Dow dropped 419, decliners over advancers a massive 8-1 & NAZ was off 119. The MLP index declined 4+ to 211 & the REIT index fell 5+ to the 361s. Junk bond funds were lower & Treasuries saw very heavy buying causing yields to plunge. Oil sank another 2+ to 66 & gold surged 45 to 1968.
AMJ (Alerian MLP Index tracking fund)
A group of the nation's biggest banks swooped in to rescue First Republic Bank (FRC) with a $30B deposit, a move intended to shore up the beleaguered lender amid fears of a broader financial crisis. JPMorgan Chase (JPM & a Dow stock), Citigroup (C), Bank of America (BAC) & Wells Fargo (WFC) will each contribute $5B; Goldman Sachs (GS) & Morgan Stanley (MS) will deposit about $2.5B each, according to a release from the banks. Truist, PNC, U.S. Bancorp, State Street & Bank of New York Mellon will provide about $1 billion apiece. "This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities," the coalition said. The deposits are required to stay at FRC for at least 120 days, according to the terms of the agreement, while earning the same daily interest as the lender's current clients. Federal regulators lauded the move, which came after several brutal & volatile days for FRC shares. The stock, which hovered around $115 per share on March 8, fell as low as $19 per share this week, the lowest level in a decade. The wild swings in stock price came in the wake of the stunning collapse of Silicon Valley Bank last Fri, which sparked widespread investor panic. FRC, which has more than 80 branches across the US, contacted customers over the weekend in an attempt to reassure them about its health. "In light of recent industry events, the last few days have caused uncertainty in the financial markets," execs wrote in an email to clients. "We want to take a moment to reinforce the safety and stability of First Republic, reflected in the continued strength of our capital, liquidity and operations." Still, S&P Global Ratings & Fitch Ratings cut First Republic to junk status earlier this week amid concern that clients will pull holdings from the lender.
First Republic gets $30B deposit from US banks after SVB collapse
Amid high inflation, many Americans fear the country will slip into a
recession this year. About 75% say they worry one is on the way, according to a survey
by Real Estate Witch. And 69% of Americans believe the country is in a
recession. And more than ½ (55%) say they would lose everything in a
recession. Typically,
economists define a recession as at least 2 consecutive qtrs of
decline in GDP. This happened in Q2-2022. However, the National Bureau of Economic Research,
which is the gov body responsible for declaring a recession,
has yet to make a determination for last year. And even though GDP increased in Q4 by 2.9%, it did not change many people's outlook on the economy. In
fact, 63% are pessimistic about how the economy will perform in 2023. As inflation soared, many Americans turned to credit cards to deal with rising expenses. In fact, credit card balances increased to $931B in Q4-2022, according to the latest Credit Industry Insights report by TransUnion. "Bankcard
balances and originations continue to climb as consumers seek ways to
cope with inflation, and this is particularly the case among Gen Z
consumers, who have seen growth of 19% in originations YoY and 64% in
balances over the same period," Paul Siegfried, TransUnion senior VP credit card business leader, said. In
addition, credit card delinquencies have increased. Serious credit card
delinquencies are expected to increase to 2.6% at the end of 2023,
according to the 2023 Consumer Credit Forecast
by TransUnion. That's up from 2.1% at the end of 2022. Delinquency
rates could reach levels not seen since 2010, the report found.
Recession fears rise: More than half of Americans say they'd lose everything
General Motors (GM) is losing ground in China, its top sales market for more than a
decade & one of 2 main profit engines for the automaker. The
company's market share in the country, including its joint ventures,
has plummeted from roughly 15% in 2015 to 9.8% last year, the first
time it has dropped below 10% since 2004. Earnings from the
operations also have fallen by nearly 70% since peaking in 2014. The
coronavirus pandemic, which originated in China, is partially to blame.
However, the declines started years before the global health crisis &
are growing increasingly more complex amid rising economic &
political tensions between the US & China. There's also
growing competition from gov-backed domestic automakers fueled by
nationalism & a generational shift in consumer perceptions regarding
the automotive industry & electric vehicles. Competition is increasingly becoming a problem for GM, which has
acknowledged such issues with its Chinese business. However, the company
has not offered much assurance on how to reverse the trend other than
the promise of new EVs & a new business unit called The Durant Guild that will import pricy vehicles with high margins from the US to China. While
many US brands aren't performing well in China, GM's decline is
especially notable. Its operations in the country are much larger than
those of its crosstown rival Ford (F). Being overly reliant on only a few markets can be risky. But it has led to record earnings for GM,
as the company under CEO Mary Barra has done away with underperforming
operations. Electric vehicles could be a new opportunity for GM to grow
globally, but experts say it would be an uphill battle compared with
recovering in China in the years to come. GM has been downplaying the role of its operations in China in recent
qtrs, including CFO Paul Jacobson saying China is “not decisive” to
GM's financial performance when he discussed earnings in Oct. The stock fell 1.32.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM_ai=CD3289&a_bid=6ae5b6f7
General Motors’ China business is hurting, and it’s not just because of Covid
Risk averse is taking over investor thinking. It is difficult to understand the goings on in the stock market when the main players don't know. Next week this chaos will continue & the FOMC will bring more excitement when it concludes its meeting on Wed. Get ready for more wild swings in stocks.Dow Jones Industrials
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