Today’s newsletter has arrived Brian Sozzi, editor-in-chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and so on LinkedIn. Read this and other market news on the go Yahoo Finance app.
No doubt Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and anyone remotely connected to the financial services industry could have a drink (or five) in one crazy week in business.
Long-troubled Credit Suisse ( CS ) received $54 billion from the Swiss government. Fast-melting First Republic (FRC) secured a $30 billion uninsured deposit increase from 11 rival banks. The FDIC continues to buy the assets of Silicon Valley Bank ( SIVB ) after its collapse a week ago.
Banking sources have told the Yahoo Finance newsroom that there may be more bank defaults on the cards. The KBW Bank ETF is now down 29% for the month.
And yet, analysts still love financial stocks!
Did we mention the Federal Reserve meets next week? One where Nomura (NMR) believes the Fed will cut rates.
Here are a few things that caught our eye during this wild week on Wall Street:
1. Credit Suisse buyer?
UBS ( UBS ) could move to buy struggling Credit Suisse, JPMorgan analyst Kian Abouhossein speculated in a note to clients.
“We consider the resolution scenario to be the most unlikely and intervention the most likely, with the third option being a takeover, especially by UBS,” the analyst said.
Just what UBS needs during the banking crisis – to take on the assets and culture of a deeply troubled rival.
2. The First Demotion of the Republic
Wedbush analyst David Chiaverini downgraded First Republic to Neutral from Outperform and sees the stock falling to $5. First Republic stock traded hands at $25 on Friday afternoon.
“We believe a distressed M&A sale could result in minimal, if any, residual value to common stockholders due to FRC’s significant negative tangible book value given the fair values of its loans and securities,” Chiaverini said. “We note that the assets of the acquisition target must be valued at fair value.” Cruel.
3. Kellogg’s CEO sees no changes in ending food brand benefits
Kellogg CEO Steve Cahillane told me (video above) that he doesn’t see people spending less since the pandemic’s emergency food stamp payments ended earlier this month. Those checks put an extra $95 a month into the hands of lower-income consumers.
4. FedEx layoffs
FedEx executives casually, almost bemusedly, slipped into their earnings call that they were looking for jobs to ultimately deliver better returns for investors. “By the end of this fiscal year, we expect U.S. headcount to decline by approximately 25,000 year-over-year,” the executives said.
5. Fed rate cut
The future favors the brave. To that end, Nomura strategist Aichi Amemiya was the first to drop a rate cut call ahead of the Fed meeting. His take: “In response to looming financial stability risks, we now expect the Fed to cut rates in 25bp increments at the March FOMC meeting, compared to where we had previously expected a 50bp hike after February 24.”
6. Lawmakers look at banking rules
Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, took a swing at the banks in a conversation with Yahoo Finance’s Jennifer Schonberger. “This is about regulation, and this is about the fact that at one point there was a strong argument for making sure that regional banks and smaller banks didn’t have to follow some of the rules that might not work. have allowed them to get in [this situation]”, Waters said on Yahoo Finance Live. Read: The return of tighter regulation of bankers lurks.
7. Banks to help
Curious to know how First Republic’s $30 billion deal came to fruition? The Yahoo Finance team of Dan Fitzpatrick and David Hollerith is here to help.
Brian Sozzi is the editor-in-chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and so on LinkedIn.
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