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☆ Debt Ceiling Crisis: How a Default Could Unfold
▼ + stars: | 2023-05-26 | by ( Joe Rennison | Alan Rappeport | ) www.nytimes.com time to read: +1 min

The United States is inching closer to calamity, as lawmakers continue to spar over what it will take to raise the country’s $31.4 trillion debt limit. Such a situation would be unprecedented, so it’s difficult to say with certainty how it would play out. But it’s not the first time investors and policymakers have had to contemplate “what if?” and they’ve been busy updating their plans for how they think things may play out this time. While negotiators appear to be moving toward an agreement, time is short. There is no certainty that the debt limit will be lifted before June 5, when the Treasury now estimates the government will run out of cash to pay all of its bills on time, a moment known as the “X-date.”

☆ JetBlue-American Partnership Struck Down by Federal Judge
▼ + stars: | 2023-05-19 | by ( Niraj Chokshi | Joe Rennison | ) www.nytimes.com time to read: +1 min

A federal judge has blocked a partnership between American Airlines and JetBlue Airways at airports in New York and Boston, writing in a ruling published on Friday that the alliance would hurt competition and raise fares. The decision is a big victory for the Justice Department, which under President Biden has sought to enforce antitrust laws more aggressively. The judge ruled that collaboration between the airlines, known as the Northeast Alliance, must end. The Justice Department had said the partnership reduced competition and would cost travelers hundreds of millions of dollars a year if it remained in place. The airlines had argued that the partnership provides consumers with more flying options.

☆ Powell Says Inflation Remains Too High
▼ + stars: | 2023-05-19 | by ( Alan Rappeport | Joe Rennison | ) www.nytimes.com time to read: 1 min

Jerome H. Powell, the Federal Reserve chair, said on Friday that inflation continues to be “far above” the central bank’s target but said policymakers “haven’t made any decisions” about whether to raise rates at their next meeting in June. The comments, made at the Fed’s annual Thomas Laubach Research Conference, came as businesses and investors around the world are trying to gauge whether the Fed is preparing to pause its campaign to raise borrowing costs amid signs that inflation is easing and the U.S. economy is cooling. Mr. Powell did not offer a clear signal on the path of interest rates, but said the Fed remains committed to bringing inflation closer to the central bank’s 2 percent target. “The data continues to support the committee’s view that bringing inflation down will take some time,” Mr. Powell said.

☆ What Would Happen if the U.S. Defaulted on Its Debt
▼ + stars: | 2023-05-18 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

The U.S. debt limit has been reached and the Treasury Department is finding ways to save cash. After it runs out of maneuvers, what once seemed unfathomable could become reality: The United States defaults. The far-reaching effects are hard to fully predict: from shock waves in financial markets to bankruptcies, recession and potentially irreversible damage to the nation’s long-held role at the center of the global economy. The probability of a default remains low, at least based on opposing lawmakers’ assurances that a deal will be done to raise or suspend the debt limit and the long odds implied by trading in certain financial markets. “We are sailing into uncharted waters,” said Andy Sparks, head of portfolio management research at MSCI, which creates indexes that track a wide range of financial assets, including in the Treasury market.

☆ How Wall Street Is Preparing for a Debt Ceiling Showdown
▼ + stars: | 2023-05-09 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

If the federal government defaults on its debt, the effects could be disastrous, threatening to undermine the role of the United States at the heart of global finance and tip its economy into recession. The precise day when the government would run out of cash, known as the X-date, is unknown, which also complicates trading decisions for investors. It could come as soon as June 1, according to recent comments from Treasury Secretary Janet L. Yellen. “What you are seeing is a consensus view that we will not cross through the X-date,” said Ralph Axel, an interest rate strategist at Bank of America. “At the moment that remains a low probability event that is hard to price.”

☆ Bank Stocks Bounce as Investors Rethink Economic Outlook
▼ + stars: | 2023-05-05 | by ( Joe Rennison | ) www.nytimes.com time to read: 1 min

A group of regional bank stocks that came under severe pressure on Thursday, stoking fears of a spiraling banking crisis, surged on Friday, at least partially alleviating those worries. The rebound came as the market was also bolstered by data on hiring deemed strong enough to soften concerns about a recession without prompting the Federal Reserve to tighten the screws on the economy further. PacWest soared nearly 80 percent, after falling over 50 percent on Thursday. Western Alliance’s share price rose more than 30 percent, also recouping a chunk of its drop the day before. The relief rally helped to lift the broader market, with the S&P 500 up 1.5 percent heading into the afternoon.

A cluster of regional banks scrambled on Thursday to convince the public of their financial soundness, even as their stock prices plunged and investors took bets on which might be the next to fall. PacWest and Western Alliance were in the eye of the storm, despite the companies’ protestations that their finances were solid. PacWest’s shares lost 50 percent of their value on Thursday and Western Alliance fell 38 percent. They are also much smaller than Silicon Valley Bank and First Republic, which each had about $200 billion in assets when they collapsed. PacWest, based in Los Angeles, has about $40 billion in assets, and Western Alliance, with headquarters in Phoenix, has $65 billion in assets.

☆ Markets Sink on Fears About Banks and Weaker Economic Outlook
▼ + stars: | 2023-05-02 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Stocks slumped on Tuesday, as fears for the health of the financial sector after the collapse of First Republic Bank collided with broader anxiety over signs of a weakening economy. PacWest lost a third of its value in the first hour of trading, it’s worst single-day drop since the height of the bank turmoil in March. Western Alliance sank nearly 20 percent, while Comerica and Zions bank both suffered double-digit percentage declines. Oil prices fell sharply, too, as the prospects of an economic downturn would likely cut energy demand. The price of a barrel of Brent crude, the international benchmark, dropped to around $76, close to its lowest level for the year.

☆ Markets Shrug Off First Republic Failure
▼ + stars: | 2023-05-01 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

The failure of First Republic Bank over the weekend barely dented financial markets on Monday, as investors shrugged off the latest bank failure to focus instead on corporate profits and the next big decision on interest rates from the Federal Reserve this week. The S&P 500 nudged higher in early trading, after the Federal Deposit Insurance Corporation’s early morning decision to take the ailing regional lender First Republic under its control and immediately sell it to JPMorgan Chase at a subsidized price. After dropping 75 percent last week, First Republic’s stock price had continued to slump overnight Sunday until trading was eventually halted early Monday morning at around $2 per share. However, investors dismissed any concerns around contagion from First Republic’s woes. A rally on Monday morning added to gains for the S&P 500 last week, when concern over the fate of First Republic reignited.

☆ First Republic’s Shares Slide as Its Fate Remains Uncertain
▼ + stars: | 2023-04-28 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

Shares of First Republic Bank resumed their punishing slide on Friday, adding to a string of losses this week that have come as doubts over the future of the regional lender intensified. The company’s stock price had dropped about 40 percent by midafternoon to $3.79 per share, on track for a drop of more than 70 percent since Monday. Those banks were seized by regulators after depositors rushed, in a span of just a few days, to pull their money as they worried about their long-term viability. Though it was also seen as a bank in trouble, First Republic won brief respite when 11 of the largest U.S. banks came together to inject $30 billion of deposits into the lender. But the precariousness of its situation came back into focus this week when it reported earnings results and told investors that it had seen the outflow of more than $100 billion in deposits since mid March.

☆ Dour Earnings Loom Over Wall St. as a Slowing Economy Bites
▼ + stars: | 2023-04-13 | by ( Joe Rennison | ) www.nytimes.com time to read: +1 min

As the country’s largest companies prepare to report their results for the start of the year — offering a view into how the economy is faring as a banking shock reverberates — they’re already warning investors to brace themselves. That would be the second consecutive quarterly decline, and the biggest since a severe — though brief — slump in the early days of the coronavirus pandemic in 2020. At the start of the year, the consensus was that profits would be roughly in line with the first quarter of 2022. But since then, continuing worries about inflation followed by a flare-up in the banking sector in March have soured the outlook. Businesses have also told investors to dial down their expectations, with 78 companies in the S&P 500 offering guidance about their results that is below the average Wall Street estimate.

☆ The bond market is signaling concern over the economy, says The New York Times' Joe Rennison
▼ + stars: | 2023-03-24 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailThe bond market is signaling concern over the economy, says The New York Times' Joe RennisonBen White of Politico, The New York Times' Joe Rennison and former acting chairman of the Council of Economic Advisors Tyler Goodspeed, join CNBC's Brian Sullivan and 'Last Call' to discuss money being pulled from U.S. banks and whether Deutsche Bank is in trouble.

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