- Zenith Newsletter
- Posts
- Are bank failures business as usual?
Are bank failures business as usual?
Weekly Newsletter 05/05/23
Welcome to the team, Ben!
Ben Silvernale joins us as our newest financial advisor, Bennett breaks down the latest bank failure, Jon reports on the aftermath of the Apple savings account.
Our membership is only $4.99 per month!
Check out these free articles from our Knowledge Base:
01. Walking the Walk
From Ben Silvernale, Financial Advisor
Hoskin has come quite far from its founding, and furthermore the business challenges of 2022. I became an investor in Hoskin Capital last year, after receiving mentorship from Nate since 2021. I have nothing but pride in the amount of effort from our team in making the vision a reality.
My personal story as to how I got here is similar to Nate’s: we were both dissatisfied with the level of advanced financial resources and attention given to young adults, and I wanted to join or create a firm that specialized in exactly that. I left my prior wealth management firm to attend college, and that’s when I found Nate on TikTok. The rest is history. Beyond Hoskin, I attend college full-time at Washington State University (Go Cougs!), and plan to get a double-major in Finance and MIS.
So what’s the point? We’re growing, and we need more hands on deck when it comes to making sure our clients receive the best possible service. I’ve been helping Nate with advisor operations, so everything on the back-end is scalable for when we grow and onboard more advisors. During this process, I realized that a perfect opportunity presented itself: why not walk the walk and do what I love at the same time?
After talking with Nate, we now have a plan in place for me to join Hoskin Capital as a full-time advisor starting June of this year.
My main goal will be to help local college students and young adults with the same services we already provide: financial planning, education, and investment management. This will all be done in a manner where I’m supervised by Nate while I learn as much as I can. He’s already mailed me his CFP textbooks to study up, and I now have a new hobby of deciphering his notes.
I’m excited to be stepping into this role, and can’t wait to start this journey with the rest of you!
02. Bank Failures, Rate Hikes and Government Default: Business as Usual?
From Bennett Fees, Economic Research Associate
The second-largest bank failure in US history, interest rates hiked above 5% for the first time since 2007, and a government default as soon as June 1st: business as usual?
While I would like to say that these events have come out of nowhere, most of these developments have been covered thoroughly, yet, it is only when you combine them that our present moment looks more and more peculiar. Maybe claims of a polycrisis aren’t too far off from reality…
While I covered the debt ceiling development last week, let's look at what the other two events might have in store looking forward. Starting with First Republic, JP Morgan’s offer should not be confused with a return to stability, even if Powell tries to convince himself that the banking system is “sound and resilient”. Rather, an immediate crisis has been avoided, but many investors have wisely turned their focus to the aftershocks of this turmoil as the anticipated changes in banking regulations may further inhibit the supply of credit.
As for the recent rate hike, a meaningful change is the removal of the phrase, “additional hikes are anticipated”. The implication is that this meeting marks the beginning of a pause for the Fed, the length of which will depend on many factors, the two most important being the stickiness of inflation and a possible recession.
Still, Powell has remained firm in referencing his dual mandate to promote stable prices and maximum employment. Regarding the first half, Powell reiterated his commitment to the 2% target and rejected any notion of getting to 3% and then stopping. To get to this point, Powell figures that “we're going to need to stay at this for a while”. This is principally because the efficacy of hikes to date has been surprising, to say the least, which has put inflation projections out of line but is also what gives Powell confidence in a potential soft landing.
Powell said noted that “we've raised rates by 5 percentage points in 14 months, and the unemployment rate is 3 1/2 percent, pretty much where it was, even lower than where it was when we started… it wasn't supposed to be possible for job openings to decline by as much…as they've declined without unemployment going up”. While Powell does not believe that wage growth is the principal driver of inflation, the key takeaway is how long this pause will last, and if any event may cause a sudden move by the Fed, in either direction. Stay tuned for more updates!
03. Just Apple Being Apple
From Jon Scott, Lead Author
I think the actual genius behind Apple is their ability to just make life easier. I remember the early arguments over Android versus iPhone. Android users (which I was one of them before 2012–yes I am dating myself a bit) would always argue that their phone could do so much more than an iPhone. While the argument was true, the beauty of the iPhone is that everyone–from a toddler to someone pushing 80–is able to use the phone with minimal difficulty. I have to think that’s why the reception to Apple’s new savings account has been so positive.
So positive, that Apple saw $1 billion in deposits to the Apple Card Savings Account in only 4 days. In a market where you can easily find comparable or even greater returns for your cash with other providers, it is Apple that seems to be taking off at breakneck speed. Adding money on your iPhone is much easier than transferring money between two bank accounts, and that is probably the reason for the influx of money.
Additionally, I think many consumers are still unaware of high yield savings accounts, and so the news surrounding a 4.15% APY on a savings account was news to many. Still, for those without an Apple Card who are looking for a (relatively) high return on your cash, the Apple Card may not be the best option–review this Hoskin Capital article if you’re curious on whether the Apple Card Savings Account is right for you.
What do you want to learn about next?
Money is a terrible master but an excellent servant
-P.T. Barnum
Copyright (C) Want to change how you receive these emails?You can update your preferences or unsubscribe
Reply