And so we come to the end of another frantic week in the markets.
The CBOE VIX index
VIX,
the indicator of equity volatility, rose twice to 30 before falling again.
The ICE BoAML MOVE Index, a VIX for the Treasury market, jumped to its highest since the Great Financial Crisis of 2008, at one point more than 80% since early February.
The moves illustrated the action in stocks and bond yields as traders tried to figure out the severity of the unfolding banking crisis and how much it would compromise the ability of central banks to maintain their inflation-fighting strategies .
Concerns that financial sector jitters would have a bad impact on the global economy, and too long a position, also caused oil prices to fall.
Still, the stock market rallied on Thursday and the tone on Friday, at least at first glance, was calm as investors appeared to be saved by the authorities arranging support for Credit Suisse.
CS,
and First Republic
FRC
in the USA
But hold on.
The Federal Reserve is set to expand its balance sheet again after reporting late Thursday that banks this week used their new bank term financing program to borrow $11.9 billion. In addition, $153 billion was borrowed through the Fed’s discount window and $142.8 billion in bridge loans.
The market does not know who, or how desperate, these borrowers may be.
And others worry that recent moves to help the banking sector are not just papering over the cracks, but possibly making things worse.
Hedge fund manager Bill Ackman is unhappy that systemically important banks (SIBs) have been forced to recycle deposits they received from First Republic Bank (FRB) into the struggling lender.
“The result is that FRB default risk is spreading to our biggest banks. Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy. The SIBs would never have made this low investment yield on deposits unless they were pressured to do so and without guarantees that FRB deposits would be supported if it failed.” Ackman wrote in a tweet late Thursday
“The press release announcing the $30 million in deposits raised more questions than it answered. The lack of transparency makes market participants assume the worst. I’ve said before that hours matter. We’ve let days pass Average measures do not work when there is a crisis of confidence”, he added.
Ackman, who runs Pershing Square Capital Management and is not averse to an apocalyptic blowout, said the banking sector urgently needed a temporary deposit guarantee until an expanded government insurance scheme was widely available.
“We have to stop this now. We are beyond the point where the private sector can solve the problem and we are in the hands of our government and regulators. Tick tock.”
markets
S&P 500 Futures
ES00
10-year Treasury yields rose 0.1%
BX: TUBMUSD10Y
fell 4.2 basis points to 3.542%. The dollar index
dxy
lost 0.3%, helping lift gold
GC00
0.7% to $1,936 an ounce.
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The buzz
US economic data due today includes February industrial production and capacity utilization, released at 9:15 a.m., followed at 10 a.m. by the February index of leading economic indicators and the March consumer sentiment report. All Eastern eras.
It’s another quadruple Witching Friday, with $2.8 trillion worth of options contracts expiring.
Anyone who buys First Republic stock
FRC
at the opening on Thursday and selling at the close could have made about 60% for the day. The rally came after a consortium of big banks pledged $30 billion in deposits for the lender. However, shares are down 5% at the opening bell on Friday after First Republic said it would have to suspend its dividend to conserve cash.
FedEx shares
FDX
are up 11% in pre-market shares after the package delivery company reported results that showed cost cutting and the ability to raise prices was helping its bottom line.
Shares of Sarepta Therapeutics
SRPT
are falling 20% after the FDA said it would hold an advisory panel on the company’s Duchenne muscular dystrophy treatment.
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the graph
Here’s CNN’s Fear and Greed Index. It is a compilation of seven indicators: market momentum, stock price strength, stock price breadth, call and put options, demand for junk bonds, market volatility, and safe haven demand.
Eagle-eyed readers may note that this week it fell to “Extreme Fear” (below the 25 line) before reappearing only in “Fear.” The last time the chart dropped this low, in October 2022, it marked a recent bottom for the S&P 500.
The best tickers
Here were the most active stock tickers on MarketWatch as of 6:00 AM Eastern.
| Ticker | Security Name |
|
TSLA |
Tesla |
|
FRC |
Bank of the First Republic |
|
BBBY |
Bed bath and beyond |
|
GME |
GameStop |
|
AMC |
AMC Entertainment |
|
HUBC |
Cyber Security Hub |
|
NVDA |
Nvidia |
|
CS |
Credit Suisse ADR |
|
AAPL |
apple |
|
TRKA |
Middle Troika |
Random readings
Rolls-Royce and the nuclear power lunar base.
Spanish princess for wearing camouflage for three years.
Rival cities in Colorado fight over a frozen death.
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