Welcome back,

Markets closed in a whole lot of green today as traders await tomorrow morning’s monthly unemployment report.

Let’s keep it concise.

Market Headlines 👀

• Goldman Sachs (GS) fined for marking 60 Million short sales as long.

• Costco (COST) falls on lowest US sales growth in almost three years.

• BlackRock (BLK) appointed by FDIC to sell $114B of SVB (SIVB) and Signature Bank (SBNY) assets.

• Tesla (TSLA) tripled its Austin workforce to more than 12,000 last year.

• Savvy Games buys Scopely for $4.9B.

• Amazon (AMZN) plans to trim employee stock awards amid tough economy.

• Apple (AAPL) launches first store in India.

• Alibaba (BABA) rises as it reportedly gets set to launch ChatGPT-like tech this month.

• Toyota (TM) looks to overhaul EV strategy as new CEO takes charge.

• Mortgage rates in the US fell for a fourth straight week to 6.28% (prev. 6.32%).

• Initial unemployment claims came in higher than expectations at 228,000 (exp. 200,000; prev. 246,000).

• ADP Challenger job cuts came in at 89.703K (exp. 65.0K; prev. 77.70K).

• IRS unveils $80B plan to overhaul tax collection.

• Biden is set to propose toughest-ever rules on car pollution to spur EVs.

• Treasury 10-year yield hits 2023 low to 3.26%.

• US dividend funds see biggest quarterly outflows in 2.5 years.

• Oil set for its third weekly gain following OPEC+ cuts and inventory draws.

• China’s smaller banks stung by 70% drop in capital bond sales.

Earnings 💸

• Constellation Brands (STZ)

  • EPS: $1.98 beats (exp. $1.84)

  • Revenue: $2.00B misses (exp. $2.01B)

S&P 500 Heap Map

Recap Around the Street 🧠

There is at least $7 trillion in uninsured bank deposits in America, which is about 30% of the country's GDP and 40% of all bank deposits. Uninsured deposits are those that exceed the $250,000 limit insured by the FDIC.

The 30 US banks with the highest percentage of uninsured deposits include Bank of New York Mellon (BK) and State Street Bank (STT), which are considered "systemically important" banks. These banks have lower levels of loans and held-to-maturity securities as a percentage of total deposits compared to Silicon Valley Bank (SIVB).

To prevent wider ramifications from the SVB fallout, regulators implemented emergency actions like protecting all SVB and Signature Bank depositors and setting up an emergency lending facility for banks (the Bank Term Funding Program, or BTFP). But, some are arguing this still introduces new risk into the system, but covering for banks’ riskier decisions.

Though the Fed has said it could take necessary actions to protect uninsured deposits, it is still uncertain how quickly BTFP loans will increase in the next few months. So, clients from smaller banks continue to withdraw funds and send them to larger ones or invest in money market funds.

Banks are facing challenges due to depositors' growing preference for money-market funds. As a result, much attention is shifting to the widely-used financing program sponsored by the Fed.

Money-market fund holdings are rising at an unprecedented pace, with a significant portion of the funds being directed to the Fed's overnight reverse repurchase facility. This is commonly known as reverse repos. This program allows the Fed to borrow funds from money-market funds and other entities by offering securities such as Treasurys as collateral. They then return the borrowed funds the next day.

Reverse repos are used by central banks to control the supply of money and influence interest rates. For example, the Fed's overnight reverse repurchase facility allows money-market funds and other firms to lend money to the Fed overnight. This helps the Fed manage the level of reserves in the banking system and keep short-term interest rates stable.

Overall, think of reverse repos as a financial tool used to manage liquidity and support financial stability.

Market Preview 🎞️

• Friday, April 7: US monthly jobs report

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

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