Eh I started watching that NFLX show on your reccy. It better get better by episode 4 or it gets the Goooong. "Bodies"
I'm still watching! I like the creepy guy in charge and the new world order after a blast? I don't know what happened yet.. it's a very cool plot line.
Major U.S. banks slammed with deposit delays, CNN says » 07:18 BAC, C, JPM, USB, WFC, GS, MS Boy are we not getting the whole story here...
Duke Professor stirring up trouble> On May 1, 2023,First Republic Bank was seized by the Federal Deposit Insurance Corporation (FDIC) and acquired by JPMorgan—the last of a string of three regional bank failures in less than two months. However,many analysts pointed out substantial differences from the earlier failures of Silicon Valley Bank and Signature Bank, and attributed First Republic’s demise to a textbook bank run, a panic-based rush to withdrawals that might not have much to do with the health of the bank. “Runs could bring down even a fundamentally solid bank,” said Rahul Vashishtha, an associate professor of accounting at Duke University’s Fuqua School of Business. In a presentation on Fuqua’s LinkedIn page, Vashishtha spoke about how an inherent fragility of the banking business can trigger runs, and how some accounting rules about the fair value of loans might make matters worse. The fragility, he said, is linked to what scholars call the liquidity transformation of the bank business model. “Banks are in the business of taking deposits and handing out loans,” Vashishtha said. “Loans facilitate investments, and help people buy houses. Deposits, similarly, are very important because they offer a temporary parking place for people’s cash.” But in using deposits to make loans, banks transform a liquid asset into an illiquid one. “If a bank needs to sell the loan, because depositors are requesting their money back, they might have a hard time to find a buyer,” he said. “And even if they do, they might not get a good price.” What’s causing panic runs Vashishtha explained panic runs may not be triggered by concerns about the health of the bank. “Most runs are just driven by the fear of withdrawals by other depositors, and these kinds of fears can turn into self-fulfilling prophecies,” he said. In a paper, Vashishtha and his Fuqua colleague Qi Chen outline “a significant presence of panic runs in U.S. banks holding a lot of illiquid assets.” Commercial mortgages are one example. The researchers also found more runs occurred in banks with relatively lower percentages of insured deposits. In the U.S.,the FDIC insures deposits up to $250,000. Vashishtha acknowledges that some withdrawals might be driven by reasonable concerns about the bank’s solvency and how it is managed. But his research points to the unintended effect of the 'fair value' accounting disclosures, which he says may have played a role in the 2023 banking crisis. Vashishtha said the fair value of a loan is roughly what a potential buyer would be willing to pay if the bank has to sell it now. “It’s the exit value,” he said, which can be lower than the value of the loan if held to maturity. The problem is that the fair value “can be influenced by factors that don’t have anything to do with the quality of the loan,” Vashishtha said. Interest rates, for example, negatively affect the selling value of a loan. In the context of one of the biggest Fed’s rate-hike campaigns in recent decades, banks were taken by surprise, he said. “Higher interest rates generated unrealized losses sitting in the fair values of banks’ loans,” Vashishtha said. “And these unrealized losses have the potential to trigger panic.” Before its collapse, First Republic Bank had nearly $136B worth of mortgages in 2022,which accounted for a fair value of about $117B, Vashishtha said. “Is that $19 billion difference a big deal? The answer is an emphatic yes.” Vashishtha says that’s because the bank’s shareholders equity was $17 billion. “If First Republic had to liquidate its assets, the whole equity would be wiped out,” Vashishtha said. He believes policymakers should consider redesigning the fair value rules. In their current form, these disclosures don’t seem to convey much information about quality, Vashishtha said. “All they seem to be doing is triggering panic in markets.” >>> 2nd Duke professor stirring up trouble> "The point I'm making is that Silicon Valley Bankwas not a one-off," Campbell Harvey, Duke University professor of finance, "There are many banks; indeed, we've estimated that perhaps 10% of all banks look pretty similar to SVB. So this is not a one-off, and those long rates going up is punishing."1 hour ago Does Duke University know something.....
2nd whiff--- The Basis Trade? (Bloomberg) -- Citadel founder Ken Griffin said regulators should focus on banks, not hedge funds, as they seek to limit financial risks stemming from highly leveraged trades in the Treasury market, the FT reported, citing an interview. US regulators have been examining dangers posed by the so-called basis trade, which involves the use of leverage to profit from the price gap between Treasury futures and the underlying cash market, and are considering options to rein in risks to the broader financial system, Bloomberg previously reported. Hedge funds rely on highly regulated large banks to finance many of their trades, including those in Treasuries. QuickTake: What’s the Basis Trade? Why Does It Worry Regulators? The FT said the US Securities and Exchange Commission has proposed a new regime that would see hedge funds treated like the broker-dealer arms of banks when it comes to the Treasury market. Griffin urged the regulator to instead focus on the risk management of banks that do the lending. “The SEC is searching for a problem,” Griffin told the FT. “If regulators are really worried about the size of the basis trade, they can ask banks to conduct stress tests to see if they have enough collateral from their counterparties.”
-PERI 2ND TIER AI PLAY- MOTLEY FOOL PROFILE- Perion Network just launched a new generative AI product, and it could be a game-changer. Ever since OpenAI unveiled what appears to be the next step in the artificial intelligence (AI) revolution with its large language model ChatGPT-4 chatbot nearly a year ago, just about every tech company out there has been laying a claim to an AI connection in the hopes of attracting some of the heightened interest around this technology. By now, most investors have some level of awareness regarding the AI strategies of big tech companies like the "Magnificent Seven." As a result, those strategies are largely priced into those stocks already. For example, Nvidia's shares have soared this year as it's seen skyrocketing demand for its AI-related products. And Microsofthas gained in part from its partnership with OpenAI. Rather than chase stocks that are already valued at more than $1 trillion, investors who are looking to get the biggest returns from AI might be better off focusing on smaller companies. One that looks particularly appealing is Perion Network(PERI2.90%), a fast-growing Israeli adtech company best known for its intelligent hub that connects ad buyers and sellers, optimizing pricing and placement for both parties. But Perion just announced a new AI that could help it penetrate a multibillion-dollar ad market. I MISS MY GYM CRUSH! SHE LOOKED ALOT LIKE THIS What Perion is doing with AI Perion launched an AI lab a few years ago tasked with developing new and unique products. Earlier the company unveiled SORT, a cookieless ad-targeting technology. It just revealed the latest product to come out of its AI research unit: WAVE, which stands for Waveform Audio Voice Engine. It's an audio advertising technology powered by generative AI that creates and reads scripts in a human voice for ad spots served on podcasts, radio, and music streaming services. Because the creative component is limitless, WAVE can target ads and customize them in a way that would be impossible for traditional audio advertising with a human voice-over -- it would be too costly and inefficient. The ads can be tailored based on factors including weather, location, time of day, and the device being used. The first major customer for WAVE is Albertsons Companies(ACI0.73%), the nation's second-biggest supermarket operator. The grocer is using WAVE to serve tailored ads and seems pleased with it. Albertsons' director of paid media, Tony Colvin, told Perion: "When your team brought us the AI script and voice, we were blown away. It was very hard to detect that it was an actual AI voice -- right down to the nuances of how certain products are pronounced." One of the criticisms of generative AI tools like ChatGPT so far has been that despite its evident capabilities, it lacks useful applications. Perion's WAVE clearly shows one way generative AI can add value for advertisers and consumers, and do something that previous technologies could not. The product should help the company increase its penetration of the $6.8 billion U.S. digital audio market, which is expected to grow to $9.7 billion by 2027. Perion also shared some other AI-based innovations in its third-quarter earnings report, including high-impact connected TV (CTV) ads that run alongside sports events. The technology can do things like identify a lull in the action, so that it can show an ad when a player is being substituted. Another example is an ad campaign with FanDuel that ran during Yankees baseball games immediately after a Yankees home run, allowing the brand to take advantage of an "unmissable moment" with the ad running as the player circles the bases. NASDAQ: PERI Perion Network Today's Change (2.90%) $0.81 Current Price $28.57 PERI KEY DATA POINTS Market Cap $1B Day's Range $27.78 - $28.96 52wk Range $21.65 - $42.75 Gross Margin 35.76% Why Perion stock is a buy Those innovations helped drive Perion's overall revenue up 17% year over year in the third quarter to $185.3 million; adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were up 29% to $42.7 million. Connected TV was also a bright spot in the quarter, with revenue up 39% to $7.9 million. The company showed particular strength in retail media in the quarter; revenue increased 112% to $13 million. In an interview I did with Perion CEO Tal Jacobson, he said that the company has focused on retail media because "You actually have the chance to work with big data." He explained that factors like purchase frequency, location, and promotions all help make a tool like WAVE more valuable for retailers than it would be for other kinds of advertisers. A retailer like Albertson's, for example, could customize ads in dozens of different ways that a carmaker is less likely to use. Perion has a strong track record in recent years of delivering growth and outperforming the stock market. With the emergence of new AI technologies like WAVE, the company should continue to deliver impressive results. The stock is also surprisingly cheap at a price-to-earnings (P/E) ratio of just 12. As it continues to innovate in AI and tap into new markets like retail media, Perion Network looks like a great bet to continue to outperform. <<<<<>>>>>>> Perion deserves to be bought in size and it is our GBA STOCK OF THE WEEK