Welcome back,

Alibaba is splitting into six different companies that may each IPO, while American conglomerates continue to lay off entire divisions.

Let’s keep it concise.

Market Headlines 👀

• McKinsey starts eliminating 1,400 roles this week in a rare round of job cuts.

• Disney (DIS) eliminates its metaverse division as part of the company's layoffs plan.

• Bed Bath & Beyond (BBBY) cuts 1,300 jobs in New Jersey.

• Lyft (LYFT) hires new CEO as founders step back amid struggles with competition.

• Virgin Orbit (VORB) extends worker furlough, continues funding talks.

• US spy agency cyber chief warns TikTok is China’s “Trojan Horse.”

• Apple (AAPL) introduces Apple Pay Later.

• Microsoft (MSFT) introduces an A.I. chatbot for cybersecurity experts.

• Databricks announces “Dolly” – an open-source ChatGPT rival.

• Lockheed Martin (LMT) and the US’ joint hypersonic missile test marred by in-flight data loss.

• FTX founder Sam Bankman-Fried charged with bribing Chinese officials.

• US housing cools further, with prices down 3% from the peak.

• US Conference Board index improved in March to 104.2 (prev. 103.4).

• US to no longer exchange data with Russia on its strategic nuclear forces following Moscow pulling from the New START treaty.

• UK food prices push shop price inflation to new high.

• Alibaba Group (BABA) plans to split its business into six independently run entities, the biggest structural overhaul in its history.

• Banks in France face more than $1.1B in fines after raids.

Earnings 💸

• Lululemon (LULU)

  • EPS: $4.40 beats (exp. $4.26)

  • Revenue: $2.77B beats (exp. $2.70B)

• Micron (MU)

  • EPS: -$1.91 misses (exp. -$0.88)

  • Revenue: $3.69B misses (exp. $3.71B)

• Dave & Buster's Entertainment (PLAY)

  • EPS: $0.80 beats (exp. $0.73)

  • Revenue: $563.76M beats (exp. $541.94M)

Recap Around the Street 🧠

Three top banking regulators faced questions this morning about their oversight of the failed Silicon Valley Bank (SIVB) and Signature Bank (SBNY). Michael Barr, the Fed’s vice chairman for banking supervision, blamed SVB’s management for the collapse. Barr noted that SVB’s management had failed to address “clear” interest-rate risk and liquidity risk.

A notable highlight from Barr’s testimony is that SVB's problems had been on supervisors' radars more than a year before the bank collapsed. For example, Barr flagged that the absence of a chief risk officer at SVB was a glaring flaw that contributed to its ultimate failure. He was also critical of SVB’s lack of preparation for rising interest rates, which caused its assets to decline in value.

The hearing was the first step in what could be a drawn-out process to probe whether stricter supervision by financial regulators could have prevented the banks’ collapses. Regulators once again attempted to stress that said collapses do not threaten the stability of the broader financial system. The Fed is reportedly considering steps to strengthen capital and liquidity rules for larger banks (i.e. more than $100B in assets).

Home prices are falling in the West yet rising in the East. The trends, though local, stem from factors such as affordability, job growth and supply. Analysts expect said trends to continue through spring and summer.

In the East, Florida and other southern markets have continued to attract new companies and add jobs. However, tech-focused cities in the West, like San Francisco and San Jose have seen home prices drop over 10%. Some southern cities that experienced significant price increases in recent years, like Nashville and Raleigh, are also said to be vulnerable to declines.

The housing market is heading into its crucial spring selling season. Despite growth in the East, economists forecast a fall in home prices on an annual basis. The latest National Association of Realtors report saw existing-home sales rise in February, ending a 12-month streak of declines.

The median existing-home sale price fell 0.2% in February to $363,000 – the first year-over-year decline in 11 years. This decline in home prices is expected to continue through the spring and summer, especially in Western markets. Keep an eye on East coast housing prices, which some economists anticipate may begin to decline as well.

Market Preview 🎞️

• Wednesday, March 29: US Mortgage applications, home sales; Crude oil inventories; Conference Board consumer confidence, Fed’s Barr testifies before the U.S. House Financial Services Committee; SNB quarterly bulletin; Australia Consumer Price Index

• Wednesday earnings: RH (RH), Cintas (CTAS), Paychex (PAYX), and EVO Payments (EVOP)

• Thursday, March 30: US Q4 GDP (final); EU Flash inflation (Germany, Spain); EU Economic Sentiment Indicator

• Thursday earnings: EVgo (EVGO), BlackBerry (BB), Rumble (RUM), and Duck Creek Technologies (DCT)

• Friday, March 31: US Core PCE; Michigan consumer sentiment; Canada GDP month-over-month; EU unemployment, Flash estimate inflation for the Euro Area; CPI Inflation (France, Italy); German retail trade and labor report; UK Q4 GDP; SwitzerlandConsumer Price Index

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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