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☆ Meredith Whitney is back. Here's her latest market call
▼ + stars: | 2023-06-06 | by ( Jeff Cox | ) www.cnbc.com time to read: +2 min

Famed analyst Meredith Whitney has ended a self-imposed exile from a finance world that she said had become "like watching paint dry." "Why I say there's no risk for an immediate downturn is because there's no forced selling," Whitney told CNBC's Sara Eisen during a " Squawk on the Street " interview. That forecast came after she had left Oppenheimer to start the Meredith Whitney Advisory Group, which she eventually shuttered to launch a hedge fund that no longer exists. Finance "was like watching paint dry, and things started to change about 18 months ago," Whitney said. In the current landscape, Whitney thinks the problems plaguing regional banks are collective "one-offs" that won't cause systemic damage.

Persons: Meredith Whitney, Whitney, CNBC's Sara Eisen, Oppenheimer Organizations: CNBC, Lehman, Citigroup, Meredith Whitney Advisory Group, Finance Locations: Silicon, Republic

☆ Central bankers face a balance sheet reckoning
▼ + stars: | 2023-05-26 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

LONDON, May 26 (Reuters Breakingviews) - Central banks’ balance sheets have exploded in size since 2008. That’s not a problem, we’re told, since central banks are not bound by ordinary accounting rules. Ferguson and his colleagues examined fourteen central bank balance sheets over a period of 400 years. Central bank hawks on the other hand, are typically slow to expand their balance sheets during crises. Central banks with weak balance sheets are less credible bastions of a fiat currency.

But as some argue, in its quest to avoid another taper tantrum, the Fed delayed that two-pronged tightening too long, which has partly contributed to the stickiness of inflation today. This lengthy buildup may have averted another taper tantrum, but tied the Fed's hands on raising rates even as inflation was roaring back. Markets thought this not only meant the Fed would soon "taper" its bond purchases, but also raise interest rates. The Fed and markets have learned their lessons from the taper tantrum. Maybe the taper tantrum illustrates that it wasn't as planned and consistent as it should have been," he said.

☆ The S&P 500 will crash 30% by December as spending slumps, profits shrink, and banking problems mount, markets guru Larry McDonald warns
▼ + stars: | 2023-05-19 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +5 min

The S&P 500 will plunge by almost 30% to around 3,000 points by December, Larry McDonald has warned. He sees less government spending, slimmer corporate profits, and banking pressures as key drivers. McDonald made a similar call in early March, when he declared the stock market could tank 30% within the next 60 days. The prospect of less spending and investment, stricter lending, steeper debt payments, and greater unemployment bodes poorly for corporate profits and stock prices. Instead, he recommended beaten-down, cyclical stocks in sectors such as energy, and hard assets such as gold, silver, and platinum.

☆ Private equity is being squeezed from all sides
▼ + stars: | 2023-05-12 | by ( Edward Chancellor | ) www.reuters.com time to read: +8 min

But this time around there’s a lot more private equity money chasing a limited number of opportunities. So private equity funds could face the prospect of a prolonged period of higher borrowing costs, lower valuations, and depressed investment returns. The birth of private equity coincided with the Reagan administration’s policy of relaxing regulations and tax cuts. Recent high profile corporate bankruptcies owned by private equity include car-rental firm Hertz and retailer Toys R Us. The private equity industry could soon find itself caught in a pincer, between tighter financing on the one hand and tighter regulation on the other.

☆ Quiet quitting hits the housing market: Tight inventory and still-high mortgage rates keep would-be buyers sidelined
▼ + stars: | 2023-05-09 | by ( Phil Rosen | ) www.businessinsider.com time to read: +5 min

Today we're talking housing — but before we get to that, the big thing to watch today is President Joe Biden's meeting with congressional leaders. Joe Raedle/Getty ImagesThe housing market seems to be taking a page from the labor market's playbook right now. Daryl Fairweather, Redfin's chief economist took to Twitter last week to describe the sluggish sector:"Homeowners are quiet quitting the housing market." In effect, more and more homeowners are choosing to stay put with their low mortgage rates locked in, rather than trying to finance a new home at rates that are hovering around 20-year highs. That's due mostly to high rates causing homes to sit on the market longer than usual, which leads to accumulating inventory.

☆ Premarket stocks: Why these bank stocks aren't getting crushed
▼ + stars: | 2023-05-04 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

First Horizon (FHN) and TD Bank (TD)also called off a $13 billion deal Thursday that would have formed America’s sixth-largest bank. The Stoxx Europe 600 Banks Index, which tracks big EU and UK banks, has shed 14% over the same period. Year-to-date, European banks are up more than 3%, while US lenders are down 26%. Broader market dynamics have also helped European bank stocks. The European Central Bank, which meets Thursday, has also been slower than the US Federal Reserve to hike interest rates.

☆ There are limited options to fix the banking crisis, but one is gaining support
▼ + stars: | 2023-05-04 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Ackman didn't provide specifics on how he thinks a deposit guarantee program would work, but he said one is essential to restore investor confidence in regional banks. That has put pressure on midsize banks, and the S & P Regional Bank ETF has fallen 40% year to date. Short sellers have ganged up on some regional banks on the prospect that even those that are rescued or merged will see stock holders wiped out. "Renewed stress among regional bank stocks after market close may cause [Washington, D.C.] to reconsider priorities," Mayo said in a client note. "Unfortunately, there is a significant disconnect between the renewed pressure on regional banks and DC's posture," Mills said in a note.

☆ Americans haven't been this worried about their bank deposits since the 2008 financial crisis
▼ + stars: | 2023-05-04 | by ( Christina Cheddar Berk | ) www.cnbc.com time to read: +1 min

Recent events may be chipping away at confidence in the U.S. financial system, according to the findings of a Gallup survey. Nearly half of the 1,013 adults polled said they were "very worried" (19%) or "moderately worried" (29%) about the safety of the money they had tucked away in a bank or other financial institution, Gallup said. The level of concern expressed in the poll is similar to the findings that Gallup found shortly after the collapse of Lehman Brothers in September, 2008. Still, a December 2008 reading had shown sentiment had already improved from those worst levels as steps were taken to ease the impact of the financial crisis. When the poll was conducted from April 3-25 this year, Signature Bank and Silicon Valley Bank had already failed.

☆ Nearly half of Americans are nervous about their money in the bank, Gallup survey finds
▼ + stars: | 2023-05-04 | by ( Matt Egan | ) edition.cnn.com time to read: +2 min

CNN —Nearly half of American adults say they are concerned about the safety of the money they keep in banks, according to a Gallup poll released on Thursday. Gallup said 48% of US adults say they are concerned about the money they have in banks and other financial institutions, including 19% who are “very” worried. Another 29% said they are “moderately” worried. Most Republicans (55%) and independents (51%) say they are at least “moderately” worried about their money in the bank, but just 36% of Democrats said so. The Gallup survey found that roughly half of Americans with an annual household income below $100,000 are worried, compared with 40% of those with higher income.

☆ Almost 50% of Americans say they worry about their money being safe with a bank as shares of regional lenders plunge amid deposit outflows
▼ + stars: | 2023-05-04 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

Nearly half of Americans are worried about the safety of their cash in banks and other financial institutions, Gallup said Thursday. But 20% said they were "not worried at all" about their cash, and 30% considered themselves "not too worried." The study was conducted throughout April after Silicon Valley Bank and Signature Bank imploded in March. But its message didn't soothe those trading regional bank stocks on Thursday. Regional bank stocks plunged, with PacWest Bancorp sliding nearly 50% following a Bloomberg report the Beverly Hills-based lender is weighing strategic options, including a breakup or a sale to a larger rival.

☆ This global commercial real-estate stock is set to rise by 60%, Jefferies says
▼ + stars: | 2023-05-03 | by ( Ganesh Rao | ) www.cnbc.com time to read: +3 min

Jefferies expects shares of U.K.-focused commercial real-estate stock Life Science REIT to rise by more than 60% over the next 12 months. The investment bank's prediction comes at a time when the global commercial real estate market has seen prices fall sharply over the past year . However, according to Jefferies, Life Science REIT will escape the brunt of the pressure facing the rest of the sector. These properties are then leased to "tenants operating in the life science sector," according to the company. The region is also set to benefit from the U.K. government's 10-year strategy, unveiled in 2021, to aid and develop the life science sector in the U.K.

☆ Resolving Credit Suisse: an alternative history
▼ + stars: | 2023-04-27 | by ( Liam Proud | ) www.reuters.com time to read: +8 min

Reuters GraphicsThe market shock will be all the more extreme because Credit Suisse doesn’t obviously need more capital. It seems perverse to put taxpayer money on the line while leaving the Credit Suisse bonds untouched. Of the 30 global lenders classed as systemically important by the Financial Stability Board, Credit Suisse is the third-smallest by total assets. It also enables the Swiss National Bank to offer Credit Suisse an open-ended credit line, hopefully ending the bank run. Credit Suisse is suffering from a crisis of confidence brought on by years of mismanagement, rather than a system-wide meltdown.

☆ Tech bulls are flirting with disaster as banking pressures threaten to crash the stock market, a markets guru warns
▼ + stars: | 2023-04-26 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +2 min

Larry McDonald has warned carefree tech investors are "smoking in the dynamite shed." The founder of "The Bear Traps Report" expects further banking turmoil to tank the stock market. Early signs of a credit crunch and ongoing turmoil in the regional-banking sector suggest there's more trouble ahead, he said. "From credit cards to all different types of companies, credit default swaps are rising on many different financial institutions," he continued. Credit default swaps (CDS) serve as insurance against a company defaulting on its debts, and become more expensive as the perceived risk of a default grows.

☆ A flawed but useful economic model for a bleak age
▼ + stars: | 2023-04-14 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

Modern Monetary Theory, which endorses unlimited government spending, was all the rage during the years of ultra-low interest rates. John Cochrane’s fiscal theory fits the bill. Cochrane, a senior fellow of the Hoover Institution at Stanford University, recently published “The Fiscal Theory of the Price Level”. Not only are high interest rates incapable of arresting inflation, fiscal theory suggests they actually make the problem worse. Nor do bondholders operate with rational expectations, as fiscal theory suggests.

The ECB's systemic risk indicator for the United States, for example, has returned to its lowest level in a year. The near $400 billion that dashed for money funds after the Lehman Brothers bust in late 2008 - despite credit fears in some of those funds - had completely retreated by early 2010. The relative interest rate attraction of bills and repos after the steepest Fed rate rises in 40 years should make this year's flows far stickier - unless or until the Fed were to embark on some dramatic rate easing. Either way, there's now no shortage of savings in cash if or when the lights go green. by Mike Dolan, Twitter: @reutersMikeD; Added chart from Andy Bruce; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

April 11 (Reuters) - Mark Shafir, one of Citigroup Inc's (C.N) top dealmakers, is retiring after a career spanning over three decades during which he advised some of the world's largest corporations on several landmark deals. Shafir, who has led Citi's global mergers and acquisitions unit since joining the bank in 2008, will stay on till mid-May to help with the transition, according to an internal memo sent on Tuesday by Tyler Dickson and Manuel Falco, Citi's global co-heads of banking, capital Markets and advisory. Cary Kochman, who has served as co-head of global M&A at Citi alongside Shafir since 2017, will continue to lead the franchise. "(Mark) has been one of the lead drivers of our M&A business and has played a central role developing the franchise, which grew significantly under his leadership," Dickson and Falco said in the memo. Shafir was instrumental in shaping Citi's M&A franchise during his tenure and advised on several landmark transactions.

☆ The economy would be better off without bitcoin as it's a 'negative-sum' investment that comes at a social cost, economist says
▼ + stars: | 2023-04-09 | by ( Filip De Mott | ) www.businessinsider.com time to read: +5 min

Bitcoin is a wasteful asset that doesn't add to global welfare, Dieter Wermuth, economist and partner at Wermuth Asset Management, wrote in a recent note. He says the bitcoin market is highly centralized, and primarily benefits early investors and miners. That's because the cryptocurrency is a wasteful investment that takes funds away from general economic growth, Dieter Wermuth — economist and partner at Wermuth Asset Management — wrote in a note published on Wednesday. "Without crypto, the economy would be better off — there would be more money for consumption and investment." "Bitcoin has been brought to market with the narrative that it would be a better, more stable currency than traditional money," Wermuth wrote.

☆ Explainer: How are money market funds preparing for a potential debt ceiling crisis?
▼ + stars: | 2023-04-06 | by ( John Mccrank | ) www.reuters.com time to read: +5 min

HOW BIG ARE MONEY MARKET FUNDS? Assets under management in U.S. money market funds, which include Treasury-only funds, prime funds, and government funds, totaled a record $5.2 trillion as of March 29, Investment Company Institute data showed. WHY IS THE DEBT CEILING A CONCERN FOR MONEY MARKET FUNDS? Fitch Ratings warned in February that the potential for investor redemptions and volatility in Treasury-only money market funds – as opposed to prime and government money market funds, which have other sources of funding – would rise if investors believed the government were to default. Runs on money market funds have been rare.

☆ Real estate warning: beware the backward cap
▼ + stars: | 2023-04-05 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +6 min

The commercial real estate industry has a different kind of backward cap – one that’s also a sign of a losing streak. The cap rate comes from dividing a property’s net operating income in any given year – money from rent minus associated costs – by the asset’s value. For more than 10 years, that gap remained positive even though cap rates were falling in virtually all real estate subsectors, from shopping malls to apartments. Reuters GraphicsAsk a large-scale real estate owner – or several – about this and they are characteristically optimistic. Reuters GraphicsWhen Lehman Brothers went bankrupt, the narrowed spread between cap rates and interest costs didn’t last for long.

☆ Wall Street sentiment about stocks is worse than it was during the Global Financial Crisis lows
▼ + stars: | 2023-04-04 | by ( Jeff Cox | ) www.cnbc.com time to read: +2 min

Wall Street strategists have pared back allocations to stocks at a level not seen even during the worst of the 2008 financial crisis, according to Bank of America. BofA's "Sell-Side Indicator" shows that stocks are down to 52.7% as a share of investment portfolios. But when worry over stocks has run this high, it often means a rally ahead. While the firm has been pessimistic about stocks in the short term, it still finds equities a preferable alternative over the long run. "We note that Wall Street recommended underweighting equities through the entire bull market of the 1980s and 1990s as well as the 2009 to 2020 bull," Subramanian wrote.

☆ Why so many banks seem to fail on Fridays
▼ + stars: | 2023-03-31 | by ( Allison Morrow | ) edition.cnn.com time to read: +7 min

That’s because when banks fail, they have a tendency to do so on Friday. Friday, March 10, 2023: Silicon Valley Bank seized by regulators, the second biggest bank failure in US history. “That was very unusual.”Similarly, Silicon Valley Bank’s unraveling happened at a head-spinning pace nearly three weeks ago. Skinny cansAnyone else notice how skinny cans are these days? My colleague Nathaniel Meyersohn, a reporter with an eagle eye for retail trends, explains that skinny cans are, in fact, in.

☆ How post-2008 bank rules led to a 2023 problem
▼ + stars: | 2023-03-30 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

Here’s how that story applies to the collapse of Credit Suisse (CSGN.S) and Silicon Valley Bank. Silicon Valley Bank’s technology-heavy customers attempted to withdraw $42 billion in a day. Reuters Graphics Reuters GraphicsFollow @liamwardproud on TwitterCONTEXT NEWSUBS will rescue Credit Suisse in a deal worth about 3 billion Swiss francs ($3.3 billion), Swiss authorities and the two banks said on March 19. The smaller bank lost 138 billion Swiss francs of customer deposits between Sept. 30 and Dec. 31, a 37% decline. The lender had $173 billion of total deposits on Dec. 31, of which $81 billion were non-interest-bearing demand deposits.

☆ Bank rescue real estate turns from dowry to downer
▼ + stars: | 2023-03-30 | by ( Aimee Donnellan | ) www.reuters.com time to read: +3 min

Unlike many banks which got into trouble back in 2008, the Swiss lender has flogged much of its prime real estate. In the last financial crisis prime real estate played a big part of bank rescues. When Barclays (BARC.L) bought Lehman Brothers’ U.S. capital markets business in September 2008 the deal included the bankrupt investment bank’s headquarters. Today there is less real estate underpinning bank values. For buyers preparing to rescue embattled banks, real estate has turned from a dowry to a downer.

☆ Explainer: What are credit default swaps and why are they causing trouble for Europe's banks?
▼ + stars: | 2023-03-28 | by ( Amanda Cooper | ) www.reuters.com time to read: +6 min

LONDON, March 28 (Reuters) - Turbulence in Europe's banks following the implosion of 167-year-old Credit Suisse (CSGN.S) and runs on regional banks in the U.S. has focused attention on the role played by credit default swaps in all the turmoil. The moves followed a surge in the cost of insuring Deutsche Bank's debt against default via credit default swaps (CDS) to a more than four-year high last week. Credit default swaps are derivatives that offer insurance against the risk of a bond issuer - such as a company, a bank or a sovereign government - not paying their creditors. The CDS market is worth around $3.8 trillion, according to the International Swaps and Derivatives Association. The CDS market is small relative to equities, foreign exchange or the global bond markets, where there are more than $120 trillion bonds outstanding.

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