This is the last stock market week of a hectic March, which saw the disappearance of four banks, Silvergate, SVB Financial, Signature and Credit Suisse. And when I say that these institutions are disappearing, it's not quite true: they will survive through their assets and sometimes even their brands, but they have been forced to sacrifice their independence on the altar of their survival. The picture is not a rosy one, but some political and financial leaders refuse to talk about a banking crisis. A term that remains taboo at the moment.

Wall Street avoided a close in the red on Friday after German chancellor Olaf Scholtz indicated that there is "no reason to worry" about Deutsche Bank, which is a "very profitable bank". Time will tell whether this statement ranks alongside some famous quotes, such as Enron boss Kenneth Lay's "I can honestly say that the company is probably in the best and strongest shape ever" in 2001. Sarcasm aside, the three main US indices rallied on Friday, while Europe closed sharply lower. Investors are betting on a Fed rate cut above all others at present, judging that the central bank cannot afford banking chaos.

This explains the 6% rise in the Nasdaq in March, when risk aversion in the banking sector is at its peak. The US technology index is weightless, supported by its large caps, while the S&P500 has been flat since March 1. This is a rare gap. The gap is even more impressive with the European broad index Stoxx Europe 600, which has lost 4.55% since the beginning of the month.

The banking sector remains under scrutiny this week. The weakest links are Deutsche Bank in Europe and First Republic in the US. I don't know if this is unhealthy or legitimate, but in any case the market is looking for the next domino. We are back in a period of knee-jerk reactions by investors, with a strong confidence component: we are talking about banking, which means the underlying architecture of the financial system, not a valuation crisis in startups or a shortage of toilet paper.

However, there was some relief after it was announced today that a buyer was found for most of the US business of the collapsed Silicon Valley Bank: a regional bank based in North Carolina called First Citizens.

Wall Street's main indexes were all in the green in pre-market trading today after the announcement of the buyout deal. Shares of First Citizens soared 40%, while First Republic Bank surged more than 25%.

To finish this column, I’d like to point out a few important indicators this week, with two inflation figures (in Germany on Thursday and in the US on Friday), and two public speeches, from US Treasury boss Janet Yellen on Thursday evening and ECB President Christine Lagarde on Friday.

 

Economic highlights of the day:

The German Ifo business confidence index for March is today’s main indicator. Full agenda is here

The dollar is flat at EUR 0.9284 and GBP 0.8168. The ounce of gold fell to around 1947 dollars. Oil is losing ground, with North Sea Brent at USD 75.93 a barrel and US WTI light crude at USD 70.64. The yield on US 10-year debt is at 3.37%. Bitcoin is trading around USD 28,000.

 

In corporate news:

  • First Citizens - The U.S. bank will buy all of Silicon Valley Bank's deposits and loans, the Federal Deposit Insurance Corporation (FDIC) said Monday, an acquisition that includes about $72 billion in assets at a $16.5 billion discount.
  • First Republic - U.S. officials are considering extending an emergency lending facility that would provide banks with more support, which could give the troubled bank more time to shore up its balance sheet, Bloomberg reported Saturday. The stock rose 25.5 percent in premarket trading.
  • Silvergate - The crypto-currency-focused lender's stock is up 14 percent in premarket trading after jumping 94 percent and being the second-most-traded U.S. stock Friday, according to J.P.Morgan.
  • Hertz - The car rental company said Monday that CFO Kenny Cheung would leave the group and that Alexandra Brooks, the head of accounting, would take over as interim CEO on April 1.
  • CVS Health, Signify Health - Drugstore chain CVS Health said Monday it expects to complete its acquisition of health services company Signify Health on or about Wednesday, potentially ending months of antitrust scrutiny of the deal.
  • Salesforce - The US software maker said on Monday that activist investor Elliott Management had decided not to appoint directors to the group's board because of its strong earnings and 2024 transformation initiatives.
  • Baidu - The Chinese tech giant cancelled plans to launch its "Ernie" chatbot and instead held a closed-door meeting with an initial group of companies testing the product, with the New York-listed stock falling 1.9%.
  • Blackbaud - The software company said Monday it has received a takeover offer from private equity firm Clearlake Capital for $3.78 billion in cash. The stock is up about 20% in pre-market trading.
  • Microsoft - The company has threatened to cut off access to its Internet search data, which it licenses to rivals, if they don't stop using it as the basis for their own artificial intelligence tools, Bloomberg reported Friday, citing people familiar with the matter.
  • Novartis - The Swiss company's New York-listed stock rose 6 percent after its breast cancer treatment Kisqali showed promising results in treating the disease at an early stage.
  • JetBlue, Spirit Airlines - The U.S. Department of Transportation on Friday rejected a request to combine the two groups because of a Justice Department complaint filed this month to block JetBlue's proposed acquisition of the low-cost airline.
  • Altria - E-cigarette maker Juul Labs Inc and its former lead investor, Marlboro maker Altria Group, will go on trial for the first time in the United States this week for creating a public nuisance among minors by luring them with sweet-flavoured products and promoting them on social networks.
  • Li-Cycle Holdings - The lithium-ion battery recycling specialist announced Monday that it will build a plant in France, expected to open in 2024, to break down the batteries of forklift manufacturer The Kion Group. The stock gained 2.5% in pre-market trading.

 

Analyst recommendations:

  • Caterpillar: Baird downgrades to underperform from neutral. PT down 15% to $185.
  • Conmed: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 28% to $124.
  • Corning: Deutsche Bank raised the recommendation to buy. PT up 16% to $38.
  • KeyCorp: Citi upgrades to buy from neutral. PT jumps 69% to $20.
  • Model N:  Morgan Stanley initiated coverage with a recommendation of overweight. PT up 35% to $43.
  • United Rentals: Baird downgrades to underperform from neutral. PT down 19% to $300.
  • Virtus Investment: Piper Sandler upgrades to overweight from neutral. PT up 55% to $260.