Morning Reads


Todays Open Interest Change




First Citizens Bank (NASDAQ:FCNCA) has agreed to buy Silicon Valley Bank's (NASDAQ:SIVB) deposits and loans, confirming an earlier report that surfaced on Sunday night. The purchase of $72B in assets will come with a 23% discount of $16.5B, while approximately $90B in securities and other assets will remain in receivership for disposition by the FDIC. Equity appreciation rights in First Citizens BancShares common stock - with a potential value of up to $500M - will also be received by the FDIC, which entered into a "loss-share transaction" with the lender to absorb commercial loan losses and minimize disruptions to the sector. In premarket trade, FCNCA is up 22% to $714/share.

Press release: "The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023. Customers of Silicon Valley Bridge Bank, National Association, should continue to use their current branch until they receive notice from First–Citizens Bank & Trust Company that systems conversions have been completed to allow full-service banking at all of its other branch locations. The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund to be approximately $20B... The exact cost will be determined when the FDIC terminates the receivership."

The deal marks the latest chapter of the current global banking crisis, which began on March 10, when SVB became the biggest U.S. bank failure since the collapse of Lehman Brothers in 2008. Shortly thereafter, Signature Bank (SBNYfailed, Credit Suisse (CS) was rescued by UBS (UBS), and things are looking rocky for First Republic (FRC) and possibly Deutsche Bank (DB), as investors and analysts alike assess if something deeper is brewing. Bond traders have radically shifted expectations for monetary policy, deposits have been drained from smaller banks and transferred to big institutions, while policymakers from Treasury Secretary Janet Yellen to Fed Chair Jerome Powell have sought to assure the public about the resilience of the U.S. financial system.

SA commentary: "The actual market and/or counterparty risks are very limited and strictly managed... however, loss of confidence may trigger a self-fulfilling prophecy," wrote IP Banking Research with regards to Deutsche Bank, though the sentiment could apply to large swathes of the banking system. CashFlow Hunter is also back with his latest picks on where to pick up value amid the global banking crisis. The Seeking Alpha contributor correctly predicted big problems for Silicon Valley Bank parent SVB Financial Group (SIVBthree months before the firm collapsed in an article that stunned the financial world. (21 comments)

Is it contained?

Will the recent spate of bank failures spiral into a financial crisis?

· Yes (just the tip of the iceberg)
· No (things are now under control)

Take the survey and see the results here

'Symbiotic' relationship

weekend visit to China by Apple (NASDAQ:AAPL) CEO Tim Cook is sparking some investor discussion, especially following his comments at the high-profile China Development Forum. "Apple and China... grew together and so this has been a symbiotic kind of relationship that we have both enjoyed. I am thrilled to be back in China. It means the world to me and I feel really privileged to be here." Only several days ago, TikTok was grilled over its relationship with China, while Apple has been reportedly looking to diversify its assembly operations, with an estimated 95% of total iPhone supply still coming from the country. Hardware tech may also be a reason for Warren Buffett to love Apple, but one analyst dives deeper into another answer to why AAPL is Berkshire Hathaway's (BRK.B) largest position by far despite historically eschewing technology stocks. (10 comments)

Nukes in Belarus

Russian President Vladimir Putin has announced his intention to station tactical nuclear weapons in Belarus, comparing the plans to the storage of U.S. warheads in bases across Europe. Construction of a storage facility in Belarus will be completed by July, expanding Russia's strike ability along NATO's eastern border that includes Latvia, Lithuania and Poland. "U.S. officials are aware of the reported Russian announcement and will monitor the implications," said Adrienne Watson, spokesperson for the National Security Council. "We remain committed to the collective defense of the NATO alliance." On Friday, Chicago wheat futures surged on short covering as well as market talk that Russia could halt exports following a sharp drop in global prices in recent weeks.

AI and your job

How will advanced chatbots impact the U.S. workforce? Pretty significantly, according to researchers from the University of Pennsylvania and OpenAI, the group behind the creation of ChatGPT. "Our findings reveal that around 80% of the U.S. workforce could have at least 10% of their work tasks affected by the introduction of LLMs (large language models), while approximately 19% of workers may see at least 50% of their tasks impacted." The projections span all wage levels, with higher-income jobs potentially facing greater exposure to LLM capabilities and LLM-powered software (check out some of the most exposed professions here). Microsoft-backed (MSFT) OpenAI recently added support for ChatGPT plugins, including ones for Expedia (EXPE), (BKNG), Slack (CRM) and Shopify (SHOP).

Today's Markets

In Asia, Japan +0.3%. Hong Kong -1.8%. China -0.4%. India +0.2%.
In Europe, at midday, London +1%. Paris +1.2%. Frankfurt +1.5%.
Futures at 6:30, Dow +0.6%. S&P +0.6%. Nasdaq +0.3%. Crude +1.1% to $69.99. Gold -1.6% to $1951.20. Bitcoin +0.8% to $27,932.
Ten-year Treasury Yield +9 bps to 3.47%

Today's Economic Calendar

10:30 Dallas Fed Manufacturing Survey
1:00 PM Results of $42B, 2-Year Note Auction
5:00 PM Fed's Jefferson Speech

Companies reporting earnings today »

What else is happening...

Bank stresses bring economy closer to recession - Fed's Kashkari.

Aurora Cannabis (ACB) receives non-compliance notice from Nasdaq.

Twitter's valuation down to $20B, while source code is leaked online.

Do gasoline stock lows signal a return to high U.S. pump prices?

WWE (WWE) receives millions from McMahon for investigation costs.

Outer BanksMurdaugh Murders lead Netflix (NFLX) to top streaming ratings.

Ethereum (ETH-USD) is at risk of losing its dominant status in DeFi.

Microsoft's (MSFT) chances of closing Activision (ATVI) deal raised at Citi.

EV buyers may be pulling back, but Tesla (TSLA) is still running hot.

Rocket Lab (RKLB) takes aim at SpaceX with Neutron launch plans.

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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