3/31/2023 4:28:16 PM
Investor optimism reigned this week heading towards the end of what has been a surprisingly strong Q1. Risk appetite was bolstered by waning concerns over global and regional banks and continued hopes that the Fed will soon pause. First Citizens’ agreement to purchase a large swath of SVB assets with modest additional support from the FDIC came following a weekend where there were no new, negative developments regarding the global banking system. Animal spirits also resurfaced Monday morning with the announcements of several modest M&A deals.
Investor focus seemed to shift away, at least for now, from the worries around US banking deposits and expected tightening financial conditions as a result of the banking crisis. EU CPI readings continued to show improvement on the headline figures with core numbers remaining stickier. Richmond Fed data remained weak but did show improvement from February while surpassing market expectations. Friday’s PCE data showed slight softening but not enough to significantly alter the messaging coming for Fed officials. US Treasury yields moved up, led by the US 2-year which gained a foothold back above 4%. Nevertheless, futures markets remained at odds with the Fed’s message, still pricing in a pivot to rate cuts later this year. Stock volumes declined significantly particularly early in the week and the US dollar remained heavy, weighed upon by strength in the Euro. The NASDAQ has seen the early February highs come back into focus while the S&P is about half way back to those levels. For the week, the S&P gained 3.5%, the DJIA was up 3.2%, and the Nasdaq rose 3.4%.
In corporate news this week, regulators took some additional steps to resolve the recently failed regional banks. First Citizens Bancshares saw its stock rocket higher after the bank negotiated a sweetheart deal to take on the assets of Silicon Valley Bank. Reports said that Newmark Group had been tapped to sell the bulk of Signature Bank’s loan book. Shares of Carnival floated higher after the cruise line reported solid Q1 results and said strong bookings performance has continued into March, though it also guided Q2 and fiscal year numbers below analyst consensus. Boeing was lifted by a report that it soon plans to boost 737 Max production rates above the current 31 aircraft per month. The semiconductor sector got some good news from Infineon, which announced its Q2 and fiscal year results will be higher than previously expected. Some of that optimism was stripped, however, by a report on Friday that China’s Cyberspace Administration plans to conduct a national security review of Micron’s sales in China.
SUN 3/26
(US) Fed’s Kashkari (voter) said too soon to forecast rate decision for the next Fed meeting – CBS
(US) US officials said to consider expanding emergency lending facility for banks, this is said to be one of the many considerations by officials - US financial press
MON 3/27
SIVB FDIC confirms First Citizens to acquire and assume $56B in deposits and $72B in loans of SVB with option to acquire all bank branches and corporate locations; The deal is structured as a whole bank purchase with loss share coverage
DNO.NO Provides Kurdistan operations update: Ordered to temporarily halt deliveries to Iraq-Turkey pipeline [~470Kbpd] following arbitration case between Iraq and Turkey has been awarded in Iraq's favor
(TW) DigiTimes report: The recovery of semiconductor industry is finally emerging; Capacity utilization rate is expected to recover ahead of schedule; Chip industry expected to be better than expected in H2 2023
MAERSKB.DK CEO Clerc: I think we have not seen really strong rebound in China as of yet; Chinese consumer is a bit more stunned by what’s happened and is not in a splurging mood right now - FT
(CH) Swiss weekly Total Sight Deposits (CHF): 567.0B v 515.1B prior (2nd biggest increase on record)
FCNCA Provides additional details on acquisition of SVB; FCB entered into five-year, $70B line of credit and a commercial shared loss agreement with the FDIC to cover an estimated $60B of loans - filing
WEC Affirms FY23 $4.58-4.62 v $4.60e; Cuts Q1 outlook to $1.56-1.58 v $1.77e (prior $1.68-1.72), citing warm winter weather
(US) BofA Institute: Mar 18th-to-date credit and debit card spending decelerated to -2% y/y v being flat y/y during Feb
(EU) European Banking Authority (EBA) Chair Campa: Warns about very big risks in financial system
CCL Reports Q1 -$0.55 v -$0.62e, Rev $4.43B v $4.35Be; Guides below consensus; Strong bookings performance has continued into March
(US) MAR DALLAS FED MANUFACTURING ACTIVITY: -15.7 V -10.0E; New Orders -14.3
TUES 3/28
(UK) Kantar announces 12 week grocery market share and sales: UK grocery inflation in March at 17.5% (the highest level ever recorded)
OMV.AT CEO: Russian gas can be replaced relatively easily with LNG currently
NESN.CH CEO: Nestle to continue to adjust prices to offset inflation as price increases have had limited effect on consumer spending so far; To re-examine banking relationship in Switzerland and abroad following Credit Suisse fall
9988.HK Confirms new organizational and governance structure into 6 units; Each to have the flexibility to raise outside capital and potentially to seek its own IPO
1211.HK Reports final FY22 (CNY) Net 16.6B v 16.0-17.0B prelim +445% y/y, Rev 424B v >420B prelim +96% y/y; Plans to issue CNY50B worth of debt financing instruments
(US) Nevada reports Feb casino gaming Rev $1.24B, +11.2% y/y, Las Vegas strip Rev $712.5M, +18.9% y/y
(US) MAR RICHMOND FED MANUFACTURING INDEX: -5 V -10E
(US) MAR CONSUMER CONFIDENCE: 104.2 V 101.0E
IFX.DE Raises Q2 rev >€4B (prior guidance €3.9B); Raises FY Rev meaningfully above prior guidance to €15-16B
(US) President Biden: Banking crisis is not over yet; Have done what is possible for banks; Watching situation very closely
JEF Reports Q1 $0.54 v $1.23 y/y, Rev $1.28B v $1.69B y/y; Says it 'does not know when the capital markets will return to some version of normalcy'
WED 3/29
(CN) US Senior Administration Official: US looking to reschedule the recently postponed Blinken visit to China; Also discussing visits by Yellen and Raimondo to China; Biden expects to talk to Xi soon
NXT.UK Reports FY22 Pretax £870.4M v £823M y/y, Rev £5.15B v £4.75B y/y; Last 8-weeks full price sales -2.0% y/y v -1.5% guided for FY23/24; Expect Q2 to be weaker than Q1
(UK) FEB MORTGAGE APPROVALS: 43.5K V 41.3KE (highest since Nov 2022)
(US) US PRES BIDEN SAID TO BE PREPARING TO CALL FOR NEW RULES FOR MID-SIZE BANKS; DISCUSSIONS STILL UNDER FLUX – Washington Post
M CEO Gennette to retire in Feb 2024; Appoints Bloomingdale’s CEO Tony Spring (58) as President and CEO-elect; CFO to also be COO
SBNY FDIC hired Newmark Group to sell $60B of Signature Bank loans - WSJ
CTAS Reports Q3 $3.14 v $3.01e, Rev $2.19B v $2.14Be; Raises guidance
(US) FEB PENDING HOME SALES M/M: 0.8% V -3.0%E; Y/Y: -21.1% V -22.4% PRIOR
(US) DOE CRUDE: -7.5M V +0.5ME; GASOLINE: -2.9M V -1.5ME; DISTILLATE: +0.3M V -1ME
(US) FDIC is said to be considering squeezing the biggest banks as it plugs $23B hole; Industry could face special assessment following SVB and Signature failures - press
THRS 3/30
EU reaches deal on 2030 renewable energy targets - press
(DE) GERMANY MAR CPI NORTH RHINE WESTPHALIA M/M: 0.6% V 1.0% PRIOR; Y/Y: 6.9% V 8.5% PRIOR (slowest annual pace since July 2022)
HMB.SE Reports Q1 (SEK) Net +540M v -1.12Be y/y, Rev 54.9B v 49.2B y/y; Notes spring season delayed in many important markets because of cold weather
(ES) SPAIN PRELIMINARY MAR CPI M/M: 0.4% V 0.7%E; Y/Y: 3.3% V 3.9%E V 6.0% PRIOR (slowest annual pace since Aug 2021)
(US) WSJ's journalist and US citizen Evan Gershkovich detained in Russia over 'spying charges' - Russian press
RH CEO: I have never seen a luxury home market down 45% a quarter ever, not even in 2008 or 2009; So I think we're near the bottom; But could it get a little worse? I think it could - earnings call
(US) Reportedly Freeport LNG export plant remains on track to pull in as much natural gas from pipelines as the facility can process - press
(DE) GERMANY MAR PRELIMINARY CPI M/M: 0.8% V 0.7%E; Y/Y: 7.4% V 7.3%E
(US) Q4 FINAL GDP ANNUALIZED Q/Q: 2.6% V 2.7%E; PERSONAL CONSUMPTION: 1.0% V 1.4%E
(US) INITIAL JOBLESS CLAIMS: 198K V 195KE; CONTINUING CLAIMS: 1.69M V 1.70ME
(US) Q4 FINAL GDP PRICE INDEX: 3.9% V 3.9%E; CORE PCE Q/Q: 4.4% V 4.3%E
(US) Treasury Sec Yellen: Recent bank failures point up need to assess past deregulatory actions for banks; Must address vulnerabilities in non-bank sector too
(US) Fed's Barkin (non-voter): Reasons to think inflation battle to take some time; If Fed backs off too soon inflation may come back stronger
(US) Fed’s Kashkari (voter): We have very high inflation but it is not being driven by wages
BA Exec: To raise 737 Max production rates above the current 31/month "very soon" - press
(US) Fed releases factors affecting reserve balances (H.4.1): Discount window borrowing declined to $88.2B v $110.2B w/w; Banks have borrowed $64.4B v $53.6B w/w from new BTFP facility
(US) Manhattan grand jury votes to indict former Pres Trump a minimum 34 counts of business fraud; Trump is expected to surrender early next week [Tues, Apr 4th]; First time in US history current or former president will face criminal charges - NYT
(JP) JAPAN MAR TOKYO CPI Y/Y: 3.3% V 3.2%E; CPI (EX-FRESH FOOD) Y/Y: 3.2% V 3.1%E
(CN) CHINA MAR MANUFACTURING PMI (GOVT OFFICIAL): 51.9 V 51.6E [3rd month of expansion]
FRI 3/31
(UK) MAR NATIONWIDE HOUSE PRICE INDEX M/M: -0.8% V -0.3%E; Y/Y: -3.1% V -2.2%E (biggest Y/Y drop since July 2009)
SAN.ES Notes first months of 2023 are on positive trend, sees Q1 lending +4% y/y, deposits +6% y/y; Affirms FY23 Rev 'double digit growth', ROTE >15%, Cost-to-income ratio 44-45% - ahead of AGM
(FI) Finland Foreign Min Haavisto: Finland's NATO entry paperwork will be done in matter of few days
(DE) GERMANY MAR NET UNEMPLOYMENT CHANGE: +16.0K V +1.0KE; UNEMPLOYMENT CLAIMS RATE: 5.6% V 5.5%E
(EU) EURO ZONE MAR CPI ESTIMATE Y/Y: 6.9% V 7.1%E; CPI CORE Y/Y: 5.7% V 5.7%E (record high for Core CPI)
(EU) EURO ZONE FEB UNEMPLOYMENT RATE: 6.6% V 6.6%E
(CN) China Top 100 developers Mar sales said to rise 29.2% y/y, +42.3% m/m to CNY660.9B - press
(US) FEB PERSONAL INCOME: 0.3% V 0.2%E; PERSONAL SPENDING: 0.2% V 0.3%E
(US) FEB PCE DEFLATOR M/M: 0.3% V 0.3%E; Y/Y: 5.0% V 5.1%E
MU China to launch cybersecurity review of Micron product sales in China - press
(US) MAR FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 62.0 V 63.3E
(US) USDA Quarterly Grain Stocks Report* (bu): Corn 7.40B v 7.48Be, Soybean 1.69B v 1.75Be, Wheat 0.946B v 0.93Be
(US) Atlanta Fed GDPNow: Cuts Q1 GDP estimate from 3.2% to 2.5%
(US) Feb Dallas Fed Trimmed Mean PCE (m/m) +4.0% v 5.8% prior
