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☆ 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.

☆ 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.

☆ Investors are pouring record amounts into money market funds as rates rise. How to pick the best one
▼ + stars: | 2023-03-28 | by ( Darla Mercado | Cfp | ) www.cnbc.com time to read: +4 min

Investors in search of relative safety and attractive yields are piling into money market funds at record levels. In particular, they fled to government money market funds – which hold U.S. Treasurys – with retail assets surpassing $1.25 trillion. Here's what you should know as you browse: Three varieties In addition to government money market funds, there are also tax-exempt money market funds. She noted that there are also some state-specific money market funds, which might make sense for residents in high-tax jurisdictions. Money market funds also shouldn't be confused with money market accounts – which are interest-bearing accounts you can open at a bank.

REUTERS/Murad Sezer/IllustrationORLANDO, Florida, March 27 (Reuters) - The most extraordinary outcome of the March banking shock would be if the problem dissipated quickly. Many people hope the crisis of confidence infecting global banking this month can be repelled almost as quickly as it appeared. SAVINGS AND LOANS DEBACLEThe easy comparison for any banking or market turmoil is the GFC of 2007-08. But crises don't have to be equal to or worse than the world's most calamitous financial disaster in a century to be extremely damaging. But other banking crises follow the same playbook, even if their outcomes are not as extreme.

☆ The banking crisis has college students on edge about Wall Street jobs and internships. 'I just want to know what the plan is.'
▼ + stars: | 2023-03-27 | by ( Emmalyse Brownstein | ) www.businessinsider.com time to read: +6 min

That's the concern plaguing aspiring investment bankers across the country as they watch the banking crisis unfold. "I think there's definitely a sense of unease in finance," said Asif Rahman, co-founder of Wall Street career coaching company Office Hours. Over at SVB's investment banking arm, incoming first-year analysts have been told that their jobs are secure. "We've reached out to all of our incoming analysts and interns. "The incoming summer interns are worried about low return offer rates," the professor said.

☆ First Citizens to buy large chunk of failed Silicon Valley Bank
▼ + stars: | 2023-03-27 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

Photo illustration, the Silicon Valley Bank logo is visible on a smartphone, with the stock market index in the background on the personal computer on March 14, 2023, in Rome, Italy. First Citizens Bank & Trust Co will buy Silicon Valley Bank's deposits and loans, the U.S. Federal Deposit Insurance Corporation said Monday, just over two weeks after the biggest U.S. banking collapse since Lehman Brothers. The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain "in receivership for disposition by the FDIC." It comes after the regulator transferred all SVB deposits and assets into a new "bridge bank" earlier this month in an effort to protect depositors of the failed lender. "The 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First–Citizens Bank & Trust Company on Monday, March 27, 2023," the FDIC statement said Monday.

☆ Factbox: The biggest financial crises of the last four decades
▼ + stars: | 2023-03-25 | by ( ) www.reuters.com time to read: +4 min

Fears of banking contagion remain, and investors are worried that global economies will suffer if the effects of higher interest rates torpedo more lenders. Michael Milken had helped popularize the financial instrument, with many using it as a way of funding leveraged buyouts. The country ended up getting external financial support from the International Monetary Fund and a $50 billion bailout from the United States. GLOBAL FINANCIAL CRISIS OF 2008The biggest financial crisis since the Great Depression was rooted in risky loans to shaky borrowers, which started to lose value after central banks raised interest rates in the period leading up to the crisis. EUROPEAN DEBT CRISISSpurred by the 2008 financial crisis, surging debt at some of the major European economies led to a loss of confidence in the region's businesses.

☆ Analysis: Banking woes, Fed keep U.S. market investors on edge
▼ + stars: | 2023-03-25 | by ( David Randall | ) www.reuters.com time to read: +5 min

But investors are guarded, wary that another bank run could erupt if people believe U.S. or European regulators won't protect depositors. Uncertainty over the Fed's intentions is amplifying investors’ hesitation in stocks and sparking huge swings in U.S. government bond prices. The Fed raised rates by 25 basis points on Wednesday but indicated it was on the verge of pausing further increases. Risk assets have been somewhat resilient despite the concerns in the banking sector, said Jason England, global bonds portfolio manager at Janus Henderson Investors. England expects longer-duration bond yields to start to rise from current levels, making short-term bonds and money market funds more attractive.

☆ Swiss franc grapples with safe-haven identity crisis after Credit Suisse
▼ + stars: | 2023-03-24 | by ( Samuel Indyk | ) www.reuters.com time to read: +5 min

Money managers ditched the Swiss franc at the fastest rate in two years last week in the run-up to the dramatic takeover of Credit Suisse (CSGN.S) by UBS (UBSG.S). "You still have some of the safe-haven hedging properties in the Swiss franc but it can only take so much when the risk ends up being so concentrated in the Swiss economy and the Swiss financial sector," Kundby-Nielsen added. "If it hadn't been Credit Suisse, but any other European bank getting into trouble, you would have seen the Swiss franc rising sharply because it would have been the safe haven for European risk," said Francesco Pesole, FX strategist at ING. "The franc is not an 'all-weather' safe haven and so far we've not had the type of market pressures that would typically lead to franc appreciation," he said. SWISSIt's one thing for the franc to have lost some favour among investors during a Swiss-centric crisis, but quite another to suggest its days as a safe haven are numbered.

☆ Get ready for stocks and real estate to crash - and the US economy to crater, 'Rich Dad Poor Dad' author warns
▼ + stars: | 2023-03-24 | by ( Theron Mohamed | ) www.businessinsider.com time to read: +2 min

Robert Kiyosaki expects stocks, bonds, and real estate to crash as higher interest rates bite. The "Rich Dad Poor Dad" author slammed the Fed for choking growth and eroding the US dollar's value. "Raising interest rates will crash stocks, bonds, real estate, & US dollar," the personal-finance guru and "Rich Dad Poor Dad" author tweeted on Thursday, adding that he expects the vast derivatives market to tank as well. "Saving money & investing in a well diversified portfolio of stocks, bonds, mutual funds & ETFs is risky advice," he tweeted in February. The founder of The Rich Dad Company has been sounding the alarm on an epic market crash and massive recession for more than 18 months.

Similarly, the U.S. economy and stock markets tend to outperform during booms and draw in overseas investment that lifts demand for dollars. Surely times of great banking and credit stress should boost the greenback? And now we face a bout of severe banking stress alongside stubbornly high inflation that had almost all major central banks raising interest rates again over the past week despite the pretty clear underlying credit stress. JPMorgan's take on the stressed side of the dollar smile last week pointed out that "the underlying macro-financial pathology that necessitates lower yields is the primary determinant of dollar direction". Clearly, the dollar smile is no laughing matter.

☆ Spooked dealmakers scurry back into their foxholes
▼ + stars: | 2023-03-23 | by ( Jeffrey Goldfarb | ) www.reuters.com time to read: +8 min

NEW YORK, March 23 (Reuters Breakingviews) - Jonathan Kanter, a lawyer by training, has become something of a magician. Pay closer attention, however, and Kanter is methodically rewriting a decades-old regulatory playbook. Last year, these breakup charges reached their highest level in a decade, at an average 4.5% of deal prices. The Department of Agriculture partnered with the DOJ on the case, another feature of Kanter’s plan of attack. As legal weaknesses emerge, dealmakers should be in position to better structure transactions and defend themselves at trial.

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