Welcome back,

Wall Street’s bonuses are down as bad as regional banks.

Let’s keep it concise.

Market Headlines 👀

• US unemployment claims tick up for first time in three weeks.

• US Q4 GDP’s final revision came in at +2.6%, below the previous number of +2.7%.

• ABC News (DIS) lays off senior executives in Disney's cost-cutting drive.

• US lawmakers introduce bill aimed at Google (GOOGL), Facebook (META) ad dominance.

• Federal Reserve Board fines Wells Fargo (WFC) $67.8M for “inadequate oversight” of sanctions risk at its subsidiary bank.

• Faraday Future (FFIE) starts production of long-delayed electric SUVs.

• Netflix (NFLX) tests the idea of expanding gaming service to televisions.

• Electronic Arts (EA) says it is laying off 6% of its workforce.

• White House to call for new midsize bank rules after SVB (SIVB) and Signature (SBNY) failures.

• US Air Force plans to end its hypersonic weapon program with Lockheed Martin (LMT).

• Centerview, a boutique adviser, beats Wall Street banks in deal rankings.

• Roku (ROKU) announces a second set of layoffs impacting 200 employees, or 6% of its workforce.

• Bed Bath & Beyond (BBBY) terminates Hudson Bay deal, turns to market to raise $300M.

• Tesla (TSLA) pursues a US plant with China’s dominant battery maker, Contemporary Amperex Technology Co. (CATL).

• Shell (SHEL) splits up global renewable power unit in new CEO’s shakeup.

• OpenAI targeted in FTC complaint urging halt of GPT rollouts.

• Michael Burry says he was “wrong to say sell.”

• Biden’s World Bank pick poised to win the job as sole expected nominee.

• Senator Manchin threatens to sue US Treasury over EV tax credit rules.

• China is now bailing out countries, after doling out huge loans.

• Alibaba’s (BABA) $20B logistics arm gears up for Hong Kong IPO.

Earnings 💸

• EVgo (EVGO)

  • EPS: -$0.06 beats (exp. -$0.16)

  • Revenue: $27.3M beats (exp. $21.82M)

S&P 500 Heat Map

Recap Around the Street 🧠

SVB’s collapse shows the world’s favorite safe asset isn’t risk-free. US Treasuries are coming back to haunt investors and bankers who ignored interest-rate risk. Economists fear there could be more surprises still in store.

Short-term Treasury yields took a dive after the banking turmoil unfolded this month. The two-year yield finished trading today at 4.097%, nearly 0.7 percentage points down from where it started in March, at 4.795%. That puts it on track for its largest monthly drop since January 2008, when it fell 0.89 points. Its current decline surpasses the 0.656-point slip in March 2020.

A deeper dive into the latest US banking crisis may surprise anyone who still thinks in terms of the crash of 2008. It wasn’t risky loans to homebuyers that sank Silicon Valley Bank (SIVB). It was betting on what are thought to be some of the safest securities: US Treasuries.

The final repayment date of SVB’s bonds was years away. Purchased during a time of ultra-low interest rates, those long-maturity Treasuries were liable to lose their immediate resale value if rates took off. Which they’ve done in a big way over the past year. As a reminder, hot economic data sparked a bond selloff several weeks ago that sent yields higher. The yield on the two-year note even breached 5% earlier this month for the first time since 2007.

Mortgage rates fell again to the lowest level in more than a month. But housing’s scarce supply is derailing buyers at a key time for US deals.

The average rate on a 30-year fixed mortgage has fallen to 6.32%, the lowest level since mid-February, according to a survey released by Freddie Mac. The drop in mortgage rates comes after a pair of bank failures raised contagion fears, prompting regulators to take emergency actions.

The Fed has signaled it could ease its campaign to curb inflation, stating that continued turmoil would likely lead some banks to tighten credit conditions. Nevertheless, buyers aren’t flooding back into the marketplace as quickly as would be expected. Refinance applications are increasing, yet still below year-ago levels.

Market Preview 🎞️

• 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; Switzerland Consumer Price Index

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

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