The First Republic Barely Clings
First Republic is limping into the weekend, just days after reporting dismal first quarter results. Banks are still working on the lifeline and whether the federal government will help in any way is a touch and go, officials said, DealBook hears.
First Republic’s volatility is a reminder that last month’s banking crisis is far from over, and that a chaotic collapse of lenders could wreak more havoc on financial markets.
You may be running out of time. First Republic shares are up nearly 10% in pre-market trading after surging yesterday, perhaps in hopes of a rescue package. But the bank’s stock is still around $6, a far cry from the $150 it traded a year ago.
Will the government force bailout deals on the big banks? This could include companies buying First Republic loans above market value and below book value.
It remains unclear which direction the government will take.Meanwhile, Washington officials Have an “urgent” discussion Not clear about potential rescuers, according to Reuters how much assistance Provided by the Biden administration.
Closing First Republic will cause even more problems. There is the problem of uninsured bank deposits, including the $30 billion that the big banks had already put in as part of their former lifeline. (Note that FDIC-insured deposits are up to $250,000 each, and many of First Republic’s deposits are well above that.)
It could also disrupt lending to the already struggling commercial real estate industry. Landlords are under pressure to refinance $137 billion in office loans this year and nearly $5 trillion over the next four years.
New volatility could weigh on the Fed ahead of next week’s important meeting on interest rate policy. Economists expect the central bank to raise interest rates by 25 basis points, but renewed tensions over the country’s banks could change the authorities’ calculations.
Other bank news: The US Federal Reserve (FRB) is set to release the much-anticipated autopsy on Silicon Valley Bank at 11am ET. Bank watchers want to know how government officials missed the warning signs with failing lenders. The FDIC will also release a postmortem analysis of the Signature Bank failure.
this is what is happening
The Eurozone has narrowly avoided a recession. GDP in the 20 euro-using countries rose 0.1% last quarter, below most expectations. This was primarily due to slower consumer demand in Germany.
Oil giants continue to turn a profit. exxon mobil and chevron Earnings reported on Friday were well above analyst expectations, even as oil prices tumbled from last year’s highs.
Federal Officials Go To Former FTX Executive. On Thursday, the FBI raided the Maryland home of Ryan Salaam, the longtime lieutenant to collapsed crypto exchange chief Sam Bankman Freed. It’s unclear what investigators were after, but authorities have scrutinized Salame and others for political contributions reportedly made with money from FTX customers.
Newsmax ratings soar after Tucker Carlson’s dismissal. The conservative network’s viewership numbers surged this week after Carlson was fired from Fox News. His Newsmax 8pm show, which competed with “Tucker Carlson Tonight,” drew 562,000 viewers on Tuesday. Last week he reported 146,000.
Two Faces of Technology
The tech earnings season is coming to an end — Apple reports next week — but it’s already possible to draw some conclusions about the state of the industry. The most distinguishing feature is that the smaller players are struggling while the big techs are stable or growing.
Amazon beat analysts’ expectations on Thursday’s earnings and profitsthanks to strong international sales and a growing advertising business, even as businesses and consumers around the world tighten their budgets.
The result sent Amazon’s stock up as much as 10% in post-market trading, but the stock turned negative after the company warned of a slowdown in its giant cloud business.
Amazon also talked about artificial intelligence. The company’s CEO Andy Jassy says big language models and generative AI will help transform the company’s cloud business, transforming “virtually every customer experience that exists, and many that don’t.” said it would. It follows efforts this week by Microsoft’s Satya Nadella and Mark Zuckerberg of Facebook’s parent company Meta to give investors a bullish vision of what AI can bring to their businesses.
Shareholders love what they’re hearing from the tech giant. The Nasdaq 100, a cluster of big tech companies, rose again on Thursday and is up more than 20% in 2023. 30 percent.
Many of these companies had been hit hard by the slowing economy and rising interest rates, but the “Year of Efficiency” focused on cutting costs, including layoffs and layoffs. seems to be rewarded with investors.
But other tech companies, especially smaller ones, have performed poorly.
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Snap became the first publicly traded company to report a revenue decline, with its share price down more than 18% in pre-market trading. Snapchat’s parent company has a bright side. The number of users increased and the loss was less than expected.
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dispatch company liftstorage provider drop box Voice chat startup Clubhouse has all announced layoffs.
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Intel’s fifth consecutive quarter of declining sales Largest quarterly loss everLike Samsung, chip makers have also seen global demand for semiconductors evaporate.
Carbon Tech Takes Washington
New rules to cut power plant emissions, due next month from the Environmental Protection Agency, could help pave the way for carbon capture, one of the most talked-about areas of cleantech investment there is.
Nevertheless many criticscarbon capture (a method of sucking carbon dioxide out of the air) has attracted a bevy of investors, including: bill gates and Elon Musk. again, centerpiece While supporting Big Oil’s decarbonization strategy, which has attracted many skeptics, it has united right- and left-wing lawmakers who see it as an attractive policy choice.
Big Energy is bullish on carbon capture. The oil and gas industry $124 million for federal lobbying Subsidies for carbon capture will be a big focus in 2022, according to watchdog group OpenSecrets. And while none of the country’s coal- and gas-fired power plants currently use the technology in any significant way, the five largest spenders have recently spotlighted investments in carbon capture. increase.
Carbon capture has an increasing place in policy. Senate and House members recently introduced bipartisan legislation Promote carbon recycling When recovered from high-emission products such as aviation fuel and construction materials.Last year’s Inflation Reduction Act significantly increased tax credits for carbon capture, the Department of Energy plans to award $3.5 billion for direct air recovery plantsto stimulate investor interest in the sector.
But the new rules could face resistance. Last year, the Supreme Court rejected emissions rules proposed by the EPA under the Obama administration, ruling that climate change is a “serious issue” that should be addressed by Congress, not by unelected regulators. bottom.
The new regulations were created with that decision in mind, but they can still face backlash. told to Dangerous air pollution. “
Is America giving up control of its own companies?
Britain’s block on Microsoft’s takeover of Activision Blizzard cemented the country as a formidable force on the global antitrust stage. But given that the Federal Trade Commission is already openly opposed to the $69 billion deal, and that there is growing global alignment on competition policy, regulators in the US and UK are doubling down on their approach to the deal. Some people question whether and to what extent they have adjusted the
Among them are former SEC Chairman Jay Clayton and former Trump economic adviser and former Goldman Sachs president Gary Cohn. In his essay, the Times Opinion guest, the two argued that the UK move threatened the US’ ability to regulate its own businesses.
If these are isolated examples of regulatory abandonment to Europe, we might shrug it off. Our regulators too often follow their foreign counterparts, citing euphemisms such as “international cooperation” and “global regulatory harmonization,” while considering domestic impacts according to the law. disrespectful of obligations.
Europeans are our allies, but they are also our competitors. Shouldn’t we expect European regulation of US matters to favor European interests over those of US citizens? What would U.S. regulators say if they claimed jurisdiction over a U.S.-centric transaction with competing interests? What if Chinese regulators made similar claims?
speed lead
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Deutsche Bank said last month that the plunge in stock prices that had worried customers and business partners was “speculative attack” (FT)
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Canadian Conservative MPs Teck Resources TOB, a Canadian mining company owned by Swiss commodity giant Glencore. (Bloomberg)
policy
best of the rest
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‘Succession’ and other HBO shows will be broadcast in India by media ventures including backers. James Murdoch. (FT)
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Jerry Springer, the chaotic talk show who set a new standard for vulgarity on American television, died yesterday. (NYT)
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WATCH: South Korean President Yoon Seok-yeol serenades the White House audience in a rendition of “American Pie.” (NYT)
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