Dow gained 132, advancers over decliners 3-2 & NAZ went up 36. The MLP index added 1+ to the 211s & the REIT index rebounded 8+ to the 453s. Junk bond funds remained out of favor & Treasuries continued to be purchased, lowering yields. Oil slid lower in the 69s (but off session lows) & gold retreated 16 to 1979 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
St Louis Fed Pres James Bullard is optimistic stress in the banking system will abate in the weeks & months ahead, leaving a stronger economy that could force the central bank to push interest rates higher. “I would put 80% of probability on the case where financial stress abates," Bullard said. "If it doesn't abate, that's a completely different world where financial stress gets more intense, and I would be willing to react to that.” Bullard raised his outlook for how high interest rates should rise by 25 basis points to 5.625% based on stronger economic data & under the assumption that financial stress weakens in weeks & months ahead. Bullard said he has been talking to banks in his district & would describe the current situation as “angst” as opposed to actual problems at the institutions. He said banks are wondering whether deposits are as sticky as previously thought & whether deposits leave banking system in search for higher yields. “SVB was a very special situation and most banks are not in anything close to that situation,” Bullard added.
Fed's Bullard sees more rate hikes as bank stress abate
Treasury Secretary Janet Yellen today chaired a private meeting with top financial regulators amid renewed fears over the global banking system. The meeting, held by the Financial Stability Oversight Council, was closed to the public, the Treasury Dept. The meeting was previously scheduled. Established in 2010 under the Dodd-Frank Act, the FSOC is led by Treasury & includes the heads of the Federal Reserve, the FDIC, the Securities & Exchange Commission, & other regulatory agencies. The council meets regularly to discuss the state of financial stability & regulation. Regulators have rushed to contain fallout after the stunning implosion of Silicon Valley Bank & Signature Bank earlier in Mar, including protecting all deposits at the 2 institutions, even those holding funds that exceeded the FDIC's $250K insurance limit. The Fed also launched a new emergency backstop for lenders to help them meet deposit withdrawals under favorable terms. The moves were intended to staunch a flow of funds from small & regional US lenders as customers rushed to banks deemed too big to fail. However, banks are still feeling the sting from the industry-wide turmoil. A fresh banking sell-off gripped markets today as shares of Deutsche Bank tumbled, reigniting worries about a broader financial crisis. Shares of the German lender plunged nearly 10% in trading on the German stock exchange. The drop follows a steep rise in the cost of financial derivatives, known as credit default swaps, that insure bondholders against the bank defaulting on its debts. Rising costs on insuring debt were also a prelude to a gov-backed takeover of Swiss lender Credit Suisse by its rival UBS.
Yellen convenes Friday meeting with top US regulators as crisis engulfs banking sector
A bipartisan group of lawmakers overseeing the recent turmoil in the banking sector said that they aim to increase Americans' confidence in the banking industry after Silicon Valley Bank & Signature Bank collapsed over the last 2 weeks. The 2 House & Senate committees that oversee banking have announced back-to-back hearings next week to examine regulatory lapses that missed signs the banks were in trouble. Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Federal Reserve Vice Chair for Supervision Michael Barr & Treasury Undersecretary for Domestic Finance Nellie Liang are scheduled to testify at both hearings. The high-profile hearings come as lawmakers try to understand what caused the 2 institutions to fold, & as many Dems float legislation to bolster safeguards for the financial system. Regulators & lawmakers are also trying to contain further damage to the economy & reinforce confidence in the banking system. “My hope is that this first hearing, we can actually get a lot of the information out and establish [the facts],” Rep Patrick McHenry, chairman of House Financial Services Committee, said during a summit of the American Bankers Association. “I think this will bring a great deal of certainty and confidence to the market.” Last week, the Fed appointed Barr to lead a review of the SVB failure. McHenry said he welcomed the probe & “the other views of financial regulators, as well.” The Rep said Congress has a “very important role to play” in reviewing how the banks failed. But he stopped short of calling for legislation to prevent future collapses. McHenry said he wanted to ensure the push for legislation matches “the realities of the situation.” Sen Tim Scott, a South Carolina Rep & ranking member of the Senate Banking Committee, also said writing new laws should take a back seat at the hearings to investigating what happened. “Unfortunately, in Washington, that’s often what occurs, that those on the committee on the left will talk about Dodd-Frank and the reforms that were done in 2018,” he told the bankers' group. He was referring to calls in Congress to unwind some of the provisions in the 2018 law that weakened regulatory powers in the landmark 2010 Dodd-Frank law. “Nothing could be a clearer red herring than that,” he added.
Upcoming hearings on bank failures aim to increase U.S. confidence in banks
Walmart (WMT), a Dow stock & Dividend Aristocrat, is laying off hundreds of employees at e-commerce facilities across the country, as the big-box giant & other retailers brace for a tougher year ahead. WMT,
the nation's largest private employer, is shrinking its workforce as
many retailers plan on roughly flat or declining sales. Inflation &
the shift back to services is taking a bite out of sales of goods,
particularly after a Covid pandemic-fueled spending boom. A spokesperson confirmed it was cutting jobs at
fulfillment centers. The company said it made the cuts
“to better prepare for the future needs of customers.” “This
decision was not made lightly, and we’re working closely with affected
associates to help them understand what career options may be available
at other Walmart locations,” WMT said. The company confirmed that it is eliminating hundreds of jobs
at 5 fulfillment centers in Pedricktown, New Jersey; Fort Worth,
Texas; Chino, California; Davenport, Florida; & Bethlehem,
Pennsylvania. It was reducing its workforce because of a
reduction or elimination in evening & weekend shifts. WMT anticipates slower sales growth & lower profits in the coming fiscal year. The company said last
month that it expects same-store sales for its US business to grow 2-2.5%, excluding fuel. That compares with 6.6% growth in
the previous fiscal year. The company expects adjusted EPS of $5.90-6.05, excluding fuel, for the fiscal
year. That's lower than the adjusted EPS of $6.29 for the
past fiscal year. Online sales have continued to grow, though at a
slower pace than during the peak of the pandemic. E-commerce sales for its US business rose 12% in the most recent fiscal year, which
ended Jan 31. That compares with 11% growth in fiscal 2022 & 79% in
fiscal 2021. The stock rose 1.15.
If you would like to learn more about WMT, click on this link:
club.ino.com/trend/analysis/stock/WMT_aid=CD3289&a_bid=6ae5b6f7
Walmart lays off hundreds of workers at e-commerce facilities
Gold futures ended lower, paring their gain for the week, with prices failing to hold above the key $2000 mark. Prices for the precious metal touched the $2000 level again today. Gold continues to be influenced by various fundamental forces ranging from Federal Reserve interest rate hike expectations, lingering banking fears, $ weakness & falling Treasury yields. But given how the recent chaos across markets has fuelled speculation around the Fed cutting rates in 2023, gold has the potential to push higher. Gold for Apr fell $12 (0.6%) to settle at $1983 an ounce. Prices based on the most-active contract gained 0.5% for the week
Gold Futures Finish Lower, Post a 4th Straight Weekly Gain
Oil futures slumped, taking back a chunk of this week's bounce, as renewed worries over the US & European banking sectors revived fears of a credit squeeze & an economic downturn. West Texas Intermediate crude for May delivery fell $2.89 (4.1%) to $67.07 a barrel. May Brent crude, the global benchmark, dropped $2.88 (3.8%) to $72.62 a barrel. Crude was falling alongside equities. US & European bank worries were back in the spotlight as Deutsche Bank shares dropped 8% in European trade & shares of UBS AG, which has agreed to buy Credit Suisse, fell 6%.
Oil Prices See Renewed Slump as European Bank Worries Rise
Trading has been choppy during Mar. with many unanswered questions about the future of interest rates & understanding the banking messes in the US & Europe. Dow finished the week up 350 which is similar to undeceive.
Dow Jones Industrials
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