Prof G Markets: Will Tesla Reward Elon and Move to Texas? + Bank Earnings and Basel Endgame

Basel III

The proposed Basel III endgame regulations aim to increase capital requirements for large banks in response to the Silicon Valley Bank collapse. Scott Galloway argues that while these regulations intend to make banks more resilient to financial crises, they may also slow economic growth by limiting banks' ability to lend 1. He believes the banking system has already demonstrated resilience, as seen during last year's crisis, and additional requirements might be unnecessary 2.

The miracle of modern banking in the United States, and it is a miracle, is that if people deposit $100, but it's different people who need the money back at different times, you can loan out 120 or $130 and grow the economy.

--- Scott Galloway

Scott emphasizes that increasing capital requirements could decrease the likelihood of a banking crisis but also hinder economic growth by restricting lending opportunities 2.

   

Bank Earnings

Recent earnings reports from major banks reveal a strong performance in investment banking, with significant year-on-year growth. Scott Galloway notes that investment banking sales increased by 27%, driven by underwriting and debt sales, while consumer banking faced challenges due to shrinking net interest margins 3. This shift indicates that consumers are becoming more financially savvy, moving their deposits to higher-yield accounts 3.

I also thought it was interesting that the lowlight for all of them was the net interest income. And I guess the thing that we underestimated is how smart consumers are.

--- Kara Swisher

Despite these challenges, the overall revenue for the six largest US banks increased by 4% from the previous year, highlighting the resilience and adaptability of the banking sector 4.