“The stock market is never obvious. It is designed to fool most of the people, most of the time”- Jesse Livermore —

1. Yellen Says US Will Intervene If Needed to Protect Smaller Banks — Treasury Secretary Janet Yellen said on last week the US government could repeat the drastic actions it took recently to protect bank depositors if smaller lenders are threatened. US authorities took extraordinary steps earlier this month to bolster that confidence following the collapses of Silicon Valley Bank and Signature Bank. Regulators guaranteed insured and uninsured deposits at the two institutions. The Federal Reserve also launched a new backstop for lenders and altered rules at its emergency lending facility — the so-called discount window — to help them meet deposit withdrawals.
2. Rent Inflation for US Single-Family Homes Drops Near Two-Year Low — rent increases for US single-family homes eased for a ninth straight month in January, pushing the annual rate to the lowest since the spring of 2021, according to CoreLogic. Nationwide, the typical rent for a single-family home rose 5.7% from a year earlier, data from the real estate analytics provider show. All 20 major metro areas tracked by CoreLogic posted single-digit annual rent increases, for the first time since late 2020.
3. Fed Raises Rates but Nods to Greater Uncertainty After Banking Stress — the Federal Reserve approved another quarter-percentage-point interest-rate increase but signaled that banking-system turmoil might end its rate-rise campaign sooner than seemed likely two weeks ago.
The decision Wednesday marked the Fed’s ninth consecutive rate increase aimed at battling inflation over the past year. It will bring its benchmark federal-funds rate to a range between 4.75% and 5%, the highest level since September 2007. The policy statement said it was too soon to tell how much recent banking stress would slow the economy. “The U.S. banking system is sound and resilient,” the statement said. “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.”
4. Deutsche Bank Stock Tumbles on Contagion Fears — Investors sparked a selloff in Deutsche Bank AG DB -4.20%decrease; red down pointing triangle and thrust one of Europe’s most important lenders into the center of concerns about the health of the global financial system. The concern over Deutsche Bank emerged days after Credit Suisse Group AG was forced into a takeover by its larger and more stable rival UBS Group AG. Since the collapse of Silicon Valley Bank in the U.S. earlier this month, investors have scoured the globe for institutions perceived as vulnerable. Deutsche Bank sits at the heart of the German economy. Despite years of retrenchment to make the bank smaller and safer, it remains a globally vital bank, with a major footprint on Wall Street trading bonds, derivatives and currencies. It serves multinational companies with bread-and-butter basics of lending, managing money and corporate accounts.

The week ahead — Economic data from Econoday.com:

“Markets can remain irrational longer than you can remain solvent” — John Maynard Keynes

1. Biggest U.S. Banks Race to Rescue First Republic — Eleven banks have deposited $30 billion in First Republic Bank, according to a joint statement from the heads of the Treasury, Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp.; gand Wells Fargo WFC ; are each making a $5 billion uninsured deposit into First Republic, the banks said in a statement Morgan Stanley and Goldman Sachs Group Inc. are kicking in $2.5 billion apiece, while five other banks are contributing $1 billion each.
2. ECB Delivers Half-Point Hike But Offers Little on Next Move — the European Central Bank went ahead with a planned half-point increase in interest rates but offered few clues on what may follow amid market turmoil that roiled Credit Suisse Group AG. The deposit rate was lifted to 3% on Thursday — as officials have been flagging since their last meeting six weeks ago and as the majority of economists anticipated, but dropped language from its statement indicating where borrowing costs are headed.
3. SVB Financial Files for Chapter 11 Bankruptcy Protection — SVB Financial Group filed for chapter 11 protection on Friday in New York bankruptcy court, the largest bankruptcy filing stemming from a bank failure since Washington Mutual Inc. in 2008. Silicon Valley Bank, the technology-focused lender and SVB Financial’s primary business, was taken over by federal regulators after it was crippled by a dash for the exits by depositors. The Federal Reserve stepped in to make depositors whole and reassure markets, although a number of other regional banks in the U.S. have seen their credit ratings cut and depositors pull cash.
4. Microsoft Adds the Tech Behind ChatGPT to Its Business Software — Microsoft Corp. MSFT 1.17%increase; green up pointing triangle is infusing its popular workplace software with the technology behind the viral chatbot ChatGPT, upgrading PowerPoint, Word, Excel and Outlook with new abilities in its latest move to try to stay ahead in the artificial-intelligence race. The software giant has gone all-in on generative AI, following its multibillion-dollar investment in ChatGPT’s creator OpenAI. In February, Microsoft rolled out a new version of its search engine Bing that used generative AI to give direct answers to questions and had a sophisticated chat tool. It announced Thursday that it is bringing the technology to its Microsoft 365 suite of software to enable users to create presentations, write documents and summarize emails—all from natural-language prompts.

The week ahead — Economic data from Econoday.com:

There will not be any re-cap for the week of March 10th, 2023. We are away for some needed R&R.

The staffs at EGS.

…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”… Jesse Livermore

1. Home-Price Growth Slowed in 2022 — home-price growth decelerated in 2022 after a rapid rise in mortgage rates priced many buyers out of the market.
The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 5.8% in the year ended in December, down from a 7.6% annual rate the prior month. The increase was the lowest December-to-December change since 2019. On a monthly basis, the index fell 0.8% in December compared with November, the sixth straight month-over-month decline. Existing-home sales dropped 17.8% in 2022 to the lowest level since 2014, as the surge in mortgage rates brought the pandemic-driven housing boom to an abrupt halt.
2. Long-Robust U.S. Labor Market Shows Signs of Cooling — demand for U.S. workers shows signs of slowing, a long-anticipated development that is appearing in private-sector job postings even while government reports indicate the labor market is running hot. Figures from ZipRecruiter Inc. and Recruit Holdings Co., two large online recruiting companies, show the number of job postings on their sites declined more late last year than the Labor Department report on job openings for that period indicated. The companies report available jobs fell further this year, potentially foretelling a decrease in openings in coming Labor Department reports, and a slowdown in hiring this year.
3. 10-Year Treasury Yield Tops 4% for First Time Since November — lingering inflation and fears of higher interest rates lifted the 10-year Treasury yield above 4% on Wednesday, marking a fresh acceleration for a historic bond-market rout.
The climb carried the key measure of borrowing costs back toward the decade-plus highs reached last year. Spurring the most recent leg: a run of strong economic data that dashed hopes inflation will rapidly slow to near the Federal Reserve’s 2% target. Yields topped 4% Wednesday morning after a slightly stronger-than-expected survey of manufacturing activity. Rising yields lift borrowing costs for consumers and companies, and hurt the prices of other investments by offering steady payouts with lower risk. The climb in yields has buffeted major stock indexes, with the S&P 500 losing around 2.6% in February.
4. Fed Official Says Hotter Data Will Warrant Higher Rates — the Federal Reserve will need to raise rates to higher levels than previously anticipated to prevent inflation from picking up if the recent strength in hiring and consumer spending continues, a central bank official said Thursday. Mr. Waller didn’t say in his prepared remarks whether he would continue to favor raising interest rates by a quarter-percentage point, which was his preference at the Fed’s last meeting, or whether he would instead support a larger half-point increase at its next gathering, March 21-22. The Fed’s rate-setting committee voted unanimously last month to slow rate increases by lifting their benchmark federal-funds rate by a quarter percentage point—to a range between 4.5% and 4.75%—following larger moves of a half point in December and 0.75 point in November.

The week ahead — Economic data from Econoday.com: