While there has been a lot of hype surrounding electric vehicles, it may not be the best time for consumers to get rid of their gas-powered vehicles to switch to electric vehicles. The shift towards electric vehicles is not as imminent as some may suggest, and many consumers are still hesitant to make the switch. The production of electric vehicles still relies on fossil fuels, and the environment benefits aren't as they appear to be. While electric vehicles produce less pollution when driven, their production and battery manufacturing have significant environmental impacts. Until renewable energy sources become more widespread, the environmental advantages of electric vehicles will be limited. Gas-powered vehicles are a better practical and cost-effective option. This is true for most people especially those who live in rural areas where they would need to travel a far distance to find a charging station for their electric vehicle. Many consumers are hesitant because of these range issues that electric vehicles have. To the typical consumer an electric vehicle doesn't seem to be as practical as a gas-powered vehicle. While electric vehicles will eventually become more common, consumers should not hastily abandon their gas-powered vehicles. Gas-powered vehicles are still a practical and cost-effective alternative, and the environmental advantages of electric vehicles are not as clear-cut. Consumers should monitor the shift towards electric vehicles and make well-informed decisions based on their individual circumstances. Written by: Nate Birck Source: https://finance.yahoo.com/news/hold-on-tight-to-your-gas-powered-car-193629839.html

The favored bond market indicator of an impending recession used by the Federal Reserve has plummeted to new lows, supporting the argument that the central bank will soon need to lower interest rates in order to boost economic growth. According to Fed research, the most consistent bond market indicator of an oncoming economic downturn is the "near-term forward spread," which compares the forward rate on Treasury bills for the next 18 months with the current yield on a three-month Treasury bill. This week, this spread hit new lows, closing at around minus 170 basis points on Thursday. Investors are concerned that the turmoil in the banking sector caused by Silicon Valley Bank's failure in March could tighten lending conditions and harm growth, which has led to an increase in recession worries in recent weeks. To combat inflation, the Fed has started one of its most aggressive rate-hike cycles in decades, and it expects borrowing prices to stay at current levels through the end of 2023. However, market players are betting on rate reductions later this year because they feel tighter monetary policy is already beginning to damage GDP. The St. Louis Fed President James Bullard stated on Thursday that the Fed should continue raising interest rates to control inflation while the job market is still robust. Recently, several Fed officials have urged for more rises. On Thursday, money market investors were overwhelmingly wagering that the Fed will have dropped rates from the current 4.75%-5% range by approximately 70 basis points by December. Written by: Massimo Scaccia Sources: https://www.reuters.com/markets/us/powells-curve-plunges-new-lows-flashing-us-recession-warning-2023-04-06/

It was a rollercoaster ride for investors on Wall Street last week, with plenty of ups and downs. Despite concerns about the banking system's stability, the major stock indexes managed to finish on a positive note, with gains overall. Investors last week showed huge signs of safety, as bond yields dipped since many opted to invest in Treasuries. The price of gold was close to record highs, and on Friday we saw an increase in demand for stocks in sectors like utilities, healthcare, and consumer staples. For the week the Dow gained 1.3%, the S&P 500 rose 1.5%, and the Nasdaq increased by 1.7%. On Friday, there was a mixed bag of results for financial firms as some fared better than others. Big U.S. institutions and European banks experienced losses, but there were some positive signs as several regional banks showed signs of recovery after a recent selloff. Investors were on the lookout for potential problem areas in the wake of recent financial collapses, including Credit Suisse's forced sale to UBS their recent buyer, as well as the collapse of Silicon Valley Bank and two other U.S. lenders. This led to a sharp drop in the value of Deutsche Bank shares listed in Frankfurt, which fell by 8.5% and caused other European banks to follow suit with losses of their own. The Federal Reserve made an announcement that they would be increasing interest rates by a quarter point. However, they also hinted that this could be one of the few hikes in the near future, citing positive signs in the economy. Written by: Jeffrey Nugent

Image: https://www.barrons.com/articles/barry-ritholtz-and-josh-brown-wont-predict-the-market-but-theyll-talk-about-anything-else-51608318612 If you want to learn more about the financial advising industry, blogs and podcasts are a great way to start. Here’s a list of influencers, blogs, and podcasts that I personally follow: Michael Kitces: Nerd’s Eye View blog, Financial Advisor Success podcast, and Kitces and Carl podcast Ritholtz Wealth Management Team: Barry Ritholtz: The Big Picture blog and Masters in Business podcast Josh Brown: Reformed Broker blog and The Compound podcast Ben Carlson: A Wealth of Common Sense blog, Portfolio Rescue podcast, and Animal Spirits podcast Michael Batnick: The Irrelevant Investor blog, The Compound podcast, and Animal Spirits podcast MSUWMA podcast XYPN Radio podcast New Planner podcast You’re a Financial Planner, Now What? podcast I know I missed a lot of them, but these are just my personal favorites. If your goal is to be a financial advisor or simply want to see what the financial advising career is all about, these are good places to start. Keep in mind that blogs and podcasts are not the only way to gain this type of exposure, books are also an excellent way to learn about financial advising, personal finance, and excelling in your career. Here are just a few that I’ve read and personally enjoyed: The Psychology of Money by Morgan Housel Just Keep Buying by Nick Maggiulli The Go-Giver by Bob Burg and John David Mann

After two U.S. banks collapsed and a record number of outflows from small lenders, the banking industry is starting to shift its concern from being in an immediate crisis to a concern for economic growth. While banks were previously concerned about the impact of the pandemic on their balance sheets, they are now turning their attention to growth-related issues. Small U.S. banks have experienced a record drop of $119 billion following the collapse of Silicon Valley Bank on March 10. Goldman Sachs analysts think that the growth of real GDP will be reduced due to stress in the banking system to weigh on credit growth. The uncertainty over government willingness to guarantee customer deposits and the shaken confidence of depositors remain causes of concern for financial markets. As customers move money from checking accounts to money market accounts, consumer spending may decrease. While tighter credit conditions will put pressure on economic activity, analysts do not expect a catastrophic effect unless the situation escalates into a full-blown crisis of confidence. Government policies, including deposit insurance and liquidity provision, have limited stress in the financial system, but not eliminated it. While banking system stress remains high, there are signs of stabilization and assurance that funding strains will be more short-lived than feared. Written by: Nate Birck Source: https://money.usnews.com/investing/news/articles/2023-03-27/us-banking-concerns-shift-from-crisis-to-growth-woes

Image: https://www.axios.com/2023/03/17/house-sets-first-hearing-into-svb-and-signature-bank-failures On Sunday, The FDIC announced the sale of Silicon Valley Bank to First Citizens Bank. The news caused bank stocks to rally, and First Citizens Bank in particular gained an additional 53.7% in value following the news. The deal gave First Citizens Bank $72 billion dollars in assets, for the cost of just $16.5 billion. The collapse of First Republic Bank and SVB, the 16th largest bank in the country, had caused a panic in the weeks prior. The news made many fear it would lead to a domino effect, possibly causing a nationwide bank run. The federal government was quick to announce in the days following that it would be refunding all depositors at SVB and First Republic Bank. The FDICs settling of all depositor money from SVB cost the agency $20 billion in total. The funds will be replenished over time by new fees on banks. Congress will hold a hearing on Tuesday going over the cause of Silicon Valley Bank and Signature Bank. The Chairman of the FDIC, Martin Gruenberg, and The Vice Chair for Supervision at The Federal Reserve, Michael Barr, will both be speaking at the hearings. The bipartisan group of lawmakers questioning them are looking to bring confidence to Americans worried about the current situation. “I think this will bring a great deal of certainty and confidence to the market.” says Rep. Patrick McHenry (R-NC). Some point to the 2018 deregulation of Dodd-Frank era laws as reasoning for the banks collapse. A new bill proposed by House and Senate Democrats would decrease the asset threshold for banks to qualify for enhanced regulation to $50 billion. The threshold was decreased back in 2018 from $50 billion to $250 billion. While most Democrats would likely support the bill, it is unlikely they could gather much support from Republicans, who seem reluctant on the issue. Republicans like McHenry were hesitant to call for any expanded regulation following the SVB collapse. Other Republicans like Tim Scott (R-SC) opposed the idea. He stated that he wants to focus the investigation more on what happened, calling remarks about regulation a “red herring”. Sources: https://www.cnbc.com/2023/03/28/stock-markets-first-citizens-struck-a-great-bargain.html https://www.fdic.gov/news/press-releases/2023/pr23023.html https://abcnews.go.com/Business/citizens-buy-72-billion-assets-failed-silicon-valley/story?id=98142831 https://www.msuwma.com/post/silicon-valley-bank-depositors-to-be-guaranteed-full-funds-by-the-federal-government https://thehill.com/newsletters/business-economy/3920816-senate-panel-to-examine-bank-failures/ https://www.cnbc.com/2023/03/24/svb-failure-congress-hearings-aim-to-increase-confidence-in-banks.html https://www.cnbc.com/2023/03/14/svb-collapse-warren-bill-would-repeal-2018-deregulation-democrats-blame-for-the-crisis.html

Social media company TikTok has been in news recently for their ties to China and its possible data collection of its users. Congress recently questioned TikTok's chief executive Shou Chew to further dig into their potential wrongdoings. For more than five hours, members of Congress questioned Chew on not only their datas collection, but also on their ties to their parent company ByteDance, affects on teenagers mental health, and other similar topics. While Chew tried denying his ties to China, saying that he lives in Singapore and attended school in the US, many lawmakers were not convinced that Chew was concerned with the well-being of TikTok's users. One fact that is worth noting which rarely happens, is that while there are some outliers, both Republicans and Democrats have seemed to oppose the app and are looking to possibly limit or ban it in the US. With this being the first hearing into the investigation on TikTok, it will be interesting to see where things turn. Written by: Brendan Zaleski Source - https://abcnews.go.com/Politics/tiktok-ceos-testimony-increased-possibility-congress-passes-ban/story?id=98127912

Image: https://www.aol.com/finance/inflation-data-arrives-critical-moment-192322458.html The consumer price index (CPI), which measures inflation by comparing the change in price over time for a variety of consumer goods and services, has risen by 0.4% in February. While the CPI increased in February, it didn't increase as much as it did in January when it increased by 0.5%. An inflation report from a few days ago made people believe that the Federal Reserve would boost the size of its next interest rate hike to 50 base points from the quarter point that they had implemented in February. However, with the market's attention being drawn to bank failures, economists who doubt the Federal Reserve will even stick with a quarter point hike in March. Kevin Cummins, a chief U.S. economist at NatWest Markets, expected the economy to fall into a recession towards the second half of this year. However, he believes with the recent bank failures that the recession could come much sooner now if banks pull back on lending. Cummons thinks that the slowdown of our economy could reduce inflation. As for now, economists say that shelter and food costs continued to rise in February. Tom Simons, a money market economist at Jefferies, believes that the Federal Reserve will stick to the quarter-point rate hike in March. He expects that due to the uncertainty, the markets will focus on one Federal Reserve meeting at a time. Written by: Nate Birck Source: https://www.msn.com/en-us/money/markets/consumer-inflation-may-have-cooled-in-february-but-only-slightly/ar-AA18AjAQ

Image: https://www.nbcnews.com/business/business-news/silicon-valley-bank-getting-government-bailout-not-2008-sense-rcna74581 The past week has been mired with the collapse of Silicon Valley Bank and First Republic Bank, both of which were major regional banks in California. The collapse of SVB marks the largest bank failure since 2008, caused by depositors withdrawing their money after questions over their ability to insure deposits arose. Read more about SVBs fall: Is Putting Money Under Your Mattress Better Than the Bank? Traditionally, there has not been much public concern over banks ability to cover deposited funds, as the Federal Government insures such deposits; however, that insurance only covers up to $250,000 per depositor. In Silicon Valley Banks' case, they primarily work with large companies that have much larger accounts with them. Specifically, 98% of all money in SVB was uninsured. This posed a problem for the US government. SVB is the 16th largest bank in the country, and First Republic Bank is the 14th. Their failure could harm many large companies and cause further bank runs to happen throughout the country. In response to the situation, on Sunday The Federal Reserve, Treasury Department, and FDIC announced that they would be backing all deposits at Silicon Valley Bank and First Republic Bank in full. The Federal Reserve also announced a $25 billion “Bank Term Funding Program”, which is a new one year loan program offering lighter terms than their traditional loans. The announcement seemed to cool some of the market's worries, as bank stocks partially rebounded after the news. The news also drew criticism from many, calling it a “bailout” of large banks that took on too much risk. Expert at the University of Pennsylvania Christina Parajon Skinner says that the response could lead to more risky behavior on the part of banks if they believe they will be backed up by the government, and that this situation could cause “moral hazard”. The government has responded saying what they are doing is not a bailout. On Monday, Biden stated “This is an important point: No losses will be borne by the taxpayers,” in reference to the funding of the deposits. The money will instead be coming from The Deposit Insurance Fund, which is funded by fees from institutional banks and interest from government bonds. Treasury Secretary Janet Yellen echoed that position on Tuesday, saying "During the financial crisis, there were investors and owners of systemic large banks that were bailed out," she continued, "And the reforms that have been put in place means that we're not going to do that again.” Some still remain skeptical of this though. Professor at Harvard Jason Furman, and former economic advisor to President Obama, said in a Tweet that “Make no mistake – it does have an expected cost to taxpayers”. Others say that this is a regulatory issue that shouldn’t have happened, pointing to deregulation of rules put in place after 2008. Economist at MIT Simon Johnson says that “The Silicon Valley Bank situation is a massive failure of regulation and supervision”. The Federal Reserve announced Monday that they would be conducting a review of “the supervision and regulation of Silicon Valley Bank”. Head of The Federal Reserve Jerome Powell said in a statement “The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,”. The review will be released and made public by May 1st. Sources: https://www.msuwma.com/post/is-putting-money-under-your-mattress-better-than-the-bank https://www.msuwma.com/post/the-devastating-decline-of-first-republic-bank https://www.nytimes.com/2023/03/13/business/economy/svb-bailout-questions.html https://www.fdic.gov/resources/deposit-insurance/faq/index.html https://www.pbs.org/newshour/show/government-takes-steps-to-shore-up-confidence-after-collapse-of-two-banks-sparks-fears https://www.federalreserve.gov/releases/lbr/current/default.htm https://finance.yahoo.com/news/us-says-svb-deposits-safe-233407286.html https://www.nytimes.com/2023/03/14/us/politics/bailout-biden-financial-crisis.html https://www.cnbc.com/2023/03/13/wall-street-not-taxpayers-will-pay-for-the-svb-and-signature-deposit-relief-plans-.html https://www.cbsnews.com/news/janet-yellen-silicon-valley-bank-bailout-face-the-nation-interview-today-2023-03-12/#:~:text=%22During%20the%20financial%20crisis%2C%20there,going%20to%20do%20that%20again https://twitter.com/jasonfurman/status/1635112159494701057?s=20 https://www.nytimes.com/2023/03/13/business/signature-silicon-valley-bank-dodd-frank-regulation.html?action=click&pgtype=Article&state=default&module=styln-svb-collapse&variant=show®ion=MAIN_CONTENT_1&block=storyline_top_links_recirc https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230313a.htm

Image Source: NBC By: Abdullah Al-Ejel Silicon Valley Bank, famous for banking with tech startups and small businesses, collapsed as investors scrambled to reclaim their deposits. Notable companies cooped up in this incident include Roblox, Roku, and Circle, with up to billions of dollars thrown into jeopardy. Why did this happen? Silicon Valley Bank’s portfolio was “yielding an average 1.79% return last week, far below the 10-year Treasury yield of around 3.9%” (CNN). As interest rates increase and investments return lower average yields, the bank could not maintain a proper balance sheet and sold securities at a loss. SVB received negative reactions after announcing a negative cash balance and looking for assistance to recoup their capital. Fearing an imminent financial crisis, confidence in the bank dwindled and panic ensued. A “bank run” began, with over $42 billion in deposit withdrawals made, depleting the banks’ cash and inevitably causing the largest bank collapse since 2008. The failure raises concern about the safety and reliability of similar large banks holding similar capital and cash amounts. Since average Americans do not typically hold many accounts surpassing the $250,000 limit insured by the FDIC, a bank failure will instantly translate over to all money lost. However, businesses commonly exceed this limit, knowingly taking on a risk. The collapse of SVB will be a monumental moment in history, furthering discussion on the handling of banks and possibly federal government policy changes. Sources/Read Further: CNN CNBC

Image: https://seekingalpha.com/article/83860-10-signs-of-a-recession The U.S. economy is at an interesting point. In the past week or so, there were three bank closures in Silvergate bank, Silicon Valley bank, and Signature Bank. These closures have investors fearing that more bank closures could be on the way. On the other hand, jobs are still plentiful and the federal reserve continues to fight high inflation, which is a result of high demand for goods and services. Let’s walk through two scenarios on where the U.S. economy could head next. The Bank Closures Are Systematic A systematic risk is a risk that can hurt the entire economy. In this scenario, the risk to the economy is not limited to the banks mentioned above and can be spread to other institutions. This will cause a ripple effect throughout the financial system. If this turns out to be true, the federal reserve may have to take a step back from raising rates, because in this scenario, a recession has most likely already occurred. So, raising rates will only exacerbate the situation. Therefore, expect lower rates, but a damaged economy. Following a damaged economy will potentially be lower demand for goods and services, and therefore, disinflation. The Bank Closures Are Unsystematic An unsystematic risk is a risk that is limited to one section of the economy. In this scenario, the risk to the economy is limited to a select few banks that engaged in more speculative activity, such as funding startups and crypto companies. The rest of the financial system is in tact and consumers are not fearful. If this turns out to be true, the federal reserve will turn its attention back to the seemingly never-ending battle of inflation. In January, inflation rose 0.5% month-over-month and is still up 6.4% from a year ago. So, expect higher rates which can cause further damage to the economy down the road. Conclusion Both scenarios seem like a losing proposition for the economy. Although this doesn’t have to be a binary situation, where the economy heads next will likely be a version of one of these two scenarios. So, pick your poison. Sources: https://decrypt.co/123270/feds-shut-down-signature-bank-say-signature-and-silicon-valley-bank-depositors-will-be-made-whole?amp=1 https://www.cnbc.com/amp/2023/02/14/consumer-price-index-january-2023-.html

By: Jeffrey Nugent The Federal Reserve is trying its best at trying to give large and small banks confidence since investors are still wary about the industry's low points. Even with regulatory actions on Sunday, bank stocks took a big hit on Monday after SVB Financial Group's collapse, down 60%. Investors are questioning other banks that have questionable characteristics. One factor that was considered was whether the bank had a significant number of deposits that were not insured, which could potentially be withdrawn quickly or would require the bank to adjust interest rates to encourage customers to keep their funds with the bank. First Republic Bank is down 61% on Monday after the bank mentioned that they had obtained more funding to ensure they have enough cash to meet their financial obligations from JPMorgan Chase and the Fed. First Republic Bank is a bank that has many wealthy people and has about 120 billion uninsured deposits which are about two-thirds of the bank's total. Other banks are also similar like Comerica Bank which had about 65% of its deposits uninsured. Citi Group and JPMorgan had more than a trillion worth of uninsured deposits at the end of 2022. Bank of America had around 700 million uninsured deposits which only decreased by 6% with other stocks decreasing by 10% or more. Size is a big part of whether the bank loses money with JPMorgan Chase only being down 2% since they have the largest assets with almost 4 trillion after 2022. Sources: https://www.wsj.com/articles/investors-are-searching-for-safe-spaces-in-banking-89f652d7