MARKET WRAPS
Watch For:
Durable Goods for February; Canada Retail Trade for January; President Biden concludes visit to Canada
Today's Headlines/Must Reads
Companies Big and Small Lose Access to Credit Amid Bank Stress
Where to Put Your Money During a Banking Crisis
First Republic, Regional Bank Stocks Rebound After Yellen Says Tools Could Be Used
North Korea Threatens 'Radioactive Tsunami' With New Underwater Drone
Iran Could Produce Nuclear Weapon in Several Months if It Decides to Do So, Mark Milley Says
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Opening Call:
Stock futures were lower on Friday with investors still focused on the fragile banking sector as data showed declining use of Federal Reserve lending.
Data released after the close on Thursday showed that banks slightly reduced their emergency borrowing from the Fed, to $163.9 billion from $164.7 billion in the latest week.
But the issue of the fragile banking sector was still in the spotlight, both in the U.S. and Europe. Deutsche Bank shares dropped 8%, with UBS stock down 6%.
This comes after a wave of central bank rate hikes, as the Fed and others bet they can resume their inflation fight while using other facilities to curb bank sector stress..
Stocks to Watch
Apple is planning to spend $1 billion a year on movies that will be shown in theaters, according to a new report, as part of a bid to boost subscribers for its streaming service and become a bigger player in Hollywood.
Bloomberg News reported Thursday that Apple plans to significantly boost its spending on movies, and is approaching movie studios for theatrical distribution deals.
The Bloomberg report gave a boost to movie-theater stocks on Thursday: AMC Entertainment, IMAX and Cinemark Holdings all posted strong gains.
Read more here .
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Cathie Wood's family of funds wasted no time pouncing on weakness in shares of Block after a short-seller report.
Three of Wood's funds, including the flagship ARK Innovation ETF, bought stock in Block on Thursday after the publication of a report by Hindenburg Research.
Block shares ended 15% lower.
Read more here .
Other Stocks to Watch
Eargo reported higher sales in its latest quarter. Its shares rose 6% in after-hours trading.
Meta Platforms rose 0.4% in premarket trading and Snap gained 0.9% after it appeared more likely that Congress would impose a ban on TikTok following a grilling of the company's CEO at a hearing Thursday.
Nelnet laid off about 7% of its workforce after the Education Department modified the terms of a contract. The company's shares dropped 9% in after-hours trading.
Netflix led the S&P 500 on Thursday, closing with a gain of 9%. In premarket trading, its shares were up 0.6%.
Ouster reported fourth-quarter sales that missed estimates and the stock fell 6% in premarket trading.
Scholastic reported a wider loss for its fiscal third quarter due to the performance of its education business and lowered its outlook for the year. Shares fell 12% in after-hours trading.
Torrid Holdings reported a narrower loss and higher-than-expected sales in its latest quarter. Its stock rose 9% in after-hours trading.
Economic Insight
Goldman Sachs said current stress in the banking sector is likely to be a drag on economic activity in both the U.S. and the eurozone.
Some U.S. small and mid-size banks are still likely to face challenges, leading to a tightening in lending standards which is expected to subtract between 0.3 and 0.5 percentage points in GDP growth, the bank said.
In the eurozone, the banking sector looks resilient, but credit conditions are expected to tighten too, hitting growth by between 0.3 and 0.4 percentage points.
"Bank stress represents a headwind to--but not a complete reversal of--recent growth momentum, though risks are tilted to the downside in the event of further bank failures or continued deposit outflows," Goldman Sachs said.
Forex:
The dollar is likely to weaken as concerns remain about U.S. regional banking troubles, which should keep alive the prospect of the Fed cutting interest rates later this year, ING said.
"A situation that neither develops into a fully-fledged systemic crisis [which would be dollar positive] nor significantly improves on the U.S. regional banking side, which should keep markets betting on Fed easing later this year" endorses ING's "baseline bearish bias on the dollar."
Bonds:
The Treasury yield curve steepening shows it is behaving according to the traditional pattern as the end of the interest-rate hiking cycle is getting closer, Danske Bank said.
"The curve begins to steepen ahead of the first rate cut," it said.
Given the high correlation between the U.S. and core-EU curves, European yield curves follow the U.S. one even though Danske Bank's analysts still expect the ECB to raise the deposit rate to 4%.
Metals:
Base metal prices were higher in Europe, as the weaker dollar and improving Chinese demand acted as tailwinds for commodities. Meantime, gold futures dipped but remained close to 9% higher month-to-date.
ANZ Research said base metals have been buoyed by "the prospect of the Fed pausing rate hikes due to the banking turmoil."
Steel
A nearly 6% rise in Chinese steel output during January and February versus year-earlier levels likely indicates strong pent-up demand as China emerges from years of strict Covid-19 controls, Commonwealth Bank of Australia said.
"China's manufacturing sector certainly suggests strong underlying demand to start the year" and "we think pent-up demand will help support China's steel output in H1 2023," CBA said.
China and South Korea are outliers among the world's largest steel producers, with production in other countries mostly weaker recently and overall global crude steel output down last month versus a year ago, CBA added.
TODAY'S TOP HEADLINES
U.S. Executives Will Keep Low Profile at China Forum Amid Tensions
With Washington and Beijing embroiled in an intensifying great-power competition, multinational companies increasingly find themselves between a rock and a hard place.
Ahead of this weekend's China Development Forum in Beijing, the mood among the more than 50 CEOs and other senior executives from the U.S. and other countries expected to attend the high-level conference was a mix of anxiety and caution, said people close to the event.
Chinese Authorities Raid Office of U.S. Investigations Firm Mintz Group
NEW YORK-Authorities this week raided the Beijing offices of Mintz Group, detaining all five of the New York-based due diligence firm's staff members in mainland China, the company said-an incident likely to unnerve global businesses operating in the country.
The move comes as the heads of multinational companies including Apple Inc. and Pfizer Inc. are due to arrive in Beijing to meet with top Chinese officials. This weekend's annual China Development Forum will be the first to be held fully in-person since the Covid-19 pandemic broke out, and is just weeks after Beijing installed a slate of new government leaders as it signals fresh efforts to boost foreign investment.
First Republic, Regional Bank Stocks Rebound After Yellen Says Tools Could Be Used
Regional bank stocks were slightly higher early on Friday after Treasury Secretary Janet Yellen said the emergency actions used to contain the fallout from Silicon Valley Bank could be used again if needed.
The SPDR S&P Regional Banking exchange-traded fund (ticker: KRE) was up 0.3% in premarket trading Friday. Shares of First Republic Bank (FRC) and PacWest Bancorp (PACW), which have been in focus, climbed 1.2% and 2%, respectively. Western Alliance Bank (WAL) also advanced 2%.
Shares of Jack Dorsey's Block Fall on Short-Seller Report
Shares of the payments company formerly known as Square fell about 15% on Thursday after a short seller questioned the company's user numbers and accused it of predatory tactics.
Hindenburg Research said a two-year investigation into Block Inc. found the company "obfuscates" its Cash App service's true user numbers by reporting misleading metrics "filled with fake and duplicate accounts." It also accused the company of taking advantage of the demographics it claims to serve-lower-income people and minorities-with "predatory loans and fees."
Apple may spend billions on theatrical movies, Premier League: reports
Apple Inc. is planning to spend $1 billion a year on movies that will be shown in theaters, according to a new report, as part of a bid to boost subscribers for its streaming service and become a bigger player in Hollywood.
Bloomberg News reported Thursday that Apple AAPL plans to significantly boost its spending on movies, and is approaching movie studios for theatrical distribution deals. Apple has an impressive movie business, and won an Oscar for best picture in 2022 for "CODA," but has largely kept its movies streaming only, with some limited-release exceptions in order to qualify for awards or to appease its high-priced talent.
The U.S. Is Scaring Off Foreign Investors. Where They're Going Instead.
Welcome to America the Uninvestible.
That seems like a strange thing to say about the go-to destination for investors around the world, offering the world's biggest companies, the most liquid markets, and rule of law to protect shareholder returns. Government interference, too, is supposed to be limited. The fact that U.S. stocks have outperformed the rest of the world over the past decade has certainly helped as well.
Companies Big and Small Lose Access to Credit Amid Bank Stress
The capital markets have been on ice since the collapse of Silicon Valley Bank two weeks ago.
(MORE TO FOLLOW) Dow Jones Newswires
03-24-23 0616ET
