach our goal of reducing emissions while also providing economic benefits for businesses."

The Portuguese government has already taken steps towards increasing the use of green hydrogen, including investing in research and development projects related to electrolysis technology, which produces hydrogen from water using electricity. 

It has also launched initiatives such as H2Global to facilitate imports of renewable ammonia, e-methanol and sustainable aviation fuel through auctions.

However, some limitations are associated with blending hydrogen into the European gas grid. For example, due to safety concerns, there is a limit on how much hydrogen can be blended into existing pipelines without risking explosions or other accidents.

In addition, there currently need to be regulations or standards in place governing how much hydrogen should be blended into the grid or how it should be stored safely.

Despite these challenges, Portugal remains committed to reducing emissions through the increased use of green hydrogen. The upcoming auction is expected to provide an essential boost for businesses involved in producing renewable fuels while also helping Portugal meet its climate targets.

By Michael Kern for Oilprice.com

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How two weather balloons led Mexico to ban solar geoengineering

Reuters / 2023-03-27 19:3213
2023-03-27T18:16:59Z
On an April day, the founder of a U.S. startup called Make Sunsets stood outside a camper van in Mexico's Baja California and released two weather balloons containing sulfur dioxide into the air, letting them float towards the stratosphere.

Entrepreneur Luke Iseman said the sulfur dioxide in the balloons would deflect sunlight and cool the atmosphere, a controversial climate strategy known as solar geoengineering. Mexico said the launch violated its national sovereignty.

Iseman, 39, said he does not know what happened to the balloons. But the unauthorized release, which became public in January, has already had an impact: setting off a series of responses that could set the rules for future study of geoengineering, especially by private companies, in Mexico and around the world.

The Mexican government told Reuters it is now actively drafting "new regulations and standards" to prohibit solar geoengineering inside the country. Mexico also plans to rally other countries to ban the climate strategy, a senior government official told Reuters.

While the Mexican government announced its intention to ban solar geoengineering in January, its current actions and plans to discuss geoengineering bans with other countries have not been previously reported.

"Progress is being made... to prepare the new regulations and norms on geoengineering, that is, to advance an official Mexican standard that prohibits said activity in the national territory," Mexico's environment ministry said in a written statement to Reuters.

The backlash from Mexico arrives as growing numbers of scientists and policy makers are urging further study of solar geoengineering, recognizing that emissions cuts alone will not limit dangerous climate change and that additional innovations may be needed.

Climate policy experts said Mexico is in a position to help set the rules for future geoengineering research.

"A country like Mexico could start pulling together other countries and say: 'Let's work on this together and see how we can ban it together or make it happen properly together,'" said Janos Pasztor, executive director of the Carnegie Climate Governance Initiative (C2G), which advises on governance of solar geoengineering and other climate-altering technologies.

The Mexican environment ministry statement said it would explore using the Convention on Biological Diversity's call for a moratorium on "climate-related geoengineering activities" to enforce its ban.

Agustin Avila, a senior environment ministry official, told Reuters Mexico will also try to find common ground with other countries on geoengineering at the COP global climate summit in the United Arab Emirates this year.

The Mexican government said Make Sunsets' balloon launch highlighted the ethical problems of allowing private companies to conduct geoengineering events.

"Why is this company, located in the United States, coming to do experiments in Mexico and not in the United States?" said Avila.

Iseman told Reuters in an email he chose Mexico because "most researchers report that particles launched into the stratosphere near the tropics will create more cooling by staying up longer." Also, he had a truck and camper in Baja and thinks the region is beautiful, he wrote.

David Keith, a professor of applied physics and public policy at Harvard University who has dedicated much of his research to solar geoengineering, called Iseman's launch a "stunt."

Iseman has a background in business, not science, but said he consulted with climate scientists. Other innovative startups were ridiculed in their early days, he said. "If the 'responsible experts' were solving the problem, we wouldn't have to," he said in an email.

Until Mexico's dispute with Make Sunsets, solar geoengineering had been gaining attention from policy makers and scientists as a possible solution to climate change, and limited research funding.

The strategy, also known as Solar Radiation Management, seeks to mimic the natural cooling effects of volcanic eruptions when ash clouds reflect back enough sunlight to reduce the warming of the earth by using planes or balloons to disperse tiny particles in the stratosphere.

Last month, 60 scientists including former NASA climate scientist James Hansen signed a letter in support of further research.

The Degrees Initiative, a UK-based non-government group, awarded $900,000 for research into the impacts of solar geoengineering on weather patterns, wildlife and glaciers to scientists from Chile, India, Nigeria and other countries.

The U.N. Environment Program in late February also recommended further study of geoengineering.

Yet some scientists remain opposed to further research, arguing that large-scale interventions in the atmosphere risk triggering extreme and unpredictable weather changes, including major droughts that would severely impact agriculture and food supply.

In 2021, the Swedish government grounded a Harvard-led study by Frank Keutsch and Keith, which planned to spray calcium carbonate dust into the atmosphere to deflect sunlight after indigenous Saami people accused researchers of lacking respect for "Mother Earth."

Frances Beinecke, a veteran environmental activist and board member of the Climate Overshoot Commission, a think tank focused on developing strategies to reduce the risk of overshooting 1.5 C in warming, said the Make Sunsets episode underscores the urgency of developing a regulatory framework that would allow further study of geoengineering and set safe and equitable rules for its use.

"The Mexico example illustrated to us that it's not only governance to consider whether or not to utilize it, but you need governance in the research phase," she said. "People can't just go all over the world and launch field experiments without some kind of oversight."

Iseman said he would welcome clearer regulation but that the international community is moving "too slowly."

Mexico has not set a date for implementing its ban, a spokeswoman for the environmental ministry said.

And it's unclear what effect a ban might have. Keith argues a ban is unenforceable. "You can't write legislation that says you can't put sulfur in the stratosphere since every commercial flight does that," he told Reuters.

Others note that a ban on geoengineering on Mexico's territory would offer no protection from the planet-scale impact of future experiments by any of its neighbors.

"It could happen literally next door. In terms of impacts on the world, it's the same," Pasztor said

Meanwhile, Make Sunsets said in a Feb. 21 blog post it had performed three additional launches near Reno, Nevada.

The National Oceanic and Atmospheric Administration (NOAA) said Make Sunsets did not report the launches. "The Weather Modification Act requires that any activity performed with the intention of producing artificial changes in the composition, behavior, or dynamics of the atmosphere be reported to the NOAA Weather Program Office before the commencement of such project or activity," NOAA told Reuters.

Iseman said he did seek clearance from the Federal Aviation Authority, but did not disclose the balloons contained sulfur dioxide. "As far as I can tell, there isn't any rule that would require us to do so - or even anyone who it would be relevant to notify," he said.

(This story has been corrected to say that David Keith was involved in the Harvard study, not lead it, in paragraph 23)

Related Galleries:
Luke Iseman launches a balloon in Baja California, Mexico, April 11, 2022. Luke Iseman/Handout via REUTERS

Clouds are seen on the horizon, in Playas Tijuana, Baja California, Mexico March 8, 2023. REUTERS/Jorge Duenes

Enviado de Outlook para Android

European diesel futures down 55% as Asian imports ease supply pinch

Nikkei Asian Review / 2023-03-27 19:55


A car is filled with diesel fuel at a Shell petrol station in Berlin, Germany. Diesel accounts for half of the demand for refined petroleum products in the European Union.   © Reuters
SHINICHI ARAKAWA, Nikkei staff writerMarch 28, 2023 03:28 JST | Europe

TOKYO -- Diesel futures in Europe have plummeted from an all-time high in March 2022 as increased imports from Asia and the Middle East have alleviated concerns of a supply shortage from the Russian oil embargo.

Some countries that have significantly expanded their exports to Europe, such as India, have continued to buy Russian oil on the cheap, raising concerns that some of them are refining that oil and exporting it as their own, effectively bypassing the embargo.

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Schwab's $7 Trillion Empire Built on Low Rates Is Showing Cracks

Yahoo! Finance: Top Stories / 2023-03-27 20:282


(Bloomberg) -- On the surface, Charles Schwab Corp. being swept up in the worst US banking crisis since 2008 makes little sense.

Most Read from Bloomberg

The firm, a half-century mainstay in the brokerage industry, isn't overexposed to crypto like Silvergate Capital and Signature Bank, nor to startups and venture capital, which felled Silicon Valley Bank. Fewer than 20% of Schwab's depositors exceed the FDIC's $250,000 insurance cap, compared with about 90% at SVB. And with 34 million accounts, a phalanx of financial advisers and more than $7 trillion of assets across all of its businesses, it towers over regional institutions.

Yet the questions around Schwab won't go away.

Rather, as the crisis drags on, investors are starting to unearth risks that have been hiding in plain sight. Unrealized losses on the Westlake, Texas-based firm's balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash out of certain accounts that underpin Schwab's business and bolster its bottom line.

It's another indication that the Federal Reserve's rapid policy tightening caught the financial world flat-footed after decades of declining rates. Schwab shares have lost more than a quarter of their value since March 8, with some Wall Street analysts expecting earnings to suffer.

"In hindsight, they arguably could have had more prudent investment choices," said Morningstar analyst Michael Wong.

Chief Executive Officer Walt Bettinger and the brokerage's founder and namesake, billionaire Charles Schwab, have said the firm is healthy and prepared to withstand the broader turmoil.

The business is "misunderstood," and it's "misleading" to focus on paper losses, which the company may never have to incur, they said last week in a statement.

"There would be a sufficient amount of liquidity right there to cover if 100% of our bank's deposits ran off," Bettinger told the Wall Street Journal in an interview published Thursday, adding that the firm could borrow from the Federal Home Loan Bank and issue certificates of deposit to address any funding shortfall.

Through a representative, Bettinger declined to comment for this story. A Schwab spokesperson declined to comment beyond the Thursday statement.

The broader crisis showed signs of easing on Monday, after First Citizens BancShares Inc. agreed to buy SVB, buoying shares of financial firms including Schwab, which was up 3.1% at 2:29 p.m. in New York. The stock is still down 42% from its peak in February 2022, a month before the Fed started raising interest rates.

Unusual Operation

Schwab is unusual among peers. It operates one of the largest US banks, grafted on to the biggest publicly traded brokerage. Both divisions are sensitive to interest-rate fluctuations.

Like SVB, Schwab gobbled up longer-dated bonds at low yields in 2020 and 2021. That meant paper losses mounted in a short period as the Fed began boosting rates to stamp out inflation.

Three years ago, Schwab's main bank had no unrealized losses on long-term debt that it planned to hold until maturity. By last March, the firm had more than $5 billion of such paper losses — a figure that climbed to more than $13 billion at year-end.

It shifted $189 billion of agency mortgage-backed securities from "available-for-sale" to "held-to-maturity" on its balance sheet last year, a move that effectively shields those unrealized losses from impacting stockholder equity.

"They basically saw higher interest rates coming," Stephen Ryan, an accounting professor at New York University's Stern School of Business, said in a phone interview. "They didn't know how long they would last or how big they would be, but they protected the equity by making the transfer."

The rules governing such balance sheet moves are stringent. It means Schwab plans to hold more than $150 billion worth of debt to maturity with a weighted-average yield of 1.74%. The lion's share of the securities — $114 billion at the end of 2022 — won't mature for more than a decade.

The benchmark 10-year Treasury yield now: 3.5%.

Cash Business

Schwab's other headache from higher interest rates stems from cash.

At the root of Schwab's income is idle client money. The firm "sweeps" cash deposits from brokerage accounts to its bank, where it can reinvest in higher-yielding products. The difference between what Schwab earns and what it pays out in interest to customers is its net interest income, among the most important metrics for a bank.

Net interest income accounted for 51% of Schwab's total net revenue last year.

"Schwab's counting on inertia," said Allan Roth, founder of Wealth Logic, a financial-planning firm.

After a year of rapidly rising rates, there's greater incentive to avoid being stagnant with cash. While many money-market funds are paying more than 4% interest, Schwab's sweep accounts offer just 0.45%.

While it's an open question just how much money customers could move away from its sweep vehicles, Schwab's management acknowledged this behavior picked up last year.

"As a result of rapidly increasing short-term interest rates in 2022, the company saw an increase in the pace at which clients moved certain cash balances" into higher-yielding alternatives, Schwab said in its annual report. "As these outflows have continued, they have outpaced excess cash on hand and cash generated by maturities and pay-downs on our investment portfolios."

In their statement, Bettinger and Schwab wrote that "client deposits may move, but they are not leaving the firm."

FHLB Borrowing

To plug the gap, the brokerage's banking units borrowed $12.4 billion from the FHLB system through the end of 2022, and had the capacity to borrow $68.6 billion, according to an annual report filed with regulators.

Schwab borrowed an additional $13 billion from the FHLB so far this year, the filing showed.

Analysts have been weighing these factors, with Barclays Plc and Morningstar lowering their price targets for Schwab shares in recent weeks.

Bettinger and Schwab said that the firm's long history and conservatism will help customers navigate the current cycle, as they have for more than 50 years.

"We remain confident in our client-centric approach, the performance of our business, and the long-term stability of our company," they wrote in last week's statement. "We are different than other banks."

--With assistance from Silla Brush, Miles Weiss and Noah Buhayar.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.

Enclosures

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2023 GICS Classification Change: Impact on S&P 500 Earnings

por Tajinder Dhillon

Earnings | Lipper Alpha Insight | Thomson Reuters / 2023-03-27 20:28

Effective Monday March 20th, 2023, 14 constituents in the S&P 500 have been impacted by a GICS Classification change which was originally announced in December 2022.

As shown in Exhibit 1, 14 constituents across two sectors will move into three new sectors (level 1).  The largest change will be within Information Technology, where eight constituents will move to the Financials sector, followed by three constituents moving into the Industrials sector.  From a market cap perspective, Visa and Mastercard will be the largest change who now rank as the 3rd and 4th largest constituent in the Financials sector and move into a newly created sub-industry (level 4) titled 'Transaction & Payment Processing Services'.

The other sector impacted is Consumer Discretionary, which will see Target Corp, Dollar General Corp, and Dollar Tree Inc all move into the Consumer Staples sector and 'Consumer Staples Merchandise Retail' sub-industry.  Target Corp now ranks as the 9th largest constituent in the Consumer Staples sector.

Exhibit 1: GICS Classification Impact on S&P 500 (click image to view full screen)


As we enter 2023 Q1 earnings season in April, we look at the impact on both y/y earnings growth and earnings weight by sector using data from March 17th (old classification) and March 24th (new classification).  Y/Y growth rates saw a minimal impact for both 2023 Q1 and full-year 2023, and instead, we see a more notable change in the earnings weight at a sector level.

As shown in Exhibit 2, Financials will see the largest increase in earnings weight next quarter, rising from 17.6% to 19.7% (+2.1 ppt) due to Visa Inc and Mastercard Inc, followed by Industrials (+0.3 ppt), which will be offset by the decline in Information Technology (-2.6 ppt).

Consumer Staples will see its earnings weight rise moderately (+0.4 ppt) which will be offset by Consumer Discretionary (-0.3 ppt).

We also include an additional graph showing the same data but for full-year 2023 estimates.  We note Financials has an earnings weight of 19.7% post-classification, far greater than its current market-cap weight of 12.9%, which indicates some form of value being offered.  Conversely, Information Technology has its earnings weight reduced to 18.9%, far less than its market-cap weight of 26.1%, which partially contributes to the premium paid for companies in this sector.

Exhibit 2: 2023 Q1 and 2023 Earnings Weight Impact





A closer look at the newly formed sub-industry within Financials
Financials was most impacted by the classification change, and we dive further into this sector by looking at the newly created sub-industry in more detail.

The Transaction & Payment Processing Services (TPPS) sub-industry will consist of eight constituents (mostly coming from the legacy Data Processing & Outsourced Services sub-industry) including Fidelity National Information Services Inc, Fiserv Inc, Global Payments Inc, Mastercard Inc, PayPal Holdings Inc, Visa Inc, Fleetcor Technologies Inc, and Jack Henry & Associates Inc.  The remaining constituents in this legacy sub-industry now move to Industrials which includes Automatic Data Processing Inc, Paychex Inc, and Broadridge Financial Solutions Inc.

As a group, TPPS widely outperformed its benchmark sector (Financials) and the broader index in 2022 Q4, with an earnings growth rate of 12.7% compared to a growth rate of -8.9% for Financials and -3.2% for the S&P 500.  We note a similar observation when looking at full-year 2022, with TPPS delivering a 15.3% earnings growth rate in comparison to -13.2% for Financials and 4.8% for the broader index.

Based on analyst expectations, TPPS is expected to marginally outperform the broader sector and strongly outperform the broader index in 2023 Q1.

TPPS is also expected to significantly outperform the S&P 500 on a full-year 2023 basis due to strong expected y/y growth rates from Visa Inc, Mastercard Inc, and PayPal Holdings.

Exhibit 3: Earnings Growth Rate for Transaction & Payment Processing Services Sub-Industry



From a valuation perspective, many companies in TPPS trade at a substantial premium to its parent sector.  TPPS as a group trade at a forward P/E of 21.1x in comparison to 12.6x for Financials and 17.9x for the S&P 500.  This results in the Financial sector seeing its forward P/E rise from 11.7x to 12.6x which becomes more 'growthy'.

Exhibit 4: Forward P/E for S&P 500 Sectors



We conclude by looking at the forward net profit margin for each sector, which sees Financials being the largest beneficiary of the classification change with a +1.1 ppt improvement (18.9% today vs. 17.8% prior), which is offset by a -0.7 ppt decline in Information Technology.

The improvement in net profit margins can be explained by Visa Inc and Mastercard Inc which has a current forward 12-month net profit margin estimate of 54.6% and 46.6% respectively, far greater than the traditional banks of JPMorgan Chase (27.1%), Bank of America (27.2%), Citigroup Inc (14.9%) and Wells Fargo Inc (23.0%).

Exhibit 5: Forward Net Profit Margin for S&P 500 Sectors



Conclusion
The GICS classification change resulted in 14 constituents moving into new sectors.  Financials saw the largest change, with 8 of these constituents move from Information Technology into Financials.

Financials also saw a newly created sub-industry which comprises of payment processors including Visa Inc and Mastercard Inc.  Financials will have a marginal increase in its earnings weight, forward P/E ratio, and forward net profit margin based on current analyst estimates.

 

Refinitiv Workspace is a complete solution for research and analytics. It places the most comprehensive market information, news, analytics and trading tools available into a desktop.

Refinitiv I/B/E/S Estimates are a market leader, boasting 300+ metrics and indicators across 15 industries. Find more information on our estimates data.

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6 big deal reports: First Republic Bank deal proving 'elusive' | Pro Recap
por Investing.com

Investing.com: Stock Market News / 2023-03-26 21:436

Investing.com -- Here is your Pro Recap of the biggest M&A headlines you may have missed this past week.

First Republic Bank deal 'remains elusive': report
The beleaguered First Republic Bank (NYSE:) is being advised by JPMorgan (NYSE:) on strategic alternatives, including a capital raise, CNBC reported early last week. But Fox Business' Charlie Gasparino later tweeted that a deal "remains elusive," as a sale is proving difficult without more "govt backstop" despite "possible interest" from former Treasury Secretary Steven Mnuchin's private equity firm, Liberty Capital.

Still, Bloomberg reported over the weekend that U.S. authorities may expand an emergency lending facility that could give First Republic more time to shore up its balance sheet.

According to media reports, JPMorgan chief Jamie Dimon is leading these effort to secure a "club deal" here. Earlier, a Wall Street Journal report said big banks are discussing converting the $30 billion deposited into the bank the prior week into a capital infusion.

First Republic shares lost another one-third of their value last week after falling off a cliff earlier this month, down some 90% for March, amid contagion fears in the sector after Silicon Valley Bank's collapse.

Shares closed Friday at $12.36.

InvestingPro users always know first. Get news like this in real time.

Signature Bank assets bought by NYCB subsidiary
Deposits and loans of Signature Bank (NASDAQ:), the recently collapsed NYC-based lender, are getting picked up by Flagstar Bank, a subsidiary of New York Community Bancorp (NYSE:).

Under the terms of the agreement, Flagstar would acquire $12.9B of Signature Bank's loans at a discount of $2.7B, substantially all of its deposits, as well as 40 former SBNY branches, soon to be rebranded as Flagstar.

The deal excludes Signet, Signature's crypto-focused subsidiary, as well as ~$60B of loans and $4 billion of deposits, as the agency still seeks buyers and considers alternatives for these.

Shortly before its widely publicized collapse, Signature had assets of $110.3B.

Microsoft-Activision deal gets positive news from UK regulatory body
The UK's Competition and Markets Authority (CMA) said the new evidence showed that the proposed $69 billion Microsoft (NASDAQ:)-Activision (NASDAQ:) merger "will not result in a substantial lessening of competition in console gaming in the UK."

"Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action," Martin Coleman, chair of the independent panel of experts conducting this investigation, said.

Earlier this week, the decision on the deal was pushed back to May 22 from April 25 by the European Commission.

Activision shares popped more than 6% last week to $84.39, while Microsoft gained 1.2% to $280.57.

BlackBerry to sell "non-core" patents and patent applications for up to $900 million
BlackBerry (NYSE:) said last week that it agreed to unload "substantially all of its non-core patents and patent applications" to Malikie Innovations, a subsidiary of Key Patent Innovations, "for a combination of cash at closing and potential future royalties in the aggregate amount of up to $900 million."

The agreement terms say BlackBerry will receive $170M upon closing, and another $30M no later than the third anniversary of closing, as well as a cut of the profits generated from the patents.

Shares gained 4% to $3.84 for the week.

BridgeBio Pharma said to attract interest from pharmaceutical companies: report
BridgeBio Pharma (NASDAQ:) is attracting takeover interest from bigger drug companies, according to a report from Bloomberg, citing people familiar with the matter.

Some large pharma companies are studying a potential acquisition of the firm. Deliberations are ongoing.

Shares leapt nearly 9% for the week to $14.90.

Extra Space Storage weighing offer for Life Storage: report
Extra Space Storage (NYSE:) is considering an offer for Life Storage (NYSE:), according to Bloomberg, citing people familiar with the matter. Extra Space Storage is working with an adviser on the potential bid.

Life Storage rejected an offer from Public Storage (NYSE:) in February.

Vlad Schepkov and Senad Karaahmetovic contributed to this report.

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Volkswagen Unveils the $25,000 Car That Tesla Doesn't Have

por Luc Olinga

The Street: Stock Market / 2023-03-25 16:2330
German auto giant announces low-cost electric vehicle for less than 25,000 euros.

Volkswagen is re-entering the race for EVs. 

The German car giant lost its title as the world's largest automaker in terms of sales last year to Japanese arch-rival Toyota  (TYIDY) . 

In the electric vehicle market, the Wolfsburg, Germany-based company has been outpaced by Tesla  (TSLA) - Get Free Report and Chinese rivals like BYD. 

But where others would have surrendered, Volkswagen  (VWAGY) - Get Free Report has sought out its rivals' weak point and has found it. It is a question of hitting the more than 80% of consumers who do not have the financial means to acquire an electric vehicle. The models currently offered are unaffordable, even with public subsidies such as the federal tax credit of $7,500 in effect in the United States since January.

On Mar. 1, investors and consumers were hoping that Tesla, whose battery charging network is one of the largest in the world, was going to unveil a Model 2, that is to say, a low-cost vehicle at $25,000.

On that day, the Austin, Texas-based automaker revealed no new passenger vehicles. The last time Tesla unveiled a new passenger vehicle was in November 2019 and it was the highly anticipated Cybertruck, its very first pickup truck. 

Since then, there has been nothing, and the wait has been long. A Model 2 could have enabled Elon Musk's group to reach a large consumer segment in Western countries and to conquer emerging countries. Musk and Tesla would have delivered a blow to their rivals. 

The ID.2all Concept
But by not unveiling an affordable vehicle, they left a void and an opportunity for the competition. Volkswagen has just rushed in to seize the opportunity.

The German juggernaut has just unveiled a low-cost electric vehicle, priced at less than 25,000 euros ($26,400). The group presented this concept car, called the ID. 2all, on Mar. 15. The version that will be available to the public, will be produced from 2025, the company said.

The ID. 2all will have a range of up to 450 km (280 miles) and features like the company's driver-assistance Travel Assist, and an infotainment system. The front-wheel drive will have some similarities to Polo's, Golf's and Beetle's design.

The production version will be based on the company's modular electric drive (MEB) platform, of which it will be the first electric vehicle with a front-wheel drive, Volkswagen said.

"We are transforming the company rapidly and fundamentally – with the clear objective of making Volkswagen a genuine Love Brand," said Thomas Schäfer, CEO of Volkswagen Passenger Cars. "The ID. 2all shows where we want to take the brand. We want to be close to the customer and offer top technology in combination with fantastic design."

"We are implementing the transformation at pace to bring electric mobility to the masses."

VW media page

Ten New EVs by 2026
Producing an electric vehicle for the masses is one of the biggest challenges for automakers, as the cost of the raw materials needed to develop the battery remains high. Tesla's cheapest vehicle right now is the Model 3 sedan, which starts at $42,990 and comes with a battery that has a range of 272 miles.

There are other cheaper electric vehicles like the Chevrolet Bolt EV from General Motors  (GM) - Get Free Report and the Nissan  (NSANY)  Leaf. The Bolt EV has a base price starting at $26,500, while the Leaf has a manufacturer's suggested retail price of $28,040.

Volkswagen's electric vehicle portfolio currently includes the ID.3 sedan, the ID.4 and ID.5 SUVs and the minibus ID. Buzz. The automaker wants to launch ten new electric models by 2026, including the new ID.3, the ID. Buzz with a long wheelbase and the ID.7 this year. This will be followed by a compact electric SUV in 2026, the company said.

The company is also working on a possible electric vehicle for less than 20,000 euros, which would be a new frontier.

"This will give the car manufacturer the widest range of electric vehicles compared with its competitors, and the company is aiming to achieve an electric car share of 80% in Europe," Volkswagen said.

Enclosures

closing-bell-volkswagen-secures-plea-deal-trump-triggers-biotech-selloff.jpg

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It Wasn't Just Credit Suisse. Switzerland Itself Needed Rescuing.

Yahoo! Finance: Top Stories / 2023-03-22 22:2636


ZURICH—The chairman of Switzerland's largest bank received an urgent call last week. On the other end were three top Swiss officials who delivered an ultimatum dressed up as a proposal. UBS Group AG UBS -3.09% needed to rescue its failing rival, Credit Suisse CS -5.48% Group AG.

For any country, it would be a financial emergency. For Switzerland, the stakes verged on existential. Its economic model and national identity, cultivated over centuries, were built on safeguarding the world's wealth. It wasn't just about a bank. Switzerland itself needed rescuing.

It was Thursday, barely 24 hours into an escalating banking crisis and Credit Suisse was hemorrhaging deposits. The 167-year-old national institution appeared days away from bankruptcy. To keep it alive until the weekend, the central bank was about to quadruple a credit line of more than $50 billion. U.S. and U.K. regulators called their Swiss counterparts to make sure they didn't let Credit Suisse bring down global markets.

Finance Minister Karin Keller-Sutter, central bank head Thomas Jordan and financial regulator Marlene Amstad had dialed Colm Kelleher, the UBS chairman, to present two options that were really only one: Buy Credit Suisse without a chance to fully understand its vast and complicated balance sheet—or let it fold in a protracted unraveling that UBS's own executives worried could shatter Switzerland's credibility as a global banking center.

Over WhatsApp, Swiss diplomats asked each other nervously whether they should move their deposits from Credit Suisse. 

After a series of frantic calls and government-orchestrated meetings in Bern, UBS agreed to swallow Credit Suisse for $3.2 billion. To seal the deal, the government, which had vowed after the 2008 crisis never again to use public money to save a bank, hastily used emergency laws to do exactly that.

"Credit Suisse is not only a Swiss company. It is part of the Swiss identity," said Thierry Burkart, head of the right-wing Liberals party, the country's third largest. "The bankruptcy of a global Swiss bank would have had an immediate effect everywhere. There would be long and hard reputational damage for Switzerland," he said. 


Photo: peter klaunzer/epa/Shutterstock
The swift demise of Switzerland's second-largest lender has rattled financial markets, and added a global dimension to a banking crisis that broke out on the West coast of the U.S. with the failure of Silicon Valley Bank. 

It is still far from clear whether the Swiss have fully contained the damage. Having two world-class banks was seen as a fail-safe to maintain Switzerland's position in world markets. The forced marriage has left it with one and has shaken ordinary Swiss people and their faith in the country's economic and political model.

"If Swiss banking means one huge bank, what if something goes wrong with that?" said Mark Pieth, a former head of the Organization for Economic Cooperation and Development's bribery division who is now at the Basel Institute on Governance. "Then the entire country and its financial stability is at stake. It's very un-Swiss." 

The central bank and finance ministry, as well as Finma, the top financial regulator in Switzerland, didn't comment beyond their previous public statements. Bankers and Swiss officials involved in the talks, as well as Swiss and other Western diplomats, provided details of the rescue. 

This Alpine nation has seen itself as a special case in Europe: a neutral broker and soberly governed democracy whose banks offer a discreet safe haven to far-flung investors and the world's wealthy. Its banking system is five times the size of its gross domestic product and larger than in most economies. UBS combined with Credit Suisse has a balance sheet twice the size of the Swiss economy.

Swiss bank UBS agreed to take over its longtime rival Credit Suisse as authorities seek to halt a dangerous decline in confidence in the global banking system. WSJ's Patricia Kowsmann explains how the deal unfolded and what might come next. Photo: Hannah McKay/Reuters
For years, Swiss exceptionalism has been chipped away. After 2008, the U.S. enacted laws requiring Swiss banks to transfer information about American clients to the Internal Revenue Service, a hammer blow to its banking secrecy. 

Relations with the European Union, whose biggest powers surround the landlocked Alpine nation, are strained after Switzerland walked away from yearslong talks to bind it more closely to the trading bloc. 

It is struggling to defend its 200-year-old policy of neutrality in the face of Russia's war with Ukraine. Moscow last year put Switzerland on its "Unfriendly Countries List" after the landlocked nation, pressured by its larger neighbors and the Biden administration, joined European Union sanctions against Vladimir Putin and his closest allies. 

By the same token, the country has refused to grant permission for Germany, Spain or Denmark to export Swiss military equipment into Ukraine, prompting a debate over whether Switzerland's attachment to neutrality is damaging its reputation in Europe. 

The country—once the indispensable meeting ground where great powers negotiated the end of conflicts—has been sidelined as a mediator in the Ukraine conflict by Turkey. Decades of economic and diplomatic ties to Russia have gone cold in Moscow yet become liabilities within the West. 


Photo: Pascal Mora/Bloomberg News
"We have now a dilemma, a big challenge for Switzerland to be recognized as a strategic partner," said former Swiss President Micheline Calmy-Rey. "For the time being it is not, and we are in shock."

The U.S. ambassador last week said Switzerland was facing its most serious crisis since World War II. Foreign investors burned by Credit Suisse's demise are rethinking their willingness to invest.

"Everything here was avoidable. We were told last week that everything was fine," said Roger Köppel, editor of the weekly magazine Die Weltwoche and member of the right-wing Swiss People's Party. "Reality is back and is hitting Switzerland very hard."

Credit Suisse's founder, Alfred Escher, was an industrial godfather of modern Switzerland. The businessman and politician used the lender to underwrite Switzerland's rail lines, tunneling through the Alps to connect the mountain-encircled nation with the rest of Europe. 

Stretching back to Nazi gold, Credit Suisse had harbored money for suspect clients alongside an A-list roster of billionaires, sovereign-wealth funds and families. In a 2014 settlement with the U.S. Justice Department, the bank paid $2.6 billion and admitted its bankers had hand delivered cash and destroyed documents to help Americans hide untaxed wealth. 

A banker in London took bribes to make loans in Mozambique. Another forged client signatures and lost them hundreds of millions of dollars. More recently, in 2021, Credit Suisse lost more than $5 billion when family office Archegos Capital Management collapsed, marking the start of its tumble into UBS.

Through the scandals, Swiss banks, and even Credit Suisse, still retained their image as fortresses for the rich.

The latest Credit Suisse management team included several who joined from UBS, including Chairman Axel Lehmann and Chief Executive Ulrich Körner. They made fresh pledges to clean up and saw returning Credit Suisse to health as a form of national service, people familiar with their thinking said.


Photo: Wassilios Aswestopoulos/NurPhoto/Getty Images
Even after raising $4 billion capital late last year for a deeper restructuring, Credit Suisse traded at just 20% of its book value. Customers pulled $120 billion from the bank last fall during an internet frenzy over the bank's health. 

Not far from Credit Suisse in central Zurich, executives at UBS prepared just in case they were called on to help. For years, UBS executives and management consultants had mapped out scenarios and what UBS would require from the government, as a precaution. 

UBS owed the government. It had been Switzerland's problem child before. 

The result of a merger in the late 1990s between Swiss Bank Corp. and Union Bank of Switzerland, UBS grew rapidly in the banking boom of the 2000s, opening a trading floor bigger than a football field in Stamford, Conn. It needed a Swiss government bailout in the 2008 financial crisis for losses on toxic securities. Chastened, it pulled back from trading and focused on managing wealth. 

The Credit Suisse chairman and CEO had feared the call from Swiss authorities.

The bank's stock had gone into free fall after the chairman of the bank's biggest investor, Saudi National Bank, speaking in a television interview at a finance conference in Riyadh, said it wouldn't invest more in Credit Suisse: "Absolutely not," he said, citing rules on bank ownership, since Saudi National Bank already owned 9.9%. 

What the market heard was that Credit Suisse's largest shareholder wouldn't back it. Mr. Lehmann, at the same Riyadh conference, rushed back to Zurich. Credit Suisse appealed to the Swiss National Bank and Finma to calm the markets with a message of support.

That Wednesday night, Credit Suisse received a more-than $50 billion liquidity line from the central bank, and the regulators said it met Swiss capital and liquidity requirements. 

Credit Suisse customers kept pulling deposits Thursday. Authorities moved to make more than $150 billion in additional liquidity available to the bank, Ms. Keller-Sutter, the finance minister, said. The government didn't disclose the move, hoping to keep Credit Suisse alive until the weekend, when a permanent solution could be found. 

Stung by having to rescue UBS before, Swiss authorities had a plan to handle big banks if they fell under stress. To avoid tapping taxpayer money, the country's financial regulator would swiftly impose losses as needed on shareholders and bondholders. 


Photo: fabrice coffrini/Agence France-Presse/Getty Images
That solution was discarded for Credit Suisse, as authorities feared it would cause panic among bank investors around the world, Mr. Jordan, the central bank governor, said Sunday.

UBS Chairman Colm Kelleher got his call Thursday from the Swiss officials, a tripartite representing Finma, the Swiss National Bank and the finance minister. The message was clear: UBS would take over Credit Suisse, or the latter would go bankrupt, potentially bringing down UBS and other banks in the fallout. 

Irish-born Mr. Kelleher joined UBS as chairman in April, after a long career at Morgan Stanley, including as chief financial officer in the 2008 financial crisis. His team swung into action, helped by a blueprint developed under former UBS Chairman Axel Weber on what a combined UBS-Credit Suisse could look like. 

The UBS and Credit Suisse chairmen and CEOs had a quick meeting with the finance minister Friday at UBS, where they were told they would sign a deal by Sunday.

Credit Suisse's large shareholders in the Gulf, including Saudi National Bank, worried they were about to lose their entire investment. They called Swiss officials, including the central bank governor and government ministers, and wrote letters, arguing that their rights were at risk of being trampled on, and that they might be able to come up with a better deal.

What do you think comes next for Swiss banking? Join the conversation below.

On Saturday evening, Mr. Kelleher took a break from dinner to call Mr. Lehmann with a $1 billion offer. It was less than Saudi National Bank's investment for one-tenth of the bank in November, a deal Mr. Lehmann brokered.

On the Credit Suisse side, executives fretted whether they could get a deal through their shareholders. A quarter of the shares were held by a trio of Gulf investors. The government had a solution. It passed a law that allowed a deal to pass without a shareholder vote. A government official read out the new law to Credit Suisse executives, without giving them it in writing, according to people familiar with the matter. 

Sunday morning, the Gulf shareholders Qatar Investment Authority and Olayan Group, and the Saudi Public Investment Fund, part-owner of Saudi National Bank, made a last-ditch proposal to Credit Suisse's board. They would inject around $5 billion, keep the stable Swiss bank and sell off other parts over time. 


Photo: fabrice coffrini/Agence France-Presse/Getty Images
Mr. Lehmann put a call into the Swiss finance minister. UBS is the only option, he was told, and the line went dead. 

Swiss officials from the get-go would only consider a Swiss option to save Credit Suisse, people familiar with the matter said. They shot-down an informal approach from U.S. asset management giant BlackRock, Inc. to get involved, these people said. 

Credit Suisse's board dug in its heels on the low price. With the announcement hours away, Swiss officials told UBS to try harder. 

Late Sunday afternoon, UBS agreed to lift its offer and pay a little over $3 billion—less than half Credit Suisse's market value on Friday. Crucially, Swiss regulators would write off $17 billion on the riskiest type of Credit Suisse bonds. The market for these bonds, commonly issued by European banks, was severely hit Monday. UBS would also get a more than $200 billion liquidity line from the central bank, and a government guarantee of over $9 billion against some potential losses. 

To get the deal done, the government waived antitrust laws on the grounds that financial stability was at stake.

"Any other solution would really have triggered a financial crisis," said Ms. Keller-Sutter, the finance minister. 

At a Sunday news conference announcing the deal, Mr. Kelleher said UBS buying Credit Suisse was in the best interest of Switzerland.

—Ben Dummett, Julie Steinberg and Summer Said contributed to this article.

Write to Margot Patrick at margot.patrick@wsj.com, Patricia Kowsmann at patricia.kowsmann@wsj.com, Drew Hinshaw at drew.hinshaw@wsj.com and Joe Parkinson at joe.parkinson@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Jeremy Scott exits Moschino after a decade of cheeky, pop culture fashion

CNN.com - Top Stories / 2023-03-20 20:18

Written by Jacqui Palumbo, CNN

Moschino creative director Jeremy Scott is stepping down from his role at the Italian luxury fashion house after a decade of irreverent, pop culture-infused collections, according to a statement from the label released Monday.

"These past ten years at Moschino have been a wonderful celebration of creativity and imagination," Scott said in the news release. "I am so proud of the legacy I am leaving behind."


Moschino sends puppets down the runway for Milan Fashion Week

During his tenure, Scott was known for theatrical productions, over-the-top styling and a playful take on the zeitgeist presented on the runway, through looks such as Marie Antoinette-inspired mini pannier skirts, paper doll motifs and evening gowns incorporating inflatable pool toys. He also partnered with H&M for a collaboration that prompted massive lines and eye-watering resale prices, with Mattel on a highly sought-after Barbie capsule collection and with The Sims to create a line of virtual clothes.

After Moschino's show last fall, Scott told CNN: "There's so much negativity that we have to process, but we must hold space for joy." Credit: Victor Boyko/Getty Images

Scott was the third designer to lead Moschino, carrying on the legacy of Franco Moschino, who founded the label in 1983 with pop art, camp and playful irony influencing his ready-to-wear collections. After his death in 1994, the label's reins went to Rossella Jardini, who helmed the fashion house for some two decades — updating Moschino's eccentric style for the 2000s and dressing pop icons including Madonna and Lady Gaga — before Scott joined in 2013.


Scott walking the runway following his final presentation with Moschino in Feburary. Credit: Estrop/Getty Images

Scott's splashy debut for Moschino in 2014 focused on American consumerism, weaving the branding of McDonald's, Hershey's and Budweiser, along with the face of Spongebob Squarepants, into pieces shown on the runway. From this and other early collections, Scott's reimaginings of Moschino accessories as everyday branded items — from Happy Meal handbags to cleaning spray bottle phone cases — were a particular hit.

His final Moschino collection, shown at Milan Fashion Week in February, was more subdued than past seasons, however, with models wearing skirt suits, knits, chunky gold jewelry and sky-high mohawks.

Moschino's themed shows included a paper doll motif for the spring 2017 season. Credit: Tristan Fewings/Getty Images

Though Scott has dressed a number of A-List celebrities while leading Moschino, his designs were particularly unmatched where high drama was needed, for occasions like the Super Bowl half-time show (for which he produced looks for Katy Perry in 2015) or the Met Gala red carpet. For the latter event, Scott dressed Cardi B in an ethereal pearl-encrusted dress and headpiece in 2018, dressed Perry as a chandelier in 2019 and sent Megan Thee Stallion in a mythological-themed feather-and-armor gown in 2022.
Earlier this month, he dressed Angela Bassett and Tessa Thompson, among other stars, for the Oscars and Vanity Fair after-party.

A visual history of space-age fashion

When pandemic restrictions kept designers off of runways in recent years, Moschino led the charge in creative workarounds, devising high-production short films instead. One featured a tiny marionette show with real (scaled-down) spring-summer 2021 looks — as well as puppet attendees such as Anna Wintour — and another featured vignettes acted out on a rotating set by stars such as Dita von Teese, Precious Lee and Hailey Bieber.
An exclusive look behind the scenes of a star-studded fashion film

The films felt fitting for Scott, who already treated Moschino's runways like a stage or cinema set — and once even built smoke machines into his gowns.

"When I'm doing a show I'm really creating a character, so I really want to put (the models) in that mood, like I think a director would an actress," Scott told CNN in 2016. "It's really important for me to speak to them and talk to them about it, and that's why the models do look so different in my shows.
Scott led Moschino alongside his own eponymous label, though he has not presented new collections independently since 2019. Scott has yet to announce his next steps — including whether he'll take his label off the backburner — but his aesthetic is sure to remain unmistakeable.

"I think it's important that people have fun when they come to my shows," he told CNN in 2016. "It's what people expect from me."

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"This Is It!" - Von Greyerz Warns "The Financial System Is Terminally Broken"
por Tyler Durden

Zero Hedge / 2023-03-20 11:51407
"This Is It!" - Von Greyerz Warns "The Financial System Is Terminally Broken"
Authored by Egon von Greyerz via GoldSwitzerland.com,

The financial system is terminally broken, toast, kaput!
Anyone who doesn't see what it happening will soon lose a major part of their assets either through bank failure, currency debasement or the collapse of all bubble assets like stocks, property and bonds by 75-100%. Many bonds will become worthless.

Wealth preservation in physical gold is now absolutely critical. Obviously it must be stored outside a broken financial system. More later in this article.

The solidity of the banking system is based on confidence. With the fractal banking system, highly leveraged banks only have a fraction of the money available if all depositors ask for their money back. So when confidence evaporates, so do the balance sheets of the banks and depositors realise that the whole system is just a black hole.


And this is exactly what is about to happen. 

For anyone who believes that this is just a problem with a few smaller US banks and one big one (Credit Suisse), they must think again.

RE CREDIT SUISSE SEE 'STOP PRESS' AT THE END OF THE ARTICLE.
THE BANKS ARE FALLING LIKE DOMINOS, INCLUDING CREDIT SUISSE TONIGHT
Yes, Silicon Valley Bank (16th biggest US bank) is gone after an idiotic and irresponsible  policy to invest short term customer deposits in long term US Treasuries at the bottom of the interest rate cycle. Even worse, they then valued the bonds at maturity rather than market, to avoid taking a loss. Clearly a management that didn't have a clue about risk. SVB's demise is the second biggest failure of a US bank. 

Yes, Signature Bank (29th biggest) is gone due to a run on deposits. 

And yes, First Republic Bank had to be supported by US lenders and the Fed by a $30 billion loan due to a run on deposits. But this won't stop the rot as depositors attack the next bank and the next one and the next one……….

And yes, the Swiss second largest bank Credit Suisse (CS) is terminally ill after a number of poor investments over the years combined with poor management that has come and gone virtually every year.. I wrote an important article about the coming demise of CS 2 years ago here: "ARCHEGOS & CREDIT SUISSE – TIP OF THE ICEBERG."

The situation at CS is so dire that a solution needs to be found before Monday's (March 20) opening. The bank cannot survive in its present form. [ZH: a 'solution' was found... for now]

A failure for Credit Suisse would not just rock the Swiss financial system but have severe global repercussions. A merger with UBS is one solution. But UBS had to be bailed out in 2008 and doesn't want to be weakened again by Credit Suisse without state guarantees and support from the Swiss National Bank (SNB). The SNB injected CHF50 billion into CS last week but the share price still went to a new low.



No one should believe that a state subsidised takeover of Credit Suisse by UBS will solve the problem. No, it will just be rearranging the deck chairs on the titanic and making the problem bigger rather than smaller. So rather than a lifebuoy, UBS will have a massive lead weight to carry which will guarantee its demise as the banking system collapses. And the Swiss government will take on assets which will be unrealisable. 

Still, it is likely that by the end of the present weekend a deal will be announced with UBS being offered a deal they can't refuse by taking over the good assets and the SNB/Government nurturing the bad assets of Credit Suisse in a rescue vehicle.

The SNB is of course in a mess itself, having lost $143 billion in 2022. The SNB balance sheet is bigger than Swiss GDP and consists of currency speculation and US tech stocks. This central bank is the world's biggest hedge fund and the least successful. 

Just to put a balanced view on Switzerland. It has the best political system in the world with direct democracy. It also has low Federal debt and normally no budget deficits. It is also the safest country in the world.

SWISS BANKING SYSTEM TOO BIG TO SAVE
But the Swiss banking system is very unsound, just like the rest of the world's. A central bank which is bigger than the country's GDP is extremely unsound. And a banking system which is 5x Swiss GDP makes it too big to save. 

Although the Fed and ECB are much smaller in relation to their countries' GDP than the SNB, these two central banks will soon discover that their assets of around $8 trillion each are grossly overvalued. 

With a global banking system on the verge of a systemic failure, Central Bankers and bankers have been working around the clock this weekend to temporarily avoid the inevitable collapse of the bankrupt financial system. 

BIGGEST MONEY PRINTING IN HISTORY COMING
As I pointed out above, the main Central Banks would also be bankrupt if they valued their assets honestly. But they have a wonderful source of money that they will tap to save the system. 

Yes, I am of course talking about money printing. 

We will in coming months and years see the most massive avalanche of money printing that has ever hit the world.

For anyone who believes that we are just seeing another bank run that will quickly evaporate, they will need to take a shower in ice cold Alpine water. 

What we are witnessing is not just a temporary drama that will be sorted out by "the all powerful and resourceful" central banks. 

THE DEATH OF MONEY
No, instead what we are seeing is the end phase of this financial era which started with the formation of the Fed in 1913 and in the next few years, or much sooner, will end with the death of money.

But the Death of Money doesn't just mean that the dollar (and most currencies) will make their final move to ZERO, having already declined 98% since 1971. 

Currency debasement is not the cause but the effect of the banking Cabal taking control of the money for their own benefit. As Mayer Amschel Rothschild said in the late 1700s: "Let me issue and control a nation's money and I care not who makes the laws".

Sadly, as this Cassandra (me) has written about since the beginning of the century, the Death of Money is not just all currencies going to ZERO as they have throughout history. 

No, the Death of Money means a total and final collapse of this financial system. 

Cassandra was a priestess in Greek mythology who was given the gift of predicting major events accurately but also given the curse that no one would  believe her predictions. 

No depositor must believe that the FDIC (Federal Deposit Insurance Corp) in the US or similar vehicles in other countries will save their deposits. All these organisations are massively undercapitalised and in the end it will be the governments in all countries which step in. 

We know of course, that the government has no money. They just print whatever they need. That leaves ordinary people taking the final burden of all this money printing. 

But ordinary people will have no money either. Yes a few rich people will be taxed heavily to cover bank deficits and losses. Still, that will be a drop in the ocean. Instead ordinary people will be impoverished with little income, no government handouts, no pension and money which is worthless. 

The above is sadly the cycle that all economic eras go through. The issue this time is that the problem is global and of a magnitude never seen before in history. 

Regrettably a rotten and bankrupt financial system needs to go through a cleansing period which the world will now experience. There cannot be sound growth and sound values until the current corrupt and debt infested system implodes. Only then can the world grow soundly again. 

The transition will sadly be dramatic with a lot of suffering for most people. But there is no other way. We won't just see poverty, famine but also many human tragedies. The risk of social unrest or civil war is very high plus the risk of a global war.

Central banks had of course hoped that their Digital Currencies (CBDC) would be ready to save them (but not the world) from the present debacle by totally controlling people's spending. But in my view they will be to late. And since CBDCs are just another form of Fiat money, it would just exacerbate the problem with an even more severe outcome at the end. Still, it won't prevent them from trying.

MARKET VALUE OF US BANKING ASSETS $2 TRILLION LOWER THAN BOOK VALUE
A paper issued by 4 US academics in finance, illustrates the $2 trillion black hole in the US banking system: 

"Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?"

March 13, 2023 

Erica Jiang, Gregor Matvos, Tomasz Piskorski, and Amit Seru 

CONCLUSION

"We provide a simple analysis of U.S. banks' asset exposure to a recent rise in the interest rates with implications for financial stability. The U.S. banking system's market value of assets is $2 trillion lower than suggested by their book value of assets. We show that these losses, combined with a large share of uninsured deposits at some U.S. banks can impair their stability. Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to even insured depositors, with potentially $300 billion of insured deposits at risk. If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk. Overall, these calculations suggest that recent declines in bank asset values significantly increased the fragility of the US banking system to uninsured depositors runs." 

What is crucial to understand is that the $2 trillion "loss" is only due to higher interest rates. When the US economy comes under pressure, the loan books of the banks will deteriorate dramatically and bad debts increase exponentially. With total assets of US commercial banks at $23 trillion, I would be surprised if 50% is repaid or recoverable in the coming crisis. 

The above risks are just for the US financial system. The global system will be no better with the EU under massive pressure partly due to US led sanctions of Russia. Virtually every major economy in the world is in a dire position. 

Lets just look at the debt pyramid which I have discussed in many articles LINK

In 1971, when Nixon closed the gold window, global debt was $4 trillion. With gold backing no currency, this became a free for all to print unlimited amounts of money. And thus by 2000 debt had grown 25x to $100t. In 2006, when the Great Financial Crisis started, global debt was $120 trillion. By 2021 it had grown 75x from 1971 to $300 trillion. 



The red column shows global debt at $3 quadrillion sometime between 2025 and 2030. 

This assumes that the shadow banking system plus outstanding derivatives of currently probably around $2 quadrillion will need to be saved by central banks in a money printing bonanza. This will obviously lead to hyperinflation and thereafter to a depressionary implosion.

I know this sounds sensational but still a very likely scenario at the end of the biggest credit bubble in history. 

GOLD – CRITICAL WEALTH PRESERVATION 
I have been standing on a soapbox for over 20 years, warning the world about the coming financial crisis and the importance of physical gold for wealth preservation purposes. In 2002 we invested important funds into physical gold with the purpose of holding it for the foreseeable future.

Between 2002 and 2011 gold went from $300 to $1,900. Since then gold corrected and then went sideways as stocks and the asset markets surged backed by massive credit expansion. 

With gold currently around $1990, there is not much gain since 2011. Still since 2002 gold is up 7x. Due to the temporarily stronger dollar, gold's gains measured in dollars are much smaller than in Euros, Pounds or Yen. But that will soon change. 

In the final section of the article "WILL NUCLEAR WAR, DEBT COLLAPSE OR ENERGY DEPLETION FINISH THE WORLD?", I outlined the importance of owning physical gold to store it in a safe jurisdiction away from kleptocratic governments.

"2023 is likely to be the year of gold. Both fundamentally and technically gold looks like it will make major up moves this year." 

And at the end of this article, I explain the importance of how and where gold should be held:"PREPARE FOR 10 YEARS OF GLOBAL DESTRUCTION."

"So my own preference would be to own physical gold and silver that only I have direct control of and can withdraw or sell with very short notice. 

It is also important to deal with a company that can move your metals at very short notice if the security or geopolitical situation would necessitate it."

In February 2019 I wrote about what I called the Gold Maginot Line which had held for 6 years below $1,350. This is typical for gold. Having gone from $250 in 1999 to $1,900 in 2011, it then spent 8 years in a correction. At the time I forecast that the Maginot Line would soon break which it did and swiftly moved to $2,000 by August 2020. We have now had another period of consolidation since then and the next move above $2,000 and towards $3,000 is imminent. 



Just to remind ourselves what happens to your money and gold during a hyperinflationary period, here is a photo from China's hyperinflation in 1949 as people try to get their 40 grammes (just over one ounce) that they were allocated by the government. At some point in the next few years, there will be a panic in the West to buy gold at any price. 



So as I have been urging investors for over 20 years, please get your gold NOW while it is still available. 

STOP PRESS
Intense discussions are right now going on here in Switzerland between UBS, Credit Suisse, the regulator FINMA, the Swiss National Bank – SNB – and the Swiss Government. The Fed, the bank of England and the ECB are also involved. 

The latest rumour is that UBS will buy Credit Suisse for CHF900 million ($1 billion). The shares of CS closed at a market cap of CHF8 billion on Friday. The deal would clearly involve backing from the SNB and the Swiss government which would have to take on major liabilities. 

The December 2022 book value of CS was CHF42 billion, as with all banks massively overstated. 

The deal isn't done at this point, 5.30pm Swiss time, but the whole banking world knows that without a deal, there will be global contagion starting tomorrow Monday the 20th. 

Even if a provisional deal will be done by Monday's open, the financial system has now been permanently injured with an open wound which won't heal. 

The problem will just move on to the next bank, and the next and the next….

Hold on to your seats but buy gold first.
Tyler Durden Mon, 03/20/2023 - 07:20

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