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☆ Mohamed El-Erian slams Powell's suggestion that the bank turmoil is over – says it could be added to a list of Fed communications that eroded its credibility.
▼ + stars: | 2023-05-04 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

Mohamed El-Erian raised doubts about Fed chair Jerome Powell's suggestion that the worst of the banking turmoil is over. PacWest is the latest bank to be hit by uncertainty, with its shares tumbling more than 50% in after-hours trading Wednesday. El-Erian said Powell's remarks may get added to a list of Fed communications that ended up eroding its credibility. It is the latest regional bank to be hit by the turmoil that started with Silicon Valley Bank's collapse in March. It's important the Fed notes that this doesn't mean the banking system as a whole is facing an existential crisis, he added.

☆ Nobel economist Paul Krugman takes a jab at Elon Musk and says dollar dominance isn't worth much to America.
▼ + stars: | 2023-05-03 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

Paul Krugman said dollar dominance is overrated, and isn't worth more to America than "a fraction of 1% of its GDP." The Nobel Prize-winning economist criticized Elon Musk for being among those warning that the US is "weaponizing" the dollar. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. "The point is that tugging on one or two strands of this web isn't likely to cause it to unravel. But Krugman argued that fears of an end to dollar dominance are made to seem important because global currency issues naturally come across as "glamorous and mysterious", but in reality very little is really at stake in them.

☆ The Fed is focused on inflation and the banking jitters won't stall its interest-rate increases, Jim Bianco says
▼ + stars: | 2023-05-02 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

Trouble with regional banks won't impact the Fed's decision to lift interest rates, Jim Bianco said. The Wall Street analyst thinks the Fed will raise rates this week and probably again next month. 'If [Fed chair Jerome Powell] focuses a lot on inflation, then financial markets could struggle. If he appeases financial markets, he lets inflation go," Bianco told CNBC. "The Fed is focused on inflation, and they're gonna raise rates, and they're gonna leave the door open to raising rates again in June.

☆ Mohamed El-Erian: 4 Unintended Consequences of the First Republic Deal
▼ + stars: | 2023-05-02 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

Mohamed El-Erian said JPMorgan's takeover of First Republic could lead to "potential collateral damage". It's another case of US government institutions settling for a "second best" solution, he wrote in a Bloomberg op-ed. El-Erian warned of four unintended consequences from the deal including "a more concentrated banking system" and the risk of deeper credit crunch. Yet the potential collateral damage and the unintended consequences are far from immaterial," El-Erian wrote in an op-ed for Bloomberg on Monday. The chief economic adviser at Allianz warned of four notable unintended consequences for the US financial system, that could emerge from the final outcome of the First Republic narrative.

☆ The Big Tech stock rally is over for now – but the equity market could still approach record highs this year, veteran investor says
▼ + stars: | 2023-04-26 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

The Big Tech stock rally has run its course, but the broader equity market will still approach record highs this year, according to the chairman of Sanders Morris Harris. Tech stocks have surged this year, rebounding after a tough 2022. "We expect the broader markets to move back near record highs at some point in 2023, but it won't likely be because of Big Tech," George Ball told Fortune on Tuesday. Tech stocks have rallied this year, with the tech-heavy Nasdaq Composite up nearly 14% year to date, recovering after a tough 2022. But in order to rise toward record highs, further major increases in the key stock indexes would be required, Ball suggested.

☆ Stock ETFs are seeing accelerated inflows even as grimmer Wall Street predictions warn of a bear market ahead
▼ + stars: | 2023-04-24 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

Stock ETFs pulled in more than $12.6 billion in April, according to data from Bloomberg. It's the largest inflow into such funds since January and more than double the pace seen in February and March. Investors are pouring large amounts into equity ETFs even as Wall Street predictions warn of a bear market ahead. Wall Street veteran Ed Yardeni wrote: "In late October, we concluded that sentiment was so bearish it had to be bullish." Then, the current bull market is likely to resume, in our opinion," according to the Yardeni Research founder.

☆ Money-market funds' assets fall for the first time since the banking turmoil started, snapping a trend of record inflows
▼ + stars: | 2023-04-21 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

US money-market funds just saw their assets drop for the first time since early March, snapping a trend of record inflows. It's also the biggest such fall since July 2020 as US taxpayers were due to file their taxes in the past week, according to Bloomberg. Money-market funds saw large inflows in recent months as high yields and the banking jitters fueled a flight of money into them. In the weeks following SVB's collapse, money-market funds saw accelerated inflows, with their total assets hitting a record high of $5.28 trillion as of April 12, per the ICI. But money-market funds had been raking in cash even before the banking turmoil thanks to the high yields they offered, following the Federal Reserve's interest-rate increases over the past year.

☆ The credit crunch is here and it could cripple the economy. Here's what Larry Summers, Nouriel Roubini and 7 other experts have said on the emerging threat.
▼ + stars: | 2023-04-20 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +6 min

Latest bank lending data suggests the credit crunch "has already started," according to Morgan Stanley strategists. Here's a selection of recent warnings on the emerging threat from experts including Larry Summers, David Solomon, Mike Wilson, Nouriel Roubini and Bill Gross. Apollo Asset Management's Jim Zelter told Bloomberg "it's not a credit crunch" but rather a "transition period" as markets face higher debt costs. "That credit crunch is going to make the likelihood of a recession — a hard landing — much greater than before. "Whether this qualifies as a full-blown 'credit crunch' remains to be seen.

☆ The US economy is barreling toward a 'student loan cliff' as borrowers may soon owe $18 billion in monthly repayments, Jefferies analyst says
▼ + stars: | 2023-04-20 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

The US economy is barreling toward a 'student loan cliff,' with a moratorium on repayments set to end this year, according to Jefferies. Cash-strapped households could scale back spending if the loan repayments resume, hitting economic growth. "The additional risk to overall US economic growth is notable," Tim Simons, an economist at Jefferies, said. An end to the loan moratorium will affect about 45 million borrowers, according to the firm. "If the resumption of student loan repayments creates ~2% downward pressure on personal consumption expenditures, the additional risk to overall US economic growth is notable," Tim Simons, an economist at Jefferies, wrote in a recent research note.

☆ US prosecutors seek a 7-year sentence and $740 million in forfeiture for an ex-NFL investor in crypto scam case
▼ + stars: | 2023-04-19 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

US prosecutors are seeking a seven-year jail sentence for an ex-NFL investor for his involvement in crypto-related bank fraud. Reginald Fowler, who owned 3% of the Minnesota Vikings, is on trial for helping crypto firms side-step money laundering rules. Now, along with the jail sentence, prosecutors are demanding Fowler give up $740 million, according to a Monday court document. Fowler allegedly opened Global Trading Solutions, a firm that worked with Crypto Capital that exchanged cash and crypto. Banks like Silvergate and Signature knowingly took exposure to the cryptocurrency industry; the banks Fowler lied to were also exposed to the volatility of the industry but were unaware of that fact," the court document said.

☆ Banking turmoil isn't over as regional lenders face risk of commercial-property credit losses, JPMorgan strategist says
▼ + stars: | 2023-04-19 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Regional banks' troubles aren't over and remain "an area of concern", JPMorgan Asset Management's Jonathan Liang said. They are facing increased risks of credit losses in the commercial-property sector, which may come under stress, he said. And so we think that in the coming year or two, there's going to be growing distress in this space, and that will also potentially amount to credit losses for those US regional banks," he added. Many experts have warned the US commercial real-estate sector could face problems as high borrowing costs and tighter credit conditions following the recent banking turmoil complicate matters for big property owners as they seek to refinance loans. Nearly $450 billion in commercial real-estate debt is due to mature in 2023 - meaning a final payment on those loans are due, per data cited from Trepp by JPMorgan.

☆ Ray Dalio shares his thoughts on SVB, offers investing advice, and warns of a 'very risky time' ahead. Here are his 7 best quotes from March.
▼ + stars: | 2023-04-07 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +4 min

Ray Dalio shared his thoughts on SVB, offered investing advice and warned of political conflicts last month. The Bridgewater Associates founder and investing veteran also offered up his thoughts on why he thinks the next two years will be a "very risky time". I think that there is a good chance that it will produce a big decline in the value of money. Geopolitical risks"Let's remember that [the money/credit/debt/market/economic dynamic] is being accompanied by the internal conflict dynamic (most importantly the 2024 US elections that are coming up) and the external conflict dynamic (most importantly the US-China conflict and the US-NATO-Russia conflict, though others like that with Iran are notable). In a nutshell, it looks to me like the next two years will be a very risky time."

☆ Bank stocks continue to sink and that shows the turmoil hasn't faded yet, Jim Bianco says
▼ + stars: | 2023-04-06 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Bank stocks still remain under pressure and that signals the sector's turmoil hasn't ended yet, Jim Bianco said. Financial stocks faced a rout over the past month following the collapses of Silicon Valley Bank and Signature Bank. The KBW bank stock index is down 3% this week, after a 25% slump in March that was the biggest monthly drop in three years. Shares of lenders and other financial companies have been under pressure since the implosions of Silicon Valley Bank, Signature Bank and Silvergate Capital last month. Otherwise, the bank stocks might be in trouble ... oh, wait!," Bianco, who runs Chicago-based Bianco Research, tweeted on Wednesday, alongside a chart showing sharp declines in bank stock indexes.

☆ Electric truck maker Nikola is planning to sell its own shares at a 20% discount to their lowest ever price
▼ + stars: | 2023-03-31 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Nikola is planning to raise $100 million by selling its stock at a huge discount. The electric truck manufacturer said Thursday that it would sell shares at $1.12, or 20% below their lowest ever price. The electric truck manufacturer said in a statement Thursday that it planned to raise the $100 million by selling 29.9 million shares to the public and another 59.4 million shares to an unnamed investor. It's pricing the shares at just $1.12 as part of the stock offering, a 20% discount to the all-time low of $1.40 they had fallen to by Thursday's closing bell. Nikola shares have cratered around 95% since Hindenburg released its first report into the company on September 10.

☆ Don't rule out a 'hard landing' for the US economy and that means it's still 'tough going' for stocks, forecaster says
▼ + stars: | 2023-03-30 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

A 'hard landing' for the US economy is still in the cards as leading indicators suggest it's not out of the woods yet, an ECRI forecaster says. The upturn in economic data earlier this year was 'a flash in the pan,' Lakshman Achuthan told CNBC. The downbeat economic outlook means stocks will continue to struggle, according to him. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. I think it's still tough going for stocks for the time being," he said.

☆ SVB saw $142 billion fly out the door in just 2 days in a tech-driven bank run - and that spells trouble, says Mohamed El-Erian
▼ + stars: | 2023-03-29 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

SVB saw $142 billion pulled from deposits in just two days before it collapsed. The bank run was sped up by social media spreading news faster and tech tools making it easier to withdraw funds. Mohamed El-Erian said potential high-speed bank runs raise challenges for banks. These new details of SVB's downfall has top economist El-Erian flagging warning signs of the impact of tech tools on banks. "I anticipate the need to strengthen capital and liquidity standards for firms over $100 billion," Barr said.

☆ A 'trilemma' of problems has cornered the Fed again — but this time there's no good way out, Mohamed El-Erian says
▼ + stars: | 2023-03-28 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +4 min

The Federal Reserve is once again having to resolve a complex set of problems, according to Mohamed El-Erian. But there's no "first best policy response" the Fed can take amid the banking turmoil, he said. "That is the most important question right now — the degree of economic contagion resulting from this mishandled interest rate cycle." Customers have pulled around $1 trillion in deposits from smaller banks since the Fed started raising rates, according to JPMorgan. The economist said he believes the Fed can sort out the interest rate mismatches that have squeezed companies.

☆ The IMF's boss has called for vigilance as risks to financial stability rise after bank turmoil
▼ + stars: | 2023-03-27 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +3 min

IMF chief Kristalina Georgieva has warned of another tough year ahead for the world economy, amid increased risks to financial stability. "Uncertainty is high which underscores the need for vigilance," Georgieva said. "Uncertainty is high which underscores the need for vigilance," Georgieva said. "Policymakers have acted decisively in response to financial stability risks, and advanced economy central banks have enhanced the provision of U.S. dollar liquidity. These actions have eased market stress to some extent, but uncertainty is high which underscores the need for vigilance."

☆ Nvidia, Tesla and Meta are helping power a growth-stock surge that has challenged BlackRock and Goldman Sachs
▼ + stars: | 2023-03-25 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +6 min

Growth stocks are beating value peers by the most in 3 years, despite interest-rate increases and banking-sector turmoil. Sizzling rallies in Nvidia, Meta and Tesla shares have helped power the surge in growth stocks. BlackRock strategists projected a similar view, saying in a late February report that they expect value stocks to outperform. Nvidia, Tesla, MetaStunning rallies in the shares of tech giants such as Nvidia and Meta as well as electric-vehicle maker Tesla have helped growth stocks beat their value peers by such an impressive margin. "Lower rates feed into lower discount rates, making future cash flows of growth companies more attractive," Dutta said.

☆ US prosecutors charge crypto Terra founder Do Kwon with fraud following his Montenegro arrest
▼ + stars: | 2023-03-24 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

US fraud prosecutors charged Terraform Labs CEO Do Kwon hours after his arrest in Montenegro. Kwon created two cryptocurrencies TerraUSD and its sister affiliate Luna that lost $40B last year. Prosecutors at the US attorney's office in New York have slapped an eight-count indictment against Kwon, including securities fraud, wire fraud, commodities fraud and conspiracy, according to a Reuters report. The criminal case comes after the US Securities and Exchange Commission charged Kwon and Terraform Labs with alleged fraud last month. The collapse of his Singapore-based Terraform Labs and that of the TerraUSD stablecoin sparked a broader crypto sell-off and wreaked havoc in the digital asset sector.

☆ Gisele Bündchen was one of FTX's biggest equity holders, and says she was 'blindsided' by its collapse
▼ + stars: | 2023-03-23 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Gisele Bündchen said she was 'blindsided' by FTX's bankruptcy. The fashion model told Vanity Fair she initially 'trusted the hype.' Her FTX stake may have been worth around $25 million before the company collapsed, according to some estimates. "I was blindsided," she told Vanity Fair in its March cover story issue. "It's just...terrible," the fashion model said.

☆ Coinbase says it could get sued by the SEC, which has identified 'potential violations of securities law' at the exchange
▼ + stars: | 2023-03-23 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Coinbase said it got a Wells notice from the SEC alerting it of possible enforcement action. The regulator told the crypto exchange it had identified potential violations of securities law, but little more. Coinbase said Wednesday that it got a Wells notice from the SEC alerting it of potential enforcement action for possible violations of securities law after "a cursory investigation," but that the SEC didn't expand much more. The exchange said the notice from the SEC touched on unspecified portions of its listed digital assets, its staking service, its self-custody crypto wallet and an aspect of its exchange called Coinbase Prime. The famed money manager now holds a 7% stake in the crypto exchange worth $837 million.

☆ Silicon Valley Bank insiders borrowed a record $219 million from the lender as its troubles built
▼ + stars: | 2023-03-22 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

Silicon Valley Bank made loans worth $219 million to insiders as its troubles built, per Bloomberg. The record high loans in the final months of 2022 were triple the amount of the quarter before. California-based SVP was closed down by US regulators in March after it got into financial difficulties. SVB issued the loans to company bigwigs — from directors to key shareholders — in the last quarter of 2022, Bloomberg reported Tuesday. SVB collapsed on March 10, when US regulators seized control of the once-trusted lender to startups and VC firms — the second-biggest bank failure in US history.

☆ SVB Financial accuses FDIC of 'improper actions' to block the firm from accessing $2 billion of its cash
▼ + stars: | 2023-03-22 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +2 min

SVB Financial filed for bankruptcy on Friday. Lawyers for SVB Financial said in the group's first bankruptcy hearing in Manhattan on Tuesday that the FDIC took "improper actions" to block it from accessing its cash, according to a Reuters report. "Not only has the bank been taken, all the cash has been taken," the financial group's lawyer James Bromley said at the hearing. The lawyers also said that the FDIC has stopped communicating with the financial group and has instructed the successor of SVB to claw back transfers that SVB Financial had made to other accounts, the WSJ first reported. SVB Financial lost access to its deposits one day before it filed for bankruptcy protection, the lawyers added.

☆ Warren Buffett, BlackRock and Goldman Sachs find energy stocks irresistible even as 2023 proves another turbulent year for markets
▼ + stars: | 2023-03-18 | by ( Zinya Salfiti | ) www.businessinsider.com time to read: +4 min

Energy stocks are emerging as a top favorite with Wall Street elites even as the recent string of bank failures spook markets. BlackRock and Goldman Sachs have also touted their preference for energy stocks. And one sector is emerging as quite the favorite with the likes of Berkshire Hathaway, BlackRock and Goldman Sachs - energy stocks. Goldman Sachs' chief US equity strategist David Kostin said last month it was time to turn to value stocks from sectors such as energy and healthcare. Economic uncertainty fueled by the banking turmoil has led to a jump in oil market volatility.

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