Reeked of Mismanagement

Good Morning. Starting today will be the best time to see Mercury from Earth, but who really cares. Recent astrobiologists suggest that we find signs of life in the galaxy by studying dust...space dust. And we somehow figured out Beethoven had gastrointestinal problems from a strand of his hair? Für at least he died a legend.

As of Market Close March 27 2023

Market Madness: First Citizens Bank some but not all acquisition of Silicon Valley Bank had investors craving gains on Monday, as other regional stocks such as First Republic Bank closed the day up 11.81%. First Citizens purchased all of SVB loans and deposits which sent their share price up over 45%.

Setting the Barr: This week the Senate Banking Committee holds a hearing on bank failures, and what the next steps are in terms of regulation and analyzation on what actually took place. Federal Reserve Vice Chair of Supervision Michael Barr wrote in a statement ahead of the hearing on Monday that the bank's failure reeked of "mismanagement."

BANKS

Are We Ok Now?

The deal between First Citizens Bank to buy much of Silicon Valley allowed ease to enter the atmosphere of the market, fortifying trust in other regional banks across the country. First Citizens agreed to buy about $72 billion of Silicon Valley Bank's assets at a massive discount of $16.5 billion. However, about $90 billion in assets remain in FDIC's receivership.

This deal allows investors to realise that SVBs assets did indeed have some value and weren't worthless after all and joy spread throughout the baking system!...right? Experts say this deal in and of itself doesn't provide an all-clear for other banks. Restoring trust and allowing other institutions to heal from their wounds may take some more time.

OIL

Oil Always Be Here For You

With the positive and reassuring news in the banking sector showering the market on Monday, Crude Oil prices jumped as much as 5%. However the news about the banking sector wasn't the only driving factor. The disruption of the Kurdistan pipeline that runs towards Turkey took place on Monday, sending flares through the crude market. But how does a halt in supply cause the price to rise?

The shutting off of oil taps of about 400,000 barrels per day from the Kurdistan Region of Iraw could, and most likely will balance out the anticipated loss of 500,000 barrel per day loss of Russian oil. The loss of Russian oil loss still hasn't been formulated, but its likely.

China Wants More: Saudi Aramco has agreed to acquire 10 per cent of a Chinese oil refiner for $3.6bn in the second in a pair of deals set to strengthen the relationship between the Middle Eastern state oil company and its biggest market. Under the arrangement with Shenzhen-listed Rongsheng Petrochemical Co, Saudi Aramco will supply 480,000 barrels a day of Saudi crude to China’s largest integrated refining and chemicals facility in Zhejiang province.

CHIPS

Microsoft Gets Active...Well Not Really

Microsoft's buyout of Activision back in 2022 might not be as profitable as they were hoping, as new evidence shows it will not result in a substantial lessening of competition in console gaming. The merger between Microsoft and Activision was said to have little to no effect on the gaming industry, but why are investors scratching their heads?

Activision is the owner of mega-franchise Call of Duty and Microsoft's initial plan was to acquire activation in efforts to make Call of Duty an X-Box exclusive. This however would potentially lose Microsoft so much money that their incentive to monopolize this industry practically disappeared. The behaviour of COD players showed to have no interest in switching consoles just for a COD game and Microsoft has now dealt hands with Sony to potentially see the 'Duty' Franchise available on Sony consoles for years to come. Talk about a mis-timed grenade.

BlackBerry has made headlines several times this week and is now catching the attention of many traders. BlackBerry plans to sell "non-core" patents and patent applications for up to $900 million, allowing a significant increase in cash flow and potential royalties in the aggregate amount. BlackBerry is said to receive $170M in the initial closing of the deal as well as an extra 30M later on. Not to mention a cut of profits generated from the patents...hats off the BB. Shares gained 4% to $3.84 for the week.

First Republic Bank got more mediocre news on Monday as JPMorgan plans to implement some strategic alternatives that include capital raises to shore up balance sheets. Reports say this deal is proving more difficult without government support and "remains elusive" for now. FRC jumped 11.81% Monday as the banking sector relaxed a little, however JPMorgan chief Jamie Dimon isn't giving up on FRC and is continuing his effort to secure a so called "club-deal" for the regional bank.

ECONOMY

Cataclysmic Failure Soon To Come?

Unrealized losses on debt may become the next big thing in our economic crisis journal, but experts warn for something much more dangerous.

Small banks may face a similar headache to one we saw in the 1980s revolving around savings accounts and mortgages, and more monetary tightening may put lenders in a bad spot for the near future. The basic premise around this issue is that $2.5 trillion in commercial real estate debt is going to mature over the next 5 years, what does this mean? Well, many borrowers have a change on defaulting these loans due to the higher interest rates and pressure on asset prices grow.

70% of the commercial real estate debt is held by small banks and can be a cataclysmic loss if these defaults occur.

Tesla CEO Elon Musk commented on this issue saying "This is by far the most serious looming issue," and he's worried that these mortgages and loans can tank in value. With demand for remote-work soaring, higher borrowing rates, and a recession on the way, demand for properties can plummet, pull down prices and issue a series of defaults causing a gutshot to small institutions.

Estimated Losses: $38 Billion

CANADA

Are You Canadian and Interested In Finance?...Pay Attention

The Canadian business world is being hit with some heavy and some not so heavy news this week. From budgets to earnings here are some things to look out for.

Budgets. Life is expected to get a lot more affordable for Canadians says Finance Minister Chrystia Freeland. And a lot more is to be notioned with the release of the federal government's budget on March 28. This budget includes targeted inflation relief, something Canadians have been begging for ever since eggs became $10 a dozen.

GDP. Stats Canada is releasing recent information on how the Canadian Economy really did in the beginning of the year. Gross domestic product for January is reported this week with expectations high as it expects to portray a 0.3% gain for the first month of 2023. Exciting...

Canadian Dollar. Strength in the one and only Canadian dollar sees some strength after struggling months against USD, posting its biggest advance in two weeks. CAD was trading 0.7% higher at 73.23 US cents. As sentiment and consumer confidence returns amid the turmoil in the Canadian market, crude prices are said to positively impact the CAD, which could be why we are seeing this strengthening.

NEWS

What Else Is Pulsing

• At Least 29 Migrants Drowned While Trying to Reach Europe as Gov’ts Make It Harder to Save Lives at Sea
• Russia Threatens Deployment of Nuclear Weapons in Belarus
• At Least 6 Killed in Suicide Bombing Near Kabul’s Foreign Ministry
• Honduras Establishes Diplomatic Ties with Beijing, Breaks with Taiwan
• Kamala Harris Vacations to Africa To Stop Chinese and Russian Influence...ok.
• Trump Railly's Against NY Prosecutors as Possible Indictment Looms

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