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☆ A new sign of panic in the US banking industry: Law firm Wachtell Lipton calls on SEC to crack down on short selling of bank stocks.
▼ + stars: | 2023-05-04 | by ( Jeffrey Cane | ) www.businessinsider.com time to read: +3 min

Influential law firm Wachtell Lipton says the SEC needs to respond by stopping bets against bank stocks in the form of short sales. Read the law firm's memo here. On Thursday, the law firm Wachtell Lipton sent a memo to clients asking the Securities and Exchange Commission to crack down on the short selling of bank stocks. Calls for limits on short selling can be seen as a sign of stress in the financial system. Other longer-term solutions may include reinstitution of the traditional up-tick rule, and aggressive enforcement combating abusive short sales, market manipulation and groups acting in concert.

☆ Russian Government Says Kremlin Hit by Ukraine Drones
▼ + stars: | 2023-05-03 | by ( Wall Street Journal | ) www.wsj.com time to read: 1 min

First Republic Seized and Sold: Why It Happened and What Comes Next The FDIC seized First Republic Bank early Monday and struck a deal to sell the bulk of its operations to JPMorgan Chase. WSJ’s Ben Eisen explains what led to the bank’s failure and what it means for customers, investors and the industry. Illustration: Preston Jessee

☆ Federal Reserve Raises Interest Rates by Another Quarter Point
▼ + stars: | 2023-05-03 | by ( The New York Times | The Associated Press | ) www.nytimes.com time to read: 1 min

NOW PLAYINGFederal Reserve Raises Interest Rates by Another Quarter Point0:59‘Taxpayers Are Not on the Hook’ for First Republic Collapse, Biden Says1:15Fox News Settles Defamation Lawsuit With Dominion0:25Fed Vice Chair Calls SVB a ‘Textbook Case of Bank Mismanagement’1:21Yellen Calls for Review of Financial Regulations After Bank Collapses1:09Fed Raises Interest Rates a Quarter of a Point0:55Yellen Reaffirms Support for Small Financial Institutions1:12U.S. Banking System ‘Is Sound,’ Yellen Says1:30‘The Banking System Is Safe,’ Biden Assures Americans0:51Fed Is Likely to Raise Rates Higher Than Expected, Powell Says0:59Biden Says U.S. Economy is ‘Strong’ After Jobs Report0:49

WTI's session low was $67.95 a barrel, lowest since March 24. On Wednesday afternoon, the Fed raised interest rates by a quarter of a percentage point, pressuring oil prices as traders worried that slower economic growth could hit energy demand. "The Fed going into a pause mode should be very supportive for the price of oil," said Phil Flynn, an analyst at Price Futures Group. Also pressuring oil prices, government data showed U.S. gasoline inventories (USOILG=ECI) unexpectedly rose by 1.7 million barrels last week. In China, data over the weekend showed April manufacturing activity fell unexpectedly in the world's largest energy consumer and top buyer of crude oil.

NEW YORK, May 2 (Reuters) - The cost of insuring against further losses in regional U.S. bank stocks stood near a one-month high in options markets on Wednesday, even as shares of lenders saw a reprieve from their recent sell-off. Skew on the SPDR S&P Regional Banking ETF - a gauge of relative demand for puts versus calls - remained elevated, hovering near the highest level since the COVID-19 market slump, data from OptionMetrics showed. The SPDR S&P Regional Banking ETF rose about 1.9% to 39.64 in afternoon trade, though it is down 33% on the year and fell on Monday and Tuesday. "The fact that you didn't see the follow-through from some of these other regional banks, with what would appear to be such great news, really didn't inspire a lot of confidence in some of these regional banks," said Seth Hickle, a derivatives portfolio manager at Innovative Portfolios, referring to JPMorgan’s rescue of First Republic. "The problem with regionals are going to be rising interest rates,” said Matt Amberson, principal at options analytics firm ORATS.

☆ Regional bank stocks edge higher after two-day slump
▼ + stars: | 2023-05-03 | by ( Medha Singh | ) www.reuters.com time to read: +2 min

PacWest Bancorp (PACW.O) shares rose 6.5% in early afternoon trading after tumbling 28% to close at their lowest level on record on Tuesday. Western Alliance Bank (WAL.N) advanced 4.2%, while Comerica (CMA.N) and Valley National Bankcorp (VLY.O) added nearly 1% and more than 2%, respectively. The KBW Regional Banking Index (.KRX) rose 2% after closing at its lowest level since December 2020 on Tuesday. The plunge in regional bank stocks came after U.S. regulators seized First Republic Bank and sold off its assets to JPMorgan Chase & Co (JPM.N) for $10.6 billion. The bank selloff indicates investor unease over their outlook following the First Republic deal, Brown Brothers Harriman analysts wrote in a note.

☆ Writers Strike in Hollywood and New York: Here’s What to Know
▼ + stars: | 2023-05-03 | by ( Wall Street Journal | ) www.wsj.com time to read: 1 min

☆ Factbox: Short sellers rake in $1.2 bln in profits as US regional bank stocks suffer
▼ + stars: | 2023-05-03 | by ( ) www.reuters.com time to read: 1 min

May 3 (Reuters) - Short sellers have pocketed $1.2 billion in paper profits betting against U.S. regional lenders in the first two days of May, analytics firm Ortex said, as the third major regional bank failure in two months sparked a selloff in the sector. U.S. regulators seized First Republic Bank and sold most of its assets to JPMorgan Chase & Co (JPM.N) on Monday in a $10.6 billion deal. Here is a list of companies that generated the most profits for short sellers on May 1 and May 2:Source: Ortex dataCompiled by Medha Singh in Bengaluru; Edited by Shounak DasguptaOur Standards: The Thomson Reuters Trust Principles.

☆ BNP only partly earns title of Europe’s JPMorgan
▼ + stars: | 2023-05-03 | by ( ) www.reuters.com time to read: +2 min

LONDON, May 3 (Reuters Breakingviews) - Bank investors and analysts often like to say that BNP Paribas (BNPP.PA) is the closest Europe has to a JPMorgan (JPM.N), the goliath of U.S. banking that just bought First Republic Bank (FRC.N). Compare that with Deutsche Bank (DBKGn.DE), whose deposits fell by 4.7% over the same period. JPMorgan will earn a 19% return on tangible equity this year, using Visible Alpha consensus data, which is good even for a U.S. bank. There’s no shame in losing to a bigger stateside rival on returns, but BNP also risks falling behind regional peers. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Morning Bid: Deja vu for Powell, as bank and debt fears revive
▼ + stars: | 2023-05-03 | by ( ) www.reuters.com time to read: +2 min

Amid so much uncertainty, markets are hopeful that the Fed's current tightening cycle will soon be over. Shares of regional banks were pulverised on Tuesday and sentiment will likely be weak through the week. Also on the minds of investors is the looming deadline for U.S. debt ceiling, with Powell likely to be asked about his contingencies. But as the Reserve Bank of Australia showed us earlier this week, central banks are still capable of surprising the market. Earnings from chip designer Qualcomm later in the day will provide more clues about where the chip market is headed.

☆ Matt Gaetz says AOC is 'wrong a lot' but 'she's not corrupt' as the pair joined forces to block Congress from trading stocks
▼ + stars: | 2023-05-03 | by ( Matthew Loh | ) www.businessinsider.com time to read: +5 min

Both congressional lawmakers formed an unlikely team-up on Tuesday to introduce a new bill. "AOC is wrong a lot, she'd probably say the same thing about me, but she's not corrupt," Gaetz told Fox News host Jesse Watters on Tuesday. They and several other congressional leaders warned that congressional trading erodes trust in the government and presents conflicts of interest. Gaetz told Watters on Tuesday that Congress should "disallow congressional stock trading for the same reason we don't allow the referee to bet on the game." Representatives for Gaetz, Ocasio-Cortez, and Frankel did not immediately respond to Insider's requests for comment sent outside regular business hours.

☆ The market is looking for the next 'domino' to fall, keeping banks under pressure
▼ + stars: | 2023-05-03 | by ( Hugh Son | ) www.cnbc.com time to read: +1 min

After an intense few days in which the fate of ailing lender First Republic was finally determined, veteran banking analyst Christopher McGratty was looking forward to some calm. Minutes after the start of regular trading, however, the regional bank stocks he covers for KBW began plunging. "I was like, 'Hey, it's a good day to catch up, it seems like an orderly kind of day,'" McGratty said in a phone interview. "I get back to my desk, and I had 40 emails and 10 voicemails, and my screen was completely red." The sharp selloff in regional banks sparked by the March failure of Silicon Valley Bank resumed Tuesday, catching Wall Street analysts and investors off guard.

If the Fed opts to pause, Treasury yields are expected to decline. Stocks that could gain on falling interest rates Here are the top stocks that are poised to move higher if the Fed signals it will pause rate increases. The gold miner benefits from a rise in gold prices, and in general, gold tends to rise when interest rates fall. Meanwhile, genetics company Illumina should gain if interest rates fall, according to its correlation to the SHY ETF. Stocks poised to gain on rate increases However, if the Fed suggests rate hikes will continue, short-term Treasury yields will likely go up, benefiting these stocks.

☆ Morning Bid: Bank reverb frames Fed decision
▼ + stars: | 2023-05-03 | by ( ) www.reuters.com time to read: +5 min

While there was some minor repricing of Fed probabilities in the futures market, the latest bout of bank stock nerves is unlikely to change the Fed's course on its own. A White House economist on Tuesday said Fed rate hikes were having a negative impact on the banking sector. Signs of some loosening of a very tight labor market may also encourage the Fed that its rate hiking job is done after this week. Private sector job readings for April are due later today along with service sector surveys for the month. With the Fed in view alongside the debt ceiling crunch and bank stock retreat, longer-term Treasury bonds rallied.

☆ This is the banking crisis that doesn't end
▼ + stars: | 2023-05-03 | by ( Dan Defrancesco | ) www.businessinsider.com time to read: +5 min

This is the banking crisis that doesn't end. So, about that banking crisis being over. The ink is barely dry on JPMorgan's agreement with regulators and it seems more regional banks are feeling the pain. Customers of regional banks are starting to ask questions about how safe their local lender is, the Financial Times reports. Here's more on how regional banks are still getting slammed despite JPMorgan's Jamie Dimon calling an end to the bank crisis.

☆ Loews CEO James Tisch uses a famous Warren Buffett quote to explain the banking fiasco - and warns more lenders may get into trouble.
▼ + stars: | 2023-05-03 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +4 min

Loews CEO James Tisch used a colorful Warren Buffett quote to describe the recent banking chaos. Tisch warned of more turmoil ahead, and urged the Fed to pause its rate hikes for three months. "As Warren Buffett says, 'When the tide goes out, you see who was swimming without a bathing suit,'" Tisch said. If authorities hadn't intervened, they risked a "full-fledged banking catastrophe" and a "massive, uncontrolled bank scare" with huge repercussions, he continued. However, Tisch warned of more trouble ahead.

☆ Indian rupee headed higher on weak dollar, fall in US yields; Fed awaited
▼ + stars: | 2023-05-03 | by ( Nimesh Vora | ) www.reuters.com time to read: +2 min

MUMBAI, May 3 (Reuters) - Indian rupee is expected to open higher on Wednesday, boosted by a broad decline on the U.S. dollar and plunge in yields amid worries over the U.S. banking sector. Non-deliverable forwards indicate the rupee will open at around 81.76-81.80 to the dollar compared to 81.88 in the previous session. The rupee reached 81.7225 on Tuesday, before dollar bids by public sector banks, probably for the Reserve Bank of India, prompted it to reverse course. The U.S. Federal Reserve will most likely raise rates by 25 basis points later in the day, interest rate futures indicate. Investors will be eyeing the U.S. central bank's forward guidance to assess the path ahead for interest rates.

☆ PacWest Bank shares fall more than 50% on report that it could be the next regional bank to collapse
▼ + stars: | 2023-05-03 | by ( David Goldman | ) edition.cnn.com time to read: +2 min

“Exploring strategic options” is Wall Street lingo for “please help.” The last bank to announce it was exploring strategic options was First Republic Bank. That regional bank failed Monday, and JPMorgan purchased most of its assets. PacWest Bank did not immediately respond to CNN’s request for comment. PacWest Bank is reportedly considering splitting up the company or trying to raise capital to support itself, Bloomberg reported. Like many other regional banks, the value of PacWest’s loans and bond holdings have crumbled as interest rates have surged.

The June hike is now off the table completely, and traders now see a 15% chance of the Fed not raising at all this week or in June. This is significant for the June 14 policy decision because the Fed also releases its new Summary of Economic Projections that day. The deposit flight may have stopped but Fed officials will be acutely aware of the negative feedback loop on the economy, given the deep-rooted linkages between small banks and businesses. The March survey of small businesses by the National Federation of Independent Business showed multiple signs of weakness, and even more attention than usual will fall on the next Senior Loan Officer Opinion Survey. Will the Fed be raising rates on June 14 if this is still a live issue?

Though stocks remain near their 2023 highs, some investors now believe those factors will soon start taking a greater toll, limiting further upside. The market may be "back in the soup on the banking crisis," said Chuck Carlson, chief executive officer at Horizon Investment Services. Many investors don’t expect that calm to continue, as a battle over raising the $34 trillion U.S. debt ceiling looms. In the six rate-hiking cycles since 1984, the S&P 500 has posted an average three-month return of 8% following the peak funds rate, Goldman Sachs strategists wrote. However, the S&P 500 is already trading well above its valuation at the end of any cycle except the one ending in 2000, when the S&P 500 declined despite a Fed pause, the bank said.

☆ Stocks slide into Fed mode, shorts stalk banks
▼ + stars: | 2023-05-03 | by ( Tom Westbrook | ) www.reuters.com time to read: +4 min

Overnight, tumbling regional bank stocks (.KRX) dragged the S&P 500 (.SPX) down 1.2% and oil dived more than 5% on fears that shaky bank confidence and signs of weakness in the U.S. job market were harbingers of a looming broader slowdown. Bonds rallied as investors reckoned the Federal Reserve, which sets policy later on Wednesday, will soon be switching from rate hikes to cuts. Among banks, PacWest Bancorp (PACW.O), down 27.8%, Western Alliance Bancorp (WAL.N), down 15.1%, and Comerica Inc (CMA.N) down 12.4%, were the biggest losers. If that happens, focus will be on whether or how hard Fed Chair Jerome Powell pushes back on investors' expectations for rate cuts by year's end. The Australian dollar has given back some of the ground gained on Tuesday, following a surprise rate hike from the central bank, and sat at $0.6670.

☆ Dollar in defensive mood after jobs data; Fed in focus
▼ + stars: | 2023-05-03 | by ( ) www.cnbc.com time to read: +3 min

U.S. dollar banknotes are seen in Chicago on October 18, 2022. The dollar index, which measures the U.S. currency against six rivals, eased 0.029% to 101.820 after sliding 0.245% on Tuesday. "If the difference in rates between the two regions become clearer, DXY (dollar index) may fall below the 100 mark." The kiwi rose 0.35% versus the greenback to $0.623, while sterling was last trading at $1.2479, up 0.12% on the day. The Japanese yen strengthened 0.11% to 136.40 per dollar, clawing back some of its losses from last week when the Bank of Japan stuck to its ultra-loose monetary policy.

☆ Stock futures fall after the Federal Reserve hikes rates and bank contagion fears return: Live updates
▼ + stars: | 2023-05-03 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +2 min

Stock futures fell after the Federal Reserve hiked rates by another 25 basis points and investors' fears of contagion in the regional bank space returned. S&P 500 futures shed 0.46%. Regional bank shares sold off hard, with Western Alliance tumbling nearly 30% and Zions Bancorporation dropping nearly 12%. Since the closure of Silicon Valley Bank in March, First Republic has joined the ranks of failed institutions and was recently taken over by JPMorgan Chase. "I believe with a very high degree of probability there's going to be further regional bank failures."

☆ Wolfe double-upgrades this regional bank stock that's an 'attractive place to hide'
▼ + stars: | 2023-05-03 | by ( Alex Harring | ) www.cnbc.com time to read: +2 min

Prosperity Bancshares is a safe pick in a sector that's been recently defined by risk, according to Wolfe Research. Analyst Bill Carcache double-upgraded the regional bank stock to outperform from underperform, saying the bank has "relative safety on high ground" amid sector turmoil that was initially ignited by the closure of Silicon Valley Bank in March and reignited by the auction won by JPMorgan for First Republic Bank this week. His new target implies the stock could rally 15% from Tuesday's close. That's of increasing importance as industry insiders expect more stringent regulations following the recent bank failures, he said. He said that the bank has historically had fewer write-offs than regional peers.

☆ Top banking CEO warns of further volatility and predicts more U.S. rescues
▼ + stars: | 2023-05-03 | by ( Silvia Amaro | ) www.cnbc.com time to read: +1 min

A top banking executive highlighted a possible divergence in fortunes for the finance sector in both Europe and the U.S., suggesting that more rescues of American regional lenders are likely. "In the U.S., it is about distressed banks being rescued, I don't see any distressed bank being rescued in Europe," Andrea Orcel, the CEO of UniCredit, told CNBC's Joumanna Bercetche Wednesday. JPMorgan on Monday acquired a substantial majority of assets of First Republic, which included about $92 billion of deposits. Leading economists have told CNBC that further rate increases could expose more fragilities in the U.S. banking sector. But banking authorities in the European Union, where Italy's UniCredit is headquartered, have repeatedly said they do not see the same level of risk in the region, arguing European banks are well-capitalized and face stronger regulation.

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