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Another day, another bank in trouble. Deutsche Bank is down 14% today. Their credit default swaps are surging. This means the cost to insure bond holders against a default is rising rapidly. Not good.
Deutsche Bank is the largest bank in Germany and a top 10 bank in Europe.
On Wednesday, Janet Yellen rattled the market after saying officials had not considered the possibility of expanding insurance coverage to all US bank deposits. Yesterday, in a meeting with the House Appropriations Committee, she walked back those comments and said regulators would “certainly” take additional actions to insure deposits if required.
Meanwhile, deteriorating investor confidence and persistent volatility in the Treasury market have held back companies from issuing new debt. For the first time since 2013, a week went by (3/9-3/17) without a single new high-grade bond sale from investment-grade rated companies.
Initial jobless claims last week were lower than expected, with 191,000 filing for unemployment benefits–estimates called for 197,000. While that’s good news for the economy, a strong labor market poses a challenge for the Fed in its battle to reduce wages and quell inflation.
Housing affordability remains an issue thanks to higher mortgage rates, but that didn’t stop sales of new US homes from rising unexpectedly in February. Sales climbed 1.1% month-over-month while the median sale price increased 2.5% from a year earlier to $438,200.
Just a couple of months after going after India’s largest company, short-seller Hindenburg Research has got a new target in its crosshairs: Jack Dorsey’s Block. The firm published a lengthy report which detailed systematic negligence that facilitated fraud at the company and accused it of strategically misleading investors. The stock fell more than 14% on the news.
Last month, Disney announced it would be laying off some 7,000 workers as part of an effort to reach $5.5 billion in overall cost savings. With its annual shareholder meeting just around the corner (April 3), the first round of job cuts is expected to kick in next week, followed by a big wave in April some have described as a “bloodbath”.
Shares of Deutsche Bank are down sharply this morning after a spike in credit default swaps (a form of insurance for the company’s bonds against default). The bank has watched more than a fifth of its value disappear this month as concerns over the stability of European banks continue following the shotgun wedding of Switzerland’s two largest lenders.
Back in October, the White House said it would buy back oil for the Strategic Petroleum Reserves (SPR)—which is at a 40-year low—when prices got down to $67-72 per barrel. Those actions have yet to materialize and US Energy Secretary Jennifer Granholm has suggested refilling the SPR could take several years.
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SVB: Bonuses for executives at Silicon Valley Bank jumped after its bet on long-dated bonds—the same ones that led to its demise—boosted its returns.
Backstop: US banks borrowed $164 million from the Fed’s backstop facilities in the week ending March 22, down just slightly from the previous week.
NBA: An ex-Morgan Stanley financial advisor has been arrested and charged with defrauding multiple NBA players out of millions.
Block: Cathie Wood’s flagship ARK Innovation ETF bought the dip to the tune of $21 million after Block shares plummeted following the release of Hindenburg’s short report.
Layoffs: Professional services company Accenture has announced it will cut 19,000 jobs (2.5% of workforce) over the next 18 months.
Caught: After being arrested in Montenegro yesterday, Do Kwon has been charged with criminal fraud by US prosecutors.
Coinbase: Cathie Wood wasted no time in buying the dip on Coinbase after it received a Wells notice from the SEC.
Reclaimed: After receiving a $102 million investment from FTX in September, startup Mystery Labs will buy back shares and token warrants from FTX creditors at $96 million.
Zipmex: Asian crypto exchange Zipmex is unable to pay staff and at risk of liquidation after its rescue investor missed, V Ventures, missed a payment.
CBDC: A shortage of banknotes (cash) in Nigeria has led to a surge of 63% in the value of eNaira (the central bank’s digital currency) transactions.
Buyout: A Japanese private equity consortium will buy Toshiba for $15 billion.
Chatbot: Andreessenn Horowitz led a $150 million round for AI chatbot developer Character.ai.
Hollywood: In addition to boosting its spending on theatrical movies this year, Apple will also make a bid for rights to stream English Premier League games.
Retail: Despite volatile market conditions, retail investors are piling into new micro-cap IPOs.
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