Funding risks at banks; missing workers in US; PE investments surge in Japan
Sarah Cottle
Growth-Focused Executive | GM | Driving Profitability & Operational Excellence in B2B Data, Research, Advisory | M&A Integration | Governance | Digital Transformation | Trusted C-Suite Advisor | Board Member
Today is Tuesday, February 14, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of?Insight Weekly, we take a look at funding risks as the age of cheap funding ends. European banks face holes in interest income, reduced liquidity and higher deposit and financing costs; many banks are enduring costlier funding as depositors focus more on certificates of deposit and away from non-interest-bearing accounts; and nine out of 13 investment banks, broker/dealers and capital market companies included in the S&P Global Market Intelligence analysis reported lower EPS year over year and five recorded EPS declines quarter over quarter.
While 62.4% of U.S. adults either had a job or were seeking one in January, slightly up from 62.3% in December 2023, that figure remains below the pre-pandemic rate of 63.3% in February 2020. According to the U.S. Bureau of Labor Statistics, the lower labor participation rate means that there are roughly 2.3 million fewer adults working than otherwise would be.
U.S. private equity and venture capital deals in Japan surged in 2022 with deals valued at $13.31 billion from $8.12 billion in 2021. In comparison, U.S. investments in China in 2022 dropped 76% year over year to $7.02 billion from $28.92 billion, according to reporting from S&P Global Market Intelligence.
Funding Risks in Focus
Eurozone banks braced for liquidity, revenue hit as cheap funding era ends
Fourth-quarter bank earnings are showing the first effects accelerated payments as the European Central Bank's €2.2 trillion stimulus program dies down.
—Read the full article from S&P Global Market Intelligence
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Rapid shifts in deposit composition strain banks
The lurch toward time deposits and away from non-interest-bearing accounts has played out unevenly, with particularly high-velocity moves at a number of banks.
—Read the full article from S&P Global Market Intelligence
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Most i-banks, asset managers record lower Q4'22 earnings YOY
Nine out of 13 investment banks, broker/dealers and capital markets companies logged lower EPS year over year, and 12 out of 14 asset management companies posted lower earnings year over year, according to an S&P Global Market Intelligence analysis.
—Read the full article from S&P Global Market Intelligence
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Deep Dives
Financials
Most top office lenders upped exposure in 2022
Among the banks with the largest office lending books, most increased their exposure to the sector over the course of 2022, although nine of 17 posted sequential declines in their office portfolios in the fourth quarter of 2022.
—Read the full article from S&P Global Market Intelligence
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Banks scrutinizing their lending practices as DOJ cracks down on redlining
As part of its focus on redlining, the DOJ is looking at loans in minority areas as a proportion of total loans, branch locations, whether banks have minority loan officers, and the banks’ outreach and advertising in communities of color, experts said.
—Read the full article from S&P Global Market Intelligence
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Fintech
Fed's Custodia denials send discouraging message to crypto banks
The denial of Custodia Bank's master account and member bank applications, along with a policy statement, sent a clear message to banks; the Federal Reserve is not keen on their involvement in cryptocurrency, experts said.
—Read the full article from S&P Global Market Intelligence
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Insurance
451 Research: US Accident & Health Insurance Market Report: Telemedicine growth to persist
Results from a 451 Research survey show strong popularity of telemedicine services at a time federal legislation has extended access for a key segment of the population.
—Read the full article from S&P Global Market Intelligence
Credit and Markets
Millions of American workers likely gone for good even as US employment surges
About 2.3 million Americans, mostly older workers, remain missing from the job market, and economists do not expect the labor force participation rate to recover.
—Read the full article from S&P Global Market Intelligence
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Investors bet against consumer stocks; crypto-focused Silvergate tops short list
Healthcare, the second most-shorted sector, had short interest of 4.03% as of mid-January, its highest level since October 2022.
—Read the full article from S&P Global Market Intelligence
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Real Estate
US housing price growth downshifts further in November 2022
The downward trend was seen in every state covered in the 20-City Composite Index, which posted a year-over-year increase of 6.8% in November 2022, compared to 8.6% in the previous month.?
—Read the full article from S&P Global Market Intelligence
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Private Equity
US private equity investment in Japan surges in 2022
U.S.-based private equity and venture capital firms invested $13.31 billion in Japan across 10 deals in 2022, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
领英推荐
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China sees huge decline in US private equity investments in 2022
Compared to 2021, the aggregate value of U.S. private equity and venture capital investments in China fell about 76% and the volume of deals went down approximately 40% in 2022.
—Read the full article from S&P Global Market Intelligence
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Energy and Utilities
EU green plan said to lack 'financial teeth' of US law, risk '2-speed Europe'
The EU's Green Deal Industrial Plan lacks the financial firepower of the $369 billion U.S. Inflation Reduction Act, and due to the nature of the 27-member union also raises the specter of trouble inside the bloc, policy observers said.
—Read the full article from S&P Global Market Intelligence
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With Europe and China in EV lead, US hits accelerator to catch up
Inconsistent policies and high electric vehicle costs have slowed adoption in the U.S., but the country is poised to gain market share. Since 2022, $1.5 billion has been disbursed to help states build a national charging network for electric cars.
—Read the full article from S&P Global Market Intelligence
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Referendum to repeal oil and gas well setbacks will be on 2024 Calif. ballot
The oil and gas industry spent $21 million gathering signatures to put the repeal of the 3,200-foot setbacks up for a vote in the November 2024 general election.
—Read the full article from S&P Global Market Intelligence
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Metals and Mining
Miners' market values fall 18.2% YOY in January
The median market capitalization of a basket of over 2,300 metals and mining companies sank 18.2% year over year but rose 6.8% month over month in January, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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Technology, Media and Telecommunications
Kagan: 2022 box office recap: Domestic box office back to late '90s levels
The domestic box office recovery continued in 2022 but has yet to return to pre-pandemic levels. Total 2022 domestic box office increased 69.3% to $7.32 billion, which is more akin to the totals of $7.73 billion in 1999 and $7.55 billion in 2000.
—Read the full article from S&P Global Market Intelligence
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Kagan: As AV vendors hit brakes, should cities still step up infrastructure investment?
Municipalities began updating their infrastructure to accommodate autonomous vehicles at the same time that some AV players started to pull back. Now they must decide whether to continue building out vehicle-to-everything infrastructure.
—Read the full article from S&P Global Market Intelligence
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The Week in M&A
Large global M&A deals off to slow start in 2023
Finance M&A deals to pick up in Asia on China reopening, valuation reset
LevelField looking to create a crypto-friendly bank with deal for Burling
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The Big Number: ?
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Trending
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Written and compiled by Alex Virtucio