Monday, March 27th, 2023
Pre-market futures are up following the Dow’s first up-week in the past three, on good news for the beleaguered regional bank space: Silicon Valley Bank (SVB) just got a buyer — First Citizens Bank (FCNCA) agreed to take on $72 billion of the regional bank specializing in tech startup money. The additional $90 billion in SVB securities and other assets remain in receivership from the FDIC.
It’s created a boon for other regional banks that have been selling off of late: First Republic Bank FRC, while still down considerably compared to where it was before this latest banking crisis, is up +28% in today’s pre-market. Pacwest (PACW), another bank from the same region, is +9% so far this morning. Currently, we see the Dow +200 points, the S&P 500 +25 and the Nasdaq +50 points. The SPDR S&P Regional Bank ETF KRE is +3.8% in early trading.
This week, we’ll get lots more data that will help inform the Fed on future interest rate policy, including Fed Chair Powell’s favorite Personal Consumption Expenditures (PCE), out Friday. In addition, Trade Balance, Inventories, Consumer Confidence, 2nd Revision of Q4, Weekly Jobless Claims, and plenty on housing: Case-Shiller 10-city and 20-city surveys, the FHFA Home Price Index and Pending Home Sales.
Perhaps these reports don’t quite capture the imagination of most market participants — at least not like Monthly Jobs Numbers or CPI do. But the Fed will be paying close attention to consumer spending in the PCE report this Friday, and housing figures may illustrate where the spear-tip on inflation-fighting policies — raising rates affecting home prices over a full year of rate hikes — currently is.
Over the past month, we’re within a range of +7% (Nasdaq) to -7% (small-cap Russell 2000), with the Dow and S&P 500 splitting the difference. As we continue to slog through a murky economic forward outlook, we tend to look for recession-resilient stocks in industries that tend to keep steady dividend payments for an extra source of income. It’s too early to know whether a recession is truly in the offing this year or next, but despite green on all the indices ahead of the bell, we’re still felling a little “risk-off” currently.
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