Week of Apr 28, 2023 Weekly Recap & The Week Ahead
“The main purpose of the stock market is to make fools of as many men as possible.” ― Bernard M. Baruch
1. Home Prices Rose in February for First Time Since June — The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 0.2% in February compared with January on a seasonally adjusted basis. On a year-over-year basis, the index rose 2% in February, down from a 3.7% annual rate the prior month. The annual increase was the smallest since July 2012.
2. Republicans Pass Debt-Ceiling Bill Aiming to Spark Talks With Biden — House Republicans passed a bill proposing to raise the nation’s $31.4 trillion borrowing limit in exchange for deep cuts in government spending, aiming to jump-start talks with President Biden ahead of an approaching deadline for the federal government to avoid default. The Republicans’ Limit, Save, Grow Act of 2023, which has no chance of passing the Democratic-controlled Senate, serves as the GOP’s opening bid as it heads into expected negotiations with Mr. Biden and congressional Democrats. Republicans want the spending reductions in exchange for agreeing to raise the debt ceiling. Mr. Biden wants an increase with no conditions attached but has said he would negotiate separately on fiscal policy.
3. GDP Report Shows Economic Growth Slowed in First Quarter — U.S. economic growth decelerated to a 1.1% annual rate in the first quarter as consumers faced high inflation, rising interest rates and the onset of banking problems. The rise in U.S. gross domestic product in the first three months of the year marked a slowdown from inflation- and seasonally adjusted 2.6% growth in the fourth quarter, the Commerce Department reported. Consumers cut retail spending in February and March. Home sales and manufacturing output dropped last month, and robust hiring growth eased gradually.
4. Wage Gains Pick Up as Fed Contemplates Next Rate Decision — wage growth stayed elevated to start the year and inflation remained high, likely keeping Federal Reserve policy makers on track to raise rates again next week. Employers spent 1.2% more on wages and benefits in the first quarter from the prior three months, a slight uptick from an upwardly revised 1.1% increase in the fourth quarter, the Labor Department said Friday. The employment-cost index advanced 4.8% last quarter from a year earlier, an easing from the 5.1% gain at the end of last year. The Fed’s preferred gauge of consumer inflation, the personal-consumption expenditures price index, cooled to 4.2% in March from a year earlier, a separate Commerce Department report said. That was down from the previous month’s 5.1% gain and a peak last June, but still well above the central bank’s 2% target.
5. First Republic Bank Is Seized and Sold to JPMorgan — regulators seized First Republic Bank FRC -43.30%decrease; red down pointing triangle and struck a deal to sell the bulk of its operations to JPMorgan Chase JPM 3.09%increase; green up pointing triangle & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. JPMorgan said it will assume all of First Republic’s $92 billion in deposits—insured and uninsured. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities.
As part of the agreement, the Federal Deposit Insurance Corp. will share losses with JPMorgan on First Republic’s loans. The agency estimated that its insurance fund would take a hit of $13 billion in the deal. JPMorgan also said it would receive $50 billion in financing from the FDIC. San Francisco-based First Republic, the second-largest bank to fail in U.S. history, lost $100 billion in deposits in a March run following the collapse of fellow Bay Area lender Silicon Valley Bank. It limped along for weeks after a group of America’s biggest banks came to its rescue with a $30 billion deposit. Those deposits will be repaid after the deal closes, JPMorgan said.
The week ahead — Economic data from Econoday.com:
