Markets on Monday survived the first day after the Silicon Valley Bank failure and the related Signature Bank failure. But there were some impacts.
The S&P 500 ended the day down 0.15% while Toronto with its heavier bank exposure was down 0.9%.
Canadian Western Bank was down 3.4% and Royal Bank was down 1.4%.
American Express (which has significant banking operations) was down 4.9%.
AutoCanada continues to fall for some reason and was down 5.8%.
Fortis Inc. was up 2.7%.
Expectations for further Central Bank interest rate hikes melted away to a good degree and bond yields came down significantly.
There is now an expectation that Canadian fixed mortgage rates could drop starting tomorrow.
With prices down today I nibbled on Canadian Western Bank and AutoCanada. But I am being cautious and will deploy cash only quite slowly. Hopefully this bank contagion episode is over, bet we really can’t be sure.
It seems that the receiver is selling off the assets of Silicone Valley Bank on a total fire sale basis. Apparently bids for its assets were due at noon on Sunday. It seems to me that a more orderly and less panicked sale of assets could have resulted in far higher prices for those assets. I guess the problem for receivers if that in a liquidation if they go slow and get better prices the creditors and even possibly the equity owners win. But if they go slow and it turns out to be a mistake as prices drop then the receiver gets the blame. So it seems that their incentive is to do a fire sale.