Morning Reads


Todays Open Interest Change




Renewed concerns over regional banks have been pushing regulators into uncomfortable areas, like facilitating and allowing the largest U.S. banks to get even bigger. Other things that have been invoked are "systemic risk exceptions," which allowed the FDIC to guarantee banks' uninsured deposits, and there are now even proposals for blanket deposit guarantees. The fear here is that the situation could spiral if left unchecked and traditional policies may be overlooked to stamp out the crisis.

Snapshot: Another hot topic of discussion has been centering around the short-selling of bank stocks. Under the strategy, investors borrow shares with the expectation that prices will drop, and if all goes well, they buy back the shares for a profit. In September 2008, the SEC temporally banned short sales, primarily in financial stocks, in an attempt to protect companies and stabilize the market, but this time around regulatory intervention might be even more controversial.

The case for a ban: The economic outlook is already uncertain, given things like the U.S. debt ceiling and falling commercial real estate values. Stress on U.S. banks could be a defining factor that pushes the economy into recession, especially for those that argue that continued stock plunges have real-world effects like spooking depositors and prompting bank runs. U.S. federal and state officials are looking into whether "market manipulation" has prompted recent volatility, while JPMorgan (JPM) CEO Jamie Dimon has said that regulators should look at banning the short-selling of bank stocks.

Leaving things in place? The short-selling ban in 2008 only lasted three weeks and many have argued that the restrictions were not only unnecessary, but actually harmed market quality and stability. Impacts cited are liquidity and pricing efficiency, while short-sellers can use other instruments like futures, options and swaps to get around the ban. Many also contend that shorts balance the market ecosystem by shining a spotlight on companies that may deserve more scrutiny, while economists from Goldman Sachs have argued that such a drastic move on bank shares looks unlikely in this scenario. (10 comments)

Short ban

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Media struggles

The digital publishing industry has claimed its latest victim, with Vice Media (VICEM) filing for Chapter 11 bankruptcy protection and listing both assets and liabilities in the range of $0.5B-$1B. It's a major turn in fortunes for a media startup that was valued at $5.7B at its peak in 2017, but was battling for a valuation of just $1.5B in December 2022. SPAC 7GC was also once in talks to merge with Vice Media, however, the parties walked away from a potential deal in August 2021, and it may now end up being sold to a lender consortium. In terms of current ownership, private equity firm TPG Inc. (NASDAQ:TPG) owns 44% of Vice Media. Disney (NYSE:DIS) is also a significant shareholder of the company, with a 16% direct stake and another 10% via its holdings in A&E Networks. (3 comments)

Merger Monday

Oneok (OKE) has agreed to acquire Magellan Midstream Partners (MMP) in a cash and stock deal worth $18.8B - including assumed debt - and resulting in a combined company with a total enterprise value of $60B. The merged firm will become one of the largest in the U.S. energy transport and storage business, after last year's energy boom left companies with a large windfall of cash. That's not all. Newmont (NEM) has sealed a $19B deal for Australia's Newcrest (OTCPK:NCMGY), paving the way for the world's largest gold miner, with nearly double the production of its nearest rival - Barrick Gold (GOLD). Speaking of Down Under, Australian gaming technology developer Aristocrat Leisure agreed to pay $1.2B for NeoGames (NGMS), in a smaller transaction than the other two, but one that sent the latter's shares up 120% in premarket trading. (261 comments)

Fed’s No. 2

While he has served as a board governor since 2022, Philip Jefferson has been officially nominated as Vice Chair of the Federal Reserve. Jefferson, a former Fed economist and vice president for academic affairs at Davidson College, would replace Lael Brainard, who left the No. 2 role at the central bank to head up the National Economic Council. In the Vice Chair role, Jefferson would help shape the agenda for rate-setting meetings, and has been known to ascribe equal importance to the Fed's dual mandate even in the era of high inflation. Biden also announced that he will renominate Lisa Cook for an additional full term as a Member of the Fed's Board of Governors, while nominating Adriana Kugler, U.S. Executive Director to the World Bank, to an empty board seat.

Today's Markets

In Asia, Japan +0.8%. Hong Kong +1.8%. China +1.2%. India +0.5%.
In Europe, at midday, London +0.5%. Paris +0.4%. Frankfurt +0.3%.
Futures at 6:30, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude +0.6% to $70.49. Gold flat at $2020. Bitcoin +2.1% to $27,413.
Ten-year Treasury Yield +3 bps to 3.49%

Today's Economic Calendar

8:30 Empire State Mfg Survey
8:45 Fed's Bostic Speech
9:15 Fed's Kashkari Speech
12:30 PM Fed's Barkin Speech
4:00 PM Treasury International Capital

Companies reporting earnings today »

What else is happening...

Big moves! Argentina to hike rates by 600 bps to stave off inflation.

Activist Engaged Capital to start proxy battle with Shake Shack (SHAK).

Biogen's (BIIB) Alzheimer's drug may raise Medicare costs by up to $5B. (AI) says preliminary Q4 revenue exceeds estimates.

Musk names NBCUniversal (CMCSA) executive as new Twitter CEO.

Tesla (TSLA) to issue software fix for more than 1M vehicles in China.

Binance to exit Canada due to rules on stablecoins, crypto exchanges.

Wheat futures in focus after USDA forecasts inventories at 16-year low.

CVS Health (CVS) said to shut down clinical trial business.

AMD's (AMD) opportunity in AI may be much bigger than first believed.

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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