Welcome back,

Too little cash, too late was the story for banks today as financials continued to fall.

Let’s keep it concise.

Market Headlines 👀

• Meta (META) plans new layoffs that could match last year’s in scope.

• America’s $52B plan to make chips at home faces a labor shortage.

• Signature Bank (SBNY) is shut by regulators following the SVB collapse.

• Pfizer (PFE) agrees to buy Seagen for $43B.

• Microsoft (MSFT) strung together tens of thousands of chips in a pricey supercomputer for OpenAI.

• HSBC (HSBC) buys SVB's UK business for £1, ending a “nightmare” for British tech.

• Fed’s new backstop shields banks from $300B of losses in SBV collapse.

• Fed announces a new bank funding program to assure all banks have the ability to meet the needs of their depositors.

• Goldman Sachs (GS) predicts the Fed won’t raise rates at its March meeting following SVB’s stress on the banking system.

  • JP Morgan (JPM) still predicts a 25 bps hike.

• Saudi sovereign-wealth fund close to deal for Boeing (BA) jets.

• Saudi’s Aramco reports record profit of $161.1B in 2022.

• China retains Yi Gang as Central Bank Governor in a surprise move.

Earnings 💸

• Buzzfeed (BZFD)

  • EPS: -$0.75 misses (exp. -$0.03)

  • Revenue: $134.62M beats (exp. $131.25M)

• Gitlab (GTLB)

  • EPS: -$0.03 beats (exp. -$0.14)

  • Revenue: $122.9M beats (exp. $119.59M)

Recap Around the Street 🧠

Silicon Valley Bank (SVB) collapsed, taking $80B down with it in 30 hours…in case you just woke up from your four-day nap. It marks the largest bank failure since 2008, rooted in bad bets on rates.

SVB branded itself as the bank for founders. When startup valuations started skyrocketing around 2019, so did the amount of checks SVB was receiving. Deposits in SVB grew from $60B in 2019 to over $189B in 2022.

But then check sizes came back down to earth, and SVB needed breathing room. So it sold a ton of securities (at a loss). SVB didn't have a liquidity problem, but investors got spooked and reacted as if it did.

The February Consumer Price Index (CPI) drops tomorrow morning (at 8:30 EST). This month's data, though normally one of the most eagerly awaited macro data points, carries even greater significance following Fed Chair Powell's testimony that the Fed could consider raising rates at the March FOMC meeting (50 bps).

Analysts forecast headline CPI to rise by 0.4% (prev. 0.5%) to 6% year-over-year (prev. 6.4%). Core CPI is expected to increase by 0.4% (prev. 0.4%).

The swaps market and the Cleveland Fed tell a different story. Their data indicates that the CPI report may show a higher inflation rate than what analysts are projecting. February CPI swaps are trading at 6.043%, while the Cleveland Fed is projecting a 6.21% YoY increase in the CPI.

If correct and the CPI report comes in higher than estimates, it would signal again that inflation continues to be stickier than hoped. As a result, the market will be forced to continue to reevaluate its view on inflation and how quickly it will come down.

For an audio recap of tomorrow’s CPI, tune into the recording of our CPI Twitter Spaces from today at 3PM EST.

Market Preview 🎞️

• Tuesday: US CPI, BoJ Minutes of January Meeting

• Tuesday earnings: Lennar (LEN) earnings

• Wednesday: US Retail Sales, PPI, NAHB Housing Market Index, MBA Mortgage Applications, UK annual budget, EIA Crude Oil Inventories

• Wednesday earnings: Adobe (ADBE) earnings

• Thursday: US Initial Jobless Claims, ECB Rate Decision, BOE releases inflation survey, Japan Trade Balance

• Thursday earnings: FedEx (FDX) & Dollar General (DG) earnings

• Friday: US Industrial Production, University of Michigan Sentiment, Eurozone CPI, OECD Publishes Interim Economic Outlook, Russia central bank (CBR) rate decision

• Friday earnings: Xpeng (XPEV) earnings

That’s all for today, folks! We’ll be back around the same time tomorrow with a curated list of important news, economic data and market highlights. 

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