Larry McDonald, founder of The Bear Traps Report, joins CNBC’s “Squawk Box” to discuss the trouble at Silicon Valley Bank. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
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LEARN MORE ABOUT: Bank Failures
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Silicon Valley Bank, a prominent player in the technology-focused banking sector, has recently faced some challenges that may have broader implications for the Federal Reserve. According to Larry McDonald, a finance expert and author, the bank’s troubles could be a catalyst for the central bank to start cutting interest rates.
Silicon Valley Bank has long been known for its specialization in serving startups and venture capital-backed companies. It has been a key player in the technology ecosystem, providing financing and other banking services to a wide range of innovative companies. However, as the technology sector faces increased scrutiny and potential headwinds, the bank has encountered some difficulties.
McDonald argues that the problems faced by Silicon Valley Bank reflect a larger trend in the technology industry. Uncertainty surrounding the trade war between the United States and China, as well as regulatory concerns and growing competition, have put pressure on tech companies and their financial partners.
The potential impact of Silicon Valley Bank’s troubles on the Federal Reserve lies in its potential to create a domino effect within the tech industry and beyond. As the banking sector tightens its lending standards and reduces risk exposure due to concerns about the technology sector, it could lead to a broader credit crunch. This could negatively impact not only tech companies but also other industries that rely on tech-driven innovation.
In response to a potential credit crunch, McDonald suggests that the Federal Reserve may turn to interest rate cuts to boost liquidity and support economic growth. Lower interest rates can stimulate borrowing and investment, helping companies to navigate difficult financial situations.
However, the decision to cut interest rates is not an easy one for the Federal Reserve. While it can have short-term benefits, it also carries potential risks, such as inflation and asset price bubbles. The central bank needs to carefully consider the broader economic implications before implementing such measures.
Overall, the troubles faced by Silicon Valley Bank are indicating potential troubles in the technology sector and may have broader implications for the economy. As Larry McDonald suggests, this could prompt the Federal Reserve to consider cutting interest rates as a means to stabilize the market and support economic growth. However, any decision by the Federal Reserve needs to be approached cautiously to balance short-term benefits with long-term risks.
PNC will be the first big Domino to fall. Very Over Exposed. Suffered huge losses. Wall Street Journal and Seeking Alpha show how bad it is. Leave if possible.
Umm nope in fact they are raising them again!
The failure of Silicon Valley Bank has torn into global markets, with investors ripping up their forecasts for further rises in interest rates and dumping bank stocks around the world. I'm at a crossroads deciding if to liquidate my dipping 200k stocck portfolio, what’s the best way to take advantage of this bear market?
Crypto……………. High Five ya'll
EVERY FAMILY HAS THAT ONE PERSON WHO WILL BREAK THE FAMILY FINANCIAL STRUGGLE I HOPE I BECOME THE ONE… IN A FEW WEEKS I WAS ABLE TO PAY OFF MY DEBTS THROUGH INVESTING IN CRYPTO TRADING.
Panic everywhere…..
USA
US PAY
YOU MUST PAY
AND+AMEN
The working class always bails out the rich. It’s time we stop.
SVB's collapse hasn't made anything better. I feel sad that even though I am investing, I don't have the brain power to dig through how each company is doing, is this a good time to buy stocks or not, my reserve of $450K is laying waste to inflation and I don't know what to do at this point tbh, I need solid data on market trajectory
Thanks for the interview. Very informative! Luckily I was not affected by the collapse of cryptocurrency prices, because I use Crypton to make money
With all this scary news making the headlines, is this really a good time to buy stocks? I know everyone says the market is ripe enough for buying but will stocks tank further this year? How long until a full stock recovery?
Both types of inflation – Demand Push (That is what Fed is addressing) – Cost Push (cannot do anything about, fuel by shutting world down for 2+ years !)
I keep hearing the talking heads say there is no systemic risk, but yet the Fed needs to cut interest rates.
If you forget about inflation you can also forget about your chance of re-election.
Maybe it is time for the banks to give reasonable interest for savings? ha?
There should be no bail-out and we need much more interest rate increase to fight inflation. Government should stop working for riches and start fighting inflation for regular people.
Its ok to raise interest rates to increase unemployment and increase unemployment to reduce inflation but if the banks are crushed by the high interest rates then you can reverse course and reduce rates. This is so hypocritical.
Why cut rates. Biden will just bail everyone out. What is the new FDIC threshold? Unlimited now or 250? Need to know.
or a less biased, indepth analysis of SVB by a former FED bond trader: https://youtu.be/LOTFAXaFrvc
Pre. Market
Crazy how the American people keep bailing out banks.
raise rates….crash the stock market, banking and housing.
lower rates…inflation goes buck wild. The FED is trapped. We are fooked…Thank you Joe Biden and Janet Yellen.
Larry don't know what the Hell he's talking about…so now the tactics the FEDS is using, showing they're not playing, banks can fall, so they would pull back on their message to greedy Corporations!
She said htm could be the new cdo because of these accounting rules and trickery. Becky isn't one to raise alarm but she's an experienced financial journalist who was in her 30s during the gfc, so she knows everything about accounting tricks
Is she blonde all over?
It’s like the same patterns we saw in late 07
Powel will raise 75 bsp
Believe me all Banks are insolvent so keep printing and give every dollar to Ukraine because Zelenski need it for his luxuary life.