Reads
- Wage-Price Spiral and That’s a Mixed Blessing
- Russia Built $80 Billion Offshore Cash Pile in Year of Sanctions
- To Rein in China’s Banks, Xi Uses Familiar Playbook
- Inflation Report Arrives as Fed Confronts Bank Failures
- Regional Banks Slammed by Fear of a Broader Financial Crisis
- Brainard Must Help Contain SVB Crisis She Warned Was Coming
- Don’t Call It a Bailout: Washington Is Haunted by the 2008 Financial Crisis
- Collapse of Silicon Valley Bank, Signature Bank Calls Fed Interest Rate Path Into Question
- KPMG Gave SVB, Signature Bank Clean Bill of Health Weeks Before Collapse
- Too-Big-to-Fail Lenders Rake In Deposits After Three Banks Fail
- Moody’s Puts First Republic, Five US Banks on Downgrade Watch
- First Republic, PacWest Lead US Bank Rebound From Post-SVB Rout
- Credit Suisse Finds ‘Material’ Control Lapses After SEC Prompt
- Billionaire Charles Schwab’s Fortune Is Slammed by SVB Fallout
- Free IRS TurboTax Competitor Is Closer After Biden Funding
- Meta Winds Down Support for NFTs on Instagram and Facebook
- Uber, Lyft Score Victory as California Court Affirms Right to Treat Drivers as Contractors
- Pfizer Agrees to Buy Seagen for $43 Billion
- Smithfield Foods CEO Defends Pork Producer’s Chinese Ownership
- HSBC Buys SVB’s UK Unit for £1 in Reprieve for Tech Sector
- Italy Says Hopes EU Acts to Shore Up Banks If Needed
- Regulators Face Urgent Task to Stem Spread
- Fed’s New Backstop Shields Banks From $300 Billion of Losses
- Regulators Close Another Bank and Move to Protect Deposits
- Signature Bank Seized by Regulators as Pain Spreads From SVB
- SVB’s Failure Exposes Lurking Systemic Risk
- SVB Collapse May Prompt Fed to Go Slow on Rate Hikes
- Silicon Valley Bank’s Failure Threatens California Winemakers
- Stocks Are Poised to Rise Monday
- Used Rolexes Are Beating the Stock Market
- Global Economy Gets Tailwind From Falling Energy Prices
- Saudi Aramco Posts Record $161 Billion Profit for 2022
- Four Takeaways
- An A.I. Start-Up Boomed
- As Economy Falters
- How Beijing Boxed America Out of the South China Sea
- Gen Z Spending Gets Supercharged by Inflation and Wage Growth
- A Supermarket Megamerger
- Chick-fil-A Wants to Serve Its Chicken Sandwiches in Asia and Europe
- SAP-controlled Qualtrics accepts $12.5 Billion Offer
- MLB to Stream Games for Free Amid Looming Diamond Sports Bankruptcy
Todays Open Interest Change
PREMIUM
PREPPER
Investors await the latest inflation data, which will be released later in the day, for clues on the Federal Reserve's future monetary policy and progress so far on the disinflation process. February consumer prices are expected to rise 0.4% M/M and 6% Y/Y, which would mark the smallest increase since October 2021.
Bigger picture: Markets are now pricing in a 73.1% chance of a 25-bp hike at the Fed meeting next week, and 26.9% probability of no hike at all, according to the CME FedWatch Tool. Just a week earlier, markets were seeing a 69.8% chance of a 50-bp hike and 30.2% probability of a 25-bp hike. The shift in expectations comes amid a moderating job growth rate and contagion fears over recent failures in the banking sector.
SA commentary: Investors should pay particular attention to the number for CPI services, excluding housing, said SA contributor James Kostohryz. "Under current conditions of distress in the U.S. banking system, if the CPI numbers come in higher than expected, the Fed would be placed in an extremely difficult predicament," he said.
Outlook: In his testimony to Congress, Powell said no decision was made on the pace of rate hikes at next week's meeting as Fed officials await more economic data to see if inflation was nearing its 2% target. UBS economist Jonathan Pingle said if the latest CPI report restores confidence in inflation's downward trajectory, the Fed will deliver a 25-bp hike. (6 comments)
Credit Suisse (CS) identified "material weakness" in its reporting procedures for FY22 and FY21, the bank said on Tuesday in its annual report, and is developing a remediation plan to address the same. The material weakness refers to the bank's failure to maintain an effective assessment process to identify material misstatement risks in its financial statements. Credit Suisse is developing a remediation plan to address the issue, including strengthening its risk and control framework. The bank delayed releasing its 2022 annual report due to last-minute questions from the U.S. SEC. SA contributor IP Banking Research turned bearish on the bank owing to regulatory scrutiny, saying they "completely lost trust" in its management. (11 comments)
A pension fund has filed a class action suit against Amgen (AMGN), accusing the biotech giant of owing more than $10B in back taxes and interest, and withholding this information from investors. The suit accused Amgen of violating securities laws by making false and/or misleading statements and/or failing to disclose the tax liabilities. It alleged that the IRS told the company in 2017 that it owed $3.6B in back taxes covering 2010 to 2012. In 2020, the agency said it owed another $5.1B for the 2013-2015 period. The suit alleged that the $5.1B tax hook wasn't disclosed to investors until April 2022, and by that time, the IRS had proposed a $2B penalty for nonpayment. SA author The Value Investor earlier raised concerns over high leverage, especially if the IRS issue escalates. (2 comments)
Ride-sharing and delivery apps can now continue to treat their drivers as independent contractors after California court reversed a lower-court decision yesterday, marking a win for companies including Uber (UBER), Lyft (LYFT) and DoorDash (DASH). The ruling mostly upholds Proposition 22, approved by California voters in 2020, that said drivers for such companies are independent contractors and are not entitled to benefits. However, the Service Employees International Union can still appeal the decision to the California Supreme Court. (5 comments)
Today's Markets
In Asia, Japan -2.2%. Hong Kong -2.3%. China -0.7%. India -0.6%.
In Europe, at midday, London -0.2%. Paris +0.2%. Frankfurt +0.5%.
Futures at 6:30, Dow +0.4%. S&P +0.4%. Nasdaq +0.3%. Crude -2.4% to $73.01. Gold -0.5% to $1906.30. Bitcoin +10.9% to $24,523.
Ten-year Treasury Yield +9 bps to 3.61%
Today's Economic Calendar
6:00 NFIB Small Business Optimism Index
8:30 Consumer Price Index
10:00 Quarterly Services Report
What else is happening...
WSB poll: SA readers pick Wall Street film 'The Big Short' to win Oscar for Best Picture.
FDIC is planning another auction of SVB (SIVB) assets as no suitors have emerged.
SA Quant flashed red on SVB (SIVB) & Signature Bank (SBNY) as early as July 28.
Bunge (BG) will replace Signature Bank (SBNY) in the S&P 500 index.
Netflix (NFLX) is considering alternatives for its advertising operations.
Meta Platforms (META) plans to begin second round of job cuts tomorrow.
Newcrest (OTCPK:NCMGF) and Newmont (NEM) end impasse over deal talks.
Pfizer's (PFE) Seagen (SGEN) buy unlikely to be hindered by antitrust concerns.
Novartis (NVS) has started the sale process of some of its ophthalmology assets.
United Airlines (UAL) stock tumbled after the bell yesterday on pessimistic forecast.