Wall Street Breakfast: Containing SVB Mess
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Justin Sullivan
U.S. regulators have rushed to minimize the impact of the collapse of Silicon Valley Bank, owned by SVB Financial (SIVB), on the wider financial sector, thereby easing market jitters. Depositors of the shuttered bank will have access to all their funds today, regulators said. Additionally, the Federal Reserve said yesterday it will make additional funding available to eligible depository institutions to avoid damaging bank runs.
Latest updates: PNC Financial (PNC) and Royal Bank of Canada (RY) explored bidding for Silicon Valley Bank as the Federal Deposit Insurance Corp. rushes to find a buyer for the failed lender. However, interest from the two early suitors has since cooled. Meanwhile, HSBC's (HSBC) ring-fenced subsidiary HSBC UK Bank acquired SVB's British unit for £1. Germany's financial regulator ordered a moratorium on SVB's Frankfurt branch, citing risks to the fulfillment of obligations to creditors.
Bigger picture: SVB was shut down after withdrawal requests overwhelmed the lender, marking the second-largest bank failure in U.S. history after the 2008 collapse of Washington Mutual. Signature Bank (SBNY) was also closed, with regulators invoking a systemic risk exception.
Outlook: The failure of SVB and the Federal Reserve introducing a new type of quantitative easing to backstop the banking sector has traders increasingly betting on a forced Fed pause. U.S. Treasury Secretary Janet Yellen said the government will not bail out banks. Billionaire investor Bill Ackman said the government's actions will boost depositors' trust in the banking system, but he still expects other banks to fail. SA contributor Logan Kane also expects more banks to fail, with some big regional banks already under intense pressure likely to follow soon. (175 comments)
In the spirit of the Oscars, which Wall Street movie below should win the Academy Award for Best Picture?
· Trading Places (1983)
· Wall Street (1987)
· Boiler Room (2000)
· Too Big to Fail (2011)
· Margin Call (2011)
· The Wolf of Wall Street (2013)
· The Big Short (2015)
· Wizard of Lies (2017)
Take the survey and see the results here
First Republic Bank (FRC) enhanced and diversified its financial position through access to additional liquidity from the Federal Reserve Bank and JPMorgan Chase (JPM), bringing the San Francisco-based bank's unused liquidity to fund operations to more than $70B. This excludes the additional liquidity First Republic is eligible to receive under the new Bank Term Funding Program announced by the Fed yesterday. SA contributor The Value Investor highlighted that First Republic operates aggressively with deposits, while having limited earnings power to increase rates paid on deposits. (148 comments)
'Everything Everywhere' sweeps Oscars
'Everything Everywhere All at Once' won Best Picture at the Oscars, logging another victory for not only traditional theatrical studios but indie studios. The film, from independent mini-major film studio A24, won seven Oscars - more awards than any other picture at the 95th Academy Awards. The wins outpace traditional movie studios and streaming companies that have thrown their weight around in recent Oscar ceremonies - notably Netflix (NFLX), which is still waiting for its Best Picture win despite a number of nominations. Netflix's 'All Quiet On the Western Front' was among the most nominated pictures, with nine nominations, and won four awards. (10 comments)
Today's Markets
In Asia, Japan -1.1%. Hong Kong +2%. China +1.2%. India -1.5%.
In Europe, at midday, London -1.8%. Paris -2%. Frankfurt -2.3%.
Futures at 6:30, Dow +1.1%. S&P +1.6%. Nasdaq +2.3%. Crude -1.2% to $75.77. Gold +1.2% to $1889.70. Bitcoin +7.5% to $22,142.
Ten-year Treasury Yield -11 bps to 3.58%
Today's Economic Calendar
No events scheduled
Companies reporting earnings today »
What else is happening...
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ZIM Integrated (ZIM) stock climbed on Q4 earnings beat and positive outlook.
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