- Morning Briefing w/ KevinD
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- Friday March 10 @ 9:00am
Friday March 10 @ 9:00am
Matthew
March 10, 2023
"At all times, in all markets, in all parts of the world, the tiniest change in rates changes the value of every financial asset."
📈 The Markets Overnight
🌏 Asia: Down a lot
🌍 Europe: Down
🌎 US Index Futures: Up
🛢 Crude Oil: Up a bit
💵 Dollar: Down
🧐 Yields: Down a bit
🔮 Crypto: Down a bit
🌏 Major Global Catalysts
Fear of a run on banks and a 2008 style banking crisis spreading.
💵 Economic Reports and Events Today
Consensus forecasts shown
8:30am Average Hourly Earnings m/m 0.3%, 0.2% reported. Change in the price businesses pay for labor, excluding the farming industry.
8:30am Non-Farm Employment Change 224K, 315K reported. Change in the number of employed people during the previous month, excluding the farming industry.
8:30am Unemployment Rate 3.4%, 3.6% reported. Percentage of the total work force that is unemployed and actively seeking employment during the previous month.
2:00pm Federal Budget Balance -261.0B Difference in value between the federal government's income and spending during the previous month.
📰 Selected Earnings Releases
Consensus Estimates shown
After Hours Today:
None
Pre-Market Monday:
ZIM ZIM Integrated Shipping EPS 2.26 Rev 2.11B
🔮 Selected Analyst Ratings Changes
AAPL Apple LightShed Partners Downgrades to Sell Targets 120.00
AAPL Apple Needham Reiterates Buy Maintains 170.00
ENPH Enphase Energy Citigroup Maintains Buy Raises to 285.00
FSLR First Solar Citigroup Maintains Neutral Raises to 220.00
ON ON Semiconductor Needham Reiterates Strong Buy Maintains
100.00
RBLX Roblox Jefferies Upgrades to Buy Raises to 48.00
TSM Taiwan Semiconductor Needham Reiterates Buy Maintains 110.00
📉 Stocks In Play
SIVB SVB Financial Down 46% and halted for news among speculation insolvency is likely, however a bailout is a possibility.
FRC First Republic Bank Down 20% Another regional bank at the center of this potential crisis.
DOCU DocuSign Down 14% on earnings.
RBLX Roblox Up 3.3% on raised an upgrade and target raise to $48.
💬 Commentary
Yesterday's market experienced a significant sell-off due to various negative catalysts, which led to relentless selling among traders and investors. The liquidity crisis at SVB Financial, caused by its large underwater bond portfolio, has highlighted similar situations in other small regional banks. Consequently, the financial sector ETF (XLF) decreased by 4%, and the regional banking ETF (KRE) fell by 8% in near panic selling. Both are expected to continue their downward trend today due to the increased uncertainty that considerably raises the risk profile of the space.
An interesting potential outcome of this situation is the possibility of a Fed pivot, resulting in lower interest rates sooner rather than later. The Fed is likely to intervene and lower rates before this situation escalates into a full-blown banking crisis. Bond yields dropped yesterday and this morning, and the probability of a 50bps hike at the next meeting has dropped by 25% since Powell's testimony and is slightly favoring a 25bps hike.
This morning's Non-Farm Payrolls report is an unrelated catalyst that may further complicate the situation. Although the report was slightly favorable and there is an initial rally on the report, it's unclear how it will impact the market amidst the current turmoil. Despite this, it's unnecessary to panic out of your long-term positions as the banking system is not going to fail. However, it is essential to exercise extra caution for a few days.
Fearful investors and trapped traders may view any rallies as opportunities to close out of unwanted long positions. This shock to the system will take a few days to resolve, and while the bulls may have something to rally on, we do not expect this rally to last due to the prevailing uncertainty and risk in the market.
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