Morning Reads


Todays Open Interest Change




Officials at the U.S. Treasury Department are reportedly studying ways to guarantee all bank deposits if tremors in the banking system spiral into a full-blown financial crisis. Authorities don't yet see full FDIC coverage as necessary, but they are exploring a legal framework using emergency powers that wouldn't require passage through a deeply divided Congress. The fear is that if another regional lender fails, there will be a run on deposits at smaller banks, knocking the industry over and sending billions of dollars to their bigger competitors. Here are the top 10 financial stocks, according to SA’s Quant Ratings

Backdrop: The FDIC has already backstopped the uninsured client deposits of Silicon Valley Bank (SIVB) and Signature Bank (SBNY), while crypto-focused Silvergate (SI) was left to liquidate and Credit Suisse (CS) was rescued by Swiss authorities and UBS (UBS). Some support is building for a motion to guarantee all bank deposits, as a fifth bank - First Republic (FRC) - teeters on the brink of insolvency. Shares of the lender tumbled 47% on Monday after a series of downgrades by S&P, but recovered as much as 21% in premarket trading as investors swallow an aid proposal led by JPMorgan (JPM) CEO Jamie Dimon (prior reports also suggested it was exploring a sale).

Where things stand? Some Republican lawmakers, like Rep. Patrick McHenry (R-NC), chairman of the House Financial Services Committee, are weighing changes to the current $250,000 FDIC insurance cap, as well as Democratic ranking member Maxine Waters (D-CA). Others are more against a universal guarantee on all bank deposits, like the conservative House Freedom Caucus, which feels that the "dangerous precedent that simply encourages future irresponsible behavior [would] be paid for by those not involved who followed the rules." It comes after the Mid-Size Bank Coalition of America penned a letter to U.S. Treasury Secretary Janet Yellen to extend FDIC insurance on all deposits to "restore confidence among depositors before another bank falls."

SA commentary: "Everywhere you look, the government is handing out money to the banks," writes contributor Mark Grant. "In fact, U.S. banks have borrowed a combined $164.8 billion from the two backstop facilities provided by the Fed, eclipsing the money that was borrowed during the 2008/2009 financial crisis. The effects of this will be wide-ranging, including real estate loans, corporate loans, personal loans, mortgages, credit card interest rates, the U.S. Prime Rate, and every other type of lending that you can consider." Check out the full article, The Banking System - The Heat Is On. (20 comments)

Robotaxi expansion

General Motors' (NYSE:GM) Cruise is making headway in the self-driving race after applying for permission to test its autonomous vehicles across all of California (see the fine print here). It was only a year ago that Cruise launched the first commercial, driverless ride-hail service in a major U.S. city after inking the appropriate permits in San Francisco. To date, Cruise has logged more than 1M driverless miles, 833K trips across the Golden Gate Bridge, and 994 road trips in other testing areas like Phoenix and Austin. In terms of its fleet, Cruise currently has 300 self-driving vehicles in service, with GM shelling out around $2B a year to grow its autonomous subsidiary as part of CEO Mary Barra's plan to double the automaker’s revenue by 2030. (2 comments)

Fresh supply

Russia has surpassed Saudi Arabia to become China's top oil supplier, according to government customs data, with imports rising 23.8% to 1.94M barrels per day in the first two months of 2023. That may help shed some light on Xi Jinping's visit to Moscow this week, though it also reflects the economics of cheaper Russian crude, with Western sanctions leading to steep discounts on Urals grade cargoes. General Chinese-Russian trade has also soared since the invasion of Ukraine as the two countries build on a "no-limits" partnership proclaimed at the 2022 Beijing Olympics. Ahead of Xi's visit, Vladimir Putin expressed a willingness to discuss China's peace plan for ending the war in Ukraine, though U.S. Secretary of State Antony Blinken said that the "world should not be fooled" by the blueprint, which would "freeze" in place territory seized by Russian forces. (14 comments)

More to come?

Amazon (NASDAQ:AMZN) is eliminating another 9,000 positions in coming weeks, marking the latest round of job cuts that adds to the 18,000 layoffs announced in January. The new cuts are mainly focused in AWS, advertising, Twitch, and People Experience and Technology Solutions divisions. "Given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and head count,” CEO Andy Jassy declared, explaining why he didn't announce both batches of layoffs at the same time. Amazon's total headcount more than doubled from 2019 to 2021, peaking at over 1.6M. As of the close of 2022, total headcount had dipped to about 1.54M. (81 comments)

Today's Markets

In Asia, Japan closed. Hong Kong +1.4%. China +0.6%. India +0.8%.
In Europe, at midday, London +1.4%. Paris +1.7%. Frankfurt +1.6%.
Futures at 6:30, Dow +0.6%. S&P +0.5%. Nasdaq +0.2%. Crude +1.1% to $68.56. Gold -0.5% to $1972.20. Bitcoin -0.9% to $28,038.
Ten-year Treasury Yield +6 bps to 3.54%

Today's Economic Calendar

FOMC meeting begins
10:00 Existing Home Sales
1:00 PM Results of $12B, 20-Year Bond Auction

Companies reporting earnings today »

What else is happening...

Survey results: 70% of WSB subscribers see 25 bps rate hike tomorrow.

Narasimhan takes over as CEO of Starbucks (SBUXahead of schedule.

Virgin Orbit (VORB) reportedly drawing up plans in case of insolvency.

Wrong size? Analysts pan Foot Locker's (FL) aggressive earnings guidance.

Moderna (MRNA) eyes ~$130 price tag for COVID vaccine in the U.S.

Canadian cannabis players like Aurora (ACBhit 52-week lows.

Florida Governor Ron DeSantis calls for ban on CBDCs.

Iron ore plunges on China warning, Tangshan production controls.

Warner Bros. (WBD) 'Shazam' sequel disappoints with $30.5M opening.

Intel (INTC), AMD (AMD) stand out as chip expectations remain mild.

Ally Financial (ALLY) gains amid vague Buffett takeover speculation.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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