Mar 24, 2023

Asia Stocks Set to Fall After US Banks Extend Drop: Markets Wrap Jack Dorsey’s Wealth Tumbles $526 Million After Hindenburg Short Volcker Slayed Inflation. Global Oil Demand Tilts Toward India as China’s Growth Slows Pemex Sends Zama Field Development Plan to Mexico Regulator Do Kwon Charged With Fraud by US Prosecutors in New York Unusual $828 Billion Loan Market Magnifies Housing Risk in Korea Man Believed to Be Crypto Fugitive Do Kwon Arrested in Montenegro Ukraine Latest: EU Leaders to Sign Off on Military Aid for Kyiv Alternative Asset Manager Varde to Make More Than $50 Million From Credit Suisse Trades Macron Challenged by New Strikes as He Pursues Pension Reform Short Seller Carson Block Says SVB Depositors Should Have Taken Haircuts Banks Are Still Drawing on the Fed for $164 Billion of Emergency Cash Why Japanese Banks Are Well Placed to Withstand Banking Crisis Bank of America’s Kevin Sherlock Exits for Senior Role at BMO Australia’s Left Poised for Rare Control of Entire Mainland TSX recap: Index finishes 0.37% lower following late-afternoon losses Coinbase Tumbles After SEC Warning Adds ‘Significant Overhang’ Wall Street Expects the Fed to Cut Rates. That Isn’t a Good Sign Is your retirement portfolio ready for what's to come? Women more likely to bag $100,000 jobs despite fewer applications Quitting your job? Experts say it's best to have a plan before you do Household debt-to-income ratio edges lower as interest payments expand Canadians making fewer trips to the grocery store as inflation pinches: RBC report With airfares rising, here's how to find a travel deal this year Young Canadians keep up pandemic-inspired DIY projects to save money Here are the most risky types of scams in Canada: Report Review your rights before signing paperwork during a layoff: Employment lawyers More than half of Canadians say current economic conditions have impacted retirement plans: Survey Majority of Canadians feel like they're being targeted more than ever by financial fraud: Survey 'Don't be afraid to ask': Tips for young workers in salary negotiations Canadians want to retire by 61, amid financial concerns: CIBC poll Tax credits and deductions for Canadians to consider 5 RRSP season resolutions for a comfortable retirement: Dale Jackson Getting divorced? Here are the top tax considerations to take into account RRSP myths prevail as Canadians rush to contribution deadline: Dale Jackson Spousal RRSPs can offer tax benefits, but experts say it might not work for everyone MPs summon big grocery store CEOs to testify in Ottawa over food inflation Unusual $828 Billion Loan Market Magnifies Housing Risk in Korea How a Seattle Architect Helped Make Timber Towers Legal in the US Why Wood Is the Breakout Architecture Star of the Early 21st Century US Mortgage Rates Fall for Second Week, Sending 30-Year to 6.42% US New-Home Sales Unexpectedly Rise, Showing Some Stabilization Trump NY Grand Jury Paused, Told to Be on Standby for Thursday BOE No Longer Expects UK Living Standards to Fall This Year Seven Money-Saving Tips to Beat Travel Inflation This Summer and Beyond SNB Says Swiss Housing Market Is Showing Signs of Cooling SNB Hikes Rate 50 Basis Points After Sealing Credit Suisse Deal Global Banking Fallout Is Vindication for China Stocks Bulls China Evergrande Will Swap Defaulted Debt in Court Restructuring ‘Zombie’ Developers Increase in Korea as Property Market Wobbles Hong Kong Mansion in Peak Area Poised to Sell for Asia Record RBNZ Says Rate Hikes Having Desired Effect on Economy Bank Turmoil Ramps Up Pressure for $900 Billion of Property Debt Canada needs 300,000 new rental units to avoid gap quadrupling by 2026: report Extra Space Storage Weighs Offer for Rival Life Storage SVB’s Big Bet on Troubled Private Bank Ends on the Auction Block TikTok CEO’s Careful Testimony Got Him No Closer to a Resolution Australia’s Budget to Show Restraint as Global Volatility Rises Asia Stocks Set to Fall After US Banks Extend Drop: Markets Wrap Jack Dorsey’s Wealth Tumbles $526 Million After Hindenburg Short Oracle Cuts Cerner Jobs After CEO Promised to ‘Clean Up’ Unit Volcker Slayed Inflation. Do Kwon Charged With Fraud by US Prosecutors in New York Unusual $828 Billion Loan Market Magnifies Housing Risk in Korea The $4.7 Billion Business of Forecasting Japan’s Cherry Blossoms Yellen Says TikTok-Like Data Security Risks Are Growing More Common Yellen Says US Prepared for Additional Deposit Actions If Needed Art Basel Hong Kong Welcomes Back Wealthy Chinese Collectors After Three Years Man Believed to Be Crypto Fugitive Do Kwon Arrested in Montenegro Ukraine Latest: EU Leaders to Sign Off on Military Aid for Kyiv Goldman’s Former Head of Digital Assets Joins DeFi Startup Ondo Finance Alternative Asset Manager Varde to Make More Than $50 Million From Credit Suisse Trades Finland’s President Signs NATO Law as Accession Draws Nearer Macron Challenged by New Strikes as He Pursues Pension Reform Short Seller Carson Block Says SVB Depositors Should Have Taken Haircuts Asia Stocks Set to Fall After US Banks Extend Drop: Markets Wrap Global Oil Demand Tilts Toward India as China’s Growth Slows Pemex Sends Zama Field Development Plan to Mexico Regulator The $4.7 Billion Business of Forecasting Japan’s Cherry Blossoms Ukraine Latest: EU Leaders to Sign Off on Military Aid for Kyiv Macron Challenged by New Strikes as He Pursues Pension Reform Oil Reserve Refill Is ‘Difficult’ This Year, US Energy Chief Says Oil’s Three-Day Rally Halts as US Throws SPR Refill Into Doubt LME Has Checked Its Nickel Bags and Didn’t Find Any More Stones Biden Seeks Show of Unity in Visit With Trudeau: What to Watch Goldman Sees Biden’s Clean-Energy Law Costing US $1.2 Trillion How China, the US and Others Watered Down a Key UN Climate Document Carbon-Eating Cement Gets Spotlight at DOE's Bleeding-Edge Expo Power Cuts Have Reduced Potential Size of South Africa Economy by a Fifth, PIC Says JPMorgan Sold $10 Million in Jewels Left in Bank Safe Deposit Box, Suit Claims Drenched Los Angeles Rattled by Strongest Tornado in 40 Years UK Prime Minister Condemns ‘Unacceptable’ Power Trader Behavior How a Seattle Architect Helped Make Timber Towers Legal in the US US Regulator Warns About Data Security During TikTok Hearing CRTC looking into wireless roaming fee hikes as industry minister signals concern How will the Bank of Canada weigh the U.S. Fed rate decision? Central banks look to restore confidence in banking system: Experts The Daily Chase: Markets point to a positive open; Bombardier forecasts increased 2025 revenue Lack of a year-round strategy weighs on Canadian tax returns: Study TSX recap: Index finishes 0.62% lower amid U.S. Fed rate hike What Wall Street had to say about the U.S. Fed's rate hike U.S. Fed raises key rate by quarter-point despite bank turmoil The Bank of Canada held interest rates. What happens next? Bank of Canada still concerned about potentially sticky inflation, says economy still too hot Ontario to table budget amid both surging revenues, potential slowdown BoC still concerned about potentially sticky inflation, says economy still too hot Canadian home sales expected to pick up in spring but inventory still lags Credit Suisse customers feel mix of anger, relief after sale The Daily Chase: Awaiting U.S. Fed rate decision; Quebec cuts income taxes Amid cooling inflation, the BoC should be 'comfortable' regarding its decisions: Economist Canadian inflation: Economist forecasts drop in living costs ahead 'Everyone is basically at risk': How to avoid falling victim to financial fraud Army of lobbyists helped water down U.S. banking regulations Ukraine Latest: EU Leaders to Sign Off on Military Aid for Kyiv Finland’s President Signs NATO Law as Accession Draws Nearer Macron Challenged by New Strikes as He Pursues Pension Reform Five Key Moments From TikTok CEO’s Combative Hearing in Congress Australia’s Left Poised for Rare Control of Entire Mainland Trump Urges Court to Uphold His Absolute Immunity Claim in Jan. 6 Lawsuits Oil Reserve Refill Is ‘Difficult’ This Year, US Energy Chief Says King Charles' Realm Is Poised to Shrink as Jamaica Considers Ditching Monarchy Petro on Track to Suffer First Major Defeat in Colombia’s Congress Meta Says ‘Nonsense’ to EU Push to Fund Telecom Infrastructure House Republicans Finalizing Offer to Biden on Debt-Ceiling Deal Manhattan DA Fires Back at Republicans’ Demand for Information on Trump Probe Warren Wants Biden’s Fed Vice Chair Pick to Be Tougher on Banks Goldman Sees Biden’s Clean-Energy Law Costing US $1.2 Trillion How China, the US and Others Watered Down a Key UN Climate Document Power Cuts Have Reduced Potential Size of South Africa Economy by a Fifth, PIC Says Lula Slams Brazil’s Central Bank as House Speaker Urges Truce UK Prime Minister Condemns ‘Unacceptable’ Power Trader Behavior Biden’s Top Diplomat Blasted By Republicans Over Chaotic Afghan Withdrawal Jack Dorsey’s Wealth Tumbles $526 Million After Hindenburg Short Oracle Cuts Cerner Jobs After CEO Promised to ‘Clean Up’ Unit Volcker Slayed Inflation. Do Kwon Charged With Fraud by US Prosecutors in New York Unusual $828 Billion Loan Market Magnifies Housing Risk in Korea Yellen Says TikTok-Like Data Security Risks Are Growing More Common Man Believed to Be Crypto Fugitive Do Kwon Arrested in Montenegro Goldman’s Former Head of Digital Assets Joins DeFi Startup Ondo Finance Five Key Moments From TikTok CEO’s Combative Hearing in Congress Coinbase Tumbles After SEC Warning Adds ‘Significant Overhang’ Jack Dorsey’s Block Falls After Hindenburg Says It’s Short the Stock Hackers Breached UK Pension Protection Fund, Stole Employee Data NBA Players Had $13 Million Stolen by Ex-Morgan Stanley Investment Adviser, Prosecutors Say Meta Says ‘Nonsense’ to EU Push to Fund Telecom Infrastructure TikTok's CEO is defiant as U.S. lawmakers doubt assurances on safety Biden Seeks Show of Unity in Visit With Trudeau: What to Watch Rappi IPO Could Happen as Soon as Year End, SoftBank Says Goldman Sees Biden’s Clean-Energy Law Costing US $1.2 Trillion Carbon-Eating Cement Gets Spotlight at DOE's Bleeding-Edge Expo The U.S. Fed is failing in four ways: Mohamed A. El-Erian Apple, JPMorgan turn to pay now grow later Remote Working Boom Is Huge for College Towns Like Knoxville Walmart flashes a warning sign to the entire consumer economy: Andrea Felsted Millennials are finally spending like grown-ups Dismal U.S. GDP report raises the odds of recession this year: Gary Shilling Musk is wrong for Twitter even if deal math works out Chocolate bunnies can teach us to save our food supply The Fed has made a U.S. recession inevitable America's oil reserve weapon risks misfiring Four-day workweeks can burn you out U.S. Fed expects a soft landing. Don't count on it Markets are pushing Fed into developing-economy territory Commodity traders go from bonanza to bailout plea Putin's war shows West must clean up dirty money Salary transparency is good for everyone Microsoft's US$69B Activision deal could be a blunder What if the oil market bulls are wrong and this lonely bear is right? Canada's trucker protest may spread from Ottawa to U.S. Differing Powell and Yellen Messages Were a Lot for the Stock Market to Digest Ark’s Cathie Wood Sees Silver Lining in $2 Billion Loss Vanguard Plans to Shutter Business in China, Exit Ant JV European Banks Set to Fall After UBS Agrees to Buy Credit Suisse Bond Market Set for More Tumult With Fed’s Next Move in Limbo First Republic Shares Resume Slide as Investors Assess Aid World’s Biggest ETF Adds $7.3 Billion in Day After Bank Rescues First Republic Sinks as Bank Said to Explore Strategic Options Oil ETF Raked in Most Cash Since 2020 as Crude Prices Buckled First Republic Goes From Wall Street Raider to Seller in Days Crypto ETP-Provider 21Shares to Shutter Funds as Demand Fades Is There a Midsize Bank Hiding in Your ETF? Crisis Narrative Forcing Out All Others in Bank-Obsessed Markets Emerging-Market Fear Gauge Soars as Traders Brace for Turmoil Steve Leuthold, Who Called 2009 Stock Market Bottom, Dies at 85 ESG Investors’ Best Intentions Slam Into Surging Oil Stocks BlackRock’s Fink Says SVB Failure Shows Cracks in Finance System Sleepy Bank ETFs Roar to Life Amid SVB Contagion Fears Cathie Wood’s ARKK Lures Biggest Inflow Since 2021 Glory Days BCE CEO says tech hiring & donations continue despite tough economy Cenovus CEO Pourbaix to step down, become executive chair; Jon McKenzie to be new CEO Manulife CEO on diversification, insurance demand and digital transformation Decision on new Suncor CEO expected 'very soon' Restaurant Brands' CEO change is 'all about accelerating growth': Executive chairman Restaurant Brands' CEO change is 'all about accelerating growth': Executive chairman Reed Hastings explains why he's stepping down as Netflix CEO in blog post Bankman-Fried says in court that he's ready for U.S. extradition SBF sent back to Bahamian jail after catching lawyer off guard with U.S. extradition plan Disney's Iger returns to reckon with his own 15-year Legacy Women making small gains, but still troublingly under-represented in the C-suite Gerry Schwartz to step down as CEO at Onex, Bobby Le Blanc named next CEO Dominic Barton on Canada-China relations, future at Rio Tinto 'We’re serving Canadians better' following the pandemic: McKesson Canada CEO Rebecca McKillican World's richest family loses US$11.4B in Walmart rout 'Fine balance': Rania Llewellyn on fitting her long-term inclusion goals into Laurentian's revamp First female bank CEO in Canada leads with younger self in mind ​Company holiday parties are making a comeback, but many employers have a plan B Elon Musk and Jeff Bezos now worth almost half a trillion dollars Rich Miller, Bloomberg News , (Bloomberg) -- History remembers Paul Volcker as the slayer of inflation, and Ben Bernanke as the crisis firefighter. Jerome Powell is in danger of having to play both roles at once — or, what may be worse, to choose between them. On the face of it, Powell’s Federal Reserve this week pushed ahead with what’s been its policy for the past year — raising interest rates to bring down inflation — and so did other major central banks. But in reality everything’s changed, after a string of bank collapses sent tremors through world markets. Just a couple of weeks ago, threats to financial stability barely registered on the troubleshooting list for central bankers. Now they’ve rocketed toward the top. Powell and his peers say preventing a re-run of the inflationary 1970s remains priority number one. But the signal is shifting. The Fed only hiked by half as much as it was expected to before the collapse of Silicon Valley Bank and the shotgun takeover of Credit Suisse Group AG. The European Central Bank followed through with its planned half-point hike, but backed away from giving much guidance as to what comes next. Investors are having trouble figuring that out, too — as shown by the dramatic swings in market bets on monetary policy over the past couple of weeks. They’ve gone from pricing an aggressive Fed that hikes several more times, to a “we’re all doomed” scenario of imminent rate cuts after SVB’s failure — to only a shade less doomy right now. Read More: Wall Street Expects Fed Cuts. That Isn’t a Good Sign The  Goldilocks scenario would be for financial conditions to be just tight enough — as banks dial back lending and shore up their own balance sheets — to do some of the Fed’s inflation-fighting work for it. That would help  cool an overheated economy the way Powell wants, and reduce the need for rate hikes. Central-bank tools to control prices and prevent financial breakdown could work separately and effectively. All very well — but the basic problem for monetary chiefs is that, in extremis, policy prescriptions for taming prices and bolstering banks point in opposite directions. To get inflation down, central banks jack up rates and withdraw liquidity from the banking system. To short-circuit crises, they shove money out to stricken lenders and cut the cost of credit. And the danger is that they end up with the worst of both worlds: A full-blown crisis that triggers a recession. That would force central banks to abandon the inflation fight before it’s finished, as they rush to shore up a teetering financial system. `Turn for the Worse’ “The tension between fighting inflation versus preserving financial stability is now more stark than any time in the Fed’s history,” says Anna Wong, chief US economist at Bloomberg Economics — drawing on a study of American banking crises over the last 140 years. For tighter credit to take a decent-sized bite out of inflation, “the current crisis would have to take a significant turn for the worse,” she says. And if that doesn’t happen, “markets will have to revise up their estimates for the Fed’s policy path.” Central bankers are themselves partly to blame for the unpalatable choices they now face. An extended period of near-zero interest rates fostered complacency and risk-taking throughout the financial markets and economy. That’s now coming to a head as monetary policy makers ramp up rates to get on top of an inflation problem they were slow to recognize. “Super-easy monetary policy created the dry tinder for the financial turmoil,” says former Fed Governor Kevin Warsh, who’s now a senior fellow at the Hoover Institution. “The massive reversal in policy was the trigger.” For a while, it looked like the financial system — fortified by reforms after the 2007-09 crisis — would be able to withstand the end of easy money. The crypto market blew up, but the central pillars seemed sturdy. But now strains have spread to the banks — and in a way that illustrates how each episode of financial unrest tends to differ from its predecessor. `Pretty Serious’ Silicon Valley Bank, the 16th-largest lender in the US, didn’t make a ton of risky loans to homebuyers. Instead it loaded up on Treasury debt, supposedly the safest asset around. But then it got hit by a double whammy. The Fed’s rate increases pushed the value of those bonds deep into the red — while also hurting its depositor base in the tech industry. The upshot: SVB was wound up by the Federal Deposit Insurance Corp. on March 12. Credit Suisse Group AG was the next big domino to fall. For years investors had fretted about weaknesses at the Swiss lender. The slow slide turned into sudden collapse, as the bank’s shares plunged and bets on a default surged. It got taken over by neighbor and rival UBS Group AG on March 19, at a rock-bottom price. Holders of some $17 billion in debt got wiped out. As investors survey the debris, a credit crunch has replaced stubborn inflation as the key risk, according to Bank of America’s latest global survey of fund managers. “The market is acting as though we’re in the middle of a pretty serious crisis,” says  Ethan Harris, BofA’s head of global economics research. “It’s putting a very high weight on an adverse scenario where you have a big financial event and a very bad economy.” Bloomberg terminal users can see scenarios for how moderate and extreme financial stress would impact Fed policy in SHOK. In what sounds a lot like the assurances made ahead of the financial crisis 15 years ago, US authorities are insisting that they’re on top of the situation. They’re arguing that the banking system as a whole is a lot stronger than it was back then, with much more capital and liquidity. They’re maintaining that many of the problems seen so far were peculiar to the institutions involved, and not a sign of broader and deeper difficulties. Significantly Fragile Not everyone is so sure about that. At the end of last year, US banks had $620 billion in unrealized losses on securities, according to the FDIC. In a March 13 paper, a group of academic economists calculated that hundreds more banks could end up in the red in the event of a massive flight of deposits. “Recent declines in bank asset values very significantly increased the fragility of the US banking system to uninsured depositor runs” like the one that destroyed SVB,  they wrote. Read More: It’s Not Just SVB - Others Were in the Same Boat Central bankers also contend that they have separate tools to contain financial turmoil and tame prices, which can be used simultaneously. That idea harkens back to the late Dutch economist Jan Tinbergen, who won the first Nobel Prize for economics in 1969. His rule — one that Bernanke adopted in the early 2000s — posited that policy makers need to use different instruments to achieve different aims. Right now, for example, central banks can support beleaguered lenders with dollops of short-term liquidity, while also raising interest rates for borrowers throughout the economy to slow inflation. The Fed has doled out hundreds of billions of dollars through various backstop facilities over the past two weeks, data out Thursday showed. The central bank’s balance sheet exists precisely to deal with such emergencies — but the problem is that the Fed is trying to pare back its bond holdings, swollen after years of buying securities under the policy known as quantitative easing. For two weeks now, the liquidity injections mean it’s effectively been doing the opposite. That shouldn’t be taken as an easing of the Fed’s stance, Powell told reporters on Wednesday. The argument is that short-term liquidity provision, and asset purchases or sales aimed at shifting longer-run borrowing costs, are different things. Many seasoned Fed watchers agree — but that hasn’t stopped money managers from latching on to it as a signal of looser policy ahead. Out of Control? The result, says former Fed governor Warsh, is a muddied message that confuses markets and makes it harder for policy makers to get a grip on inflation. Case in point: Investors are ignoring Powell’s repeated attestations that the Fed has no plans to lower rates this year, and trading as if cuts are baked in. Even if monetary policy makers do succeed in staunching the latest financial turmoil, they acknowledge that it’s still likely to squeeze the economy. The key question is: how much? At his press conference after Wednesday’s 25-basis-point move, Powell suggested that tighter financial conditions might be “the equivalent of a rate hike, or perhaps more than that” — quickly adding a caveat: the assessment can’t currently be made “with any precision whatsoever.” That hasn’t stopped economists on Wall Street and elsewhere from trying. Using SHOK — Bloomberg’s model of the US economy— Wong calculates that the banking stress seen so far is likely equal to a 50-basis-point increase in interest rates. Other estimates run as high as 150 basis points. Whatever the answer, the underlying problem is the same: it’s something the Fed can’t fine-tune. Powell and his colleagues are trying to steer the world’s biggest economy out of an inflationary episode and back to steady growth. The job just got much tougher. “Ideally the Fed would like to be able to manage this process carefully,” Bank of America’s Harris says. Now, “you have to be worried that the recession is going to be deeper and harder to control.” ©2023 Bloomberg L.P.