Great article. I am in agreement that Schwab’s profits will be squeezed really hard. However, what seems to be missing from the analysis is the fact that under the new BTFP there will liquidity for any modest run on assets? The Federal Reserve will lend at par so no need to sell those T Bonds at a loss to the market? Did not the Fed just effectively back stop the whole U.S. banking system? Thank you.
Schwab’s not in danger of a bank run. Their business model built on cheap deposits is over. The stock will trade significantly lower on squeezed net income and lower PE before this cycle is done.
The stock is down over 40%.
I don’t disagree with the research (very well done Bubble). But some of the downside is built in.
If their user deposits slow/ interest rates level off, the stock might be a buy.
I agree with you Frank.
Great article. I am in agreement that Schwab’s profits will be squeezed really hard. However, what seems to be missing from the analysis is the fact that under the new BTFP there will liquidity for any modest run on assets? The Federal Reserve will lend at par so no need to sell those T Bonds at a loss to the market? Did not the Fed just effectively back stop the whole U.S. banking system? Thank you.
Yeah, don’t see Schwab facing a true bank run. However, deposits will continue to bleed. The question is how much...
Schwab’s not in danger of a bank run. Their business model built on cheap deposits is over. The stock will trade significantly lower on squeezed net income and lower PE before this cycle is done.