And so we are approaching the end of another hectic week in the markets.
The CBOE VIX index
VI,
the measure of stock volatility, rose to 30 twice before tumbling back down.
The ICE BoAML MOVE index, a VIX for the Treasury market, jumped to its highest level since the Great Financial Crisis of 2008, at one point more than 80% higher than in early February.
These moves illustrate the whiplash in stocks and bond yields as traders tried to work out the severity of the unfolding banking crisis and the extent to which it would jeopardize central banks’ ability to sustain their anti-inflation strategies.
Concerns that shocks in the financial sector would negatively affect the global economy – and overlong positioning – also caused a slump in oil prices.
Still, the stock market rallied Thursday, and Friday’s tone is calm, at least on the surface, as investors appear bailed out by authorities arranging aid for Credit Suisse
CS,
and First Republic
FRC
in the U.S.
But hold on.
The Federal Reserve is set to expand its balance sheet again after it reported late Thursday that banks used its new Bank Term Funding Program to borrow $11.9 billion this week. Also $153 billion was borrowed through the Fed’s rebate window and $142.8 billion in bridge loans.
The market doesn’t know who, or how desperate, these borrowers are.
And others worry that the recent moves to help the banking sector may not just close the cracks, but may make things worse.
Hedge fund manager Bill Ackman is not happy that the systemically important banks (SIBs) have been persuaded to return the deposits they received from First Republic Bank (FRB) to the struggling lender.
“The result is that FRB default risk is now spread to our largest banks. Spreading the risk of financial contagion to create a false sense of confidence in FRB is bad policy. The SIBs would never have made this investment in low-yield deposits unless they were pressured to do so and without a guarantee that FRB deposits would be discontinued if it failed. Ackman wrote in a tweet late Thursday.
“The press release announcing the $30 billion deposits raised more questions than it answers. Lack of transparency leads market participants to assume the worst. I’ve said before that hours matter. We let days pass. Half measures don’t 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 industry needed an immediate temporary deposit guarantee until comprehensive government insurance is widely available.
“We have to stop this now. We are past the point where the private sector can solve the problem and are in the hands of our government and regulators. Tick-tock.”
Markets
S&P 500 futures
ES00
rose 0.1% as a 10-year Treasury yield
BX:TMUBMUSD10Y
fell 4.2 basis points to 3.542%. The dollar index
DXY
lost 0.3%, which helped lift gold
GC00
by 0.7% to $1,936 an ounce.
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The buzz
US economic data expected today includes February’s industrial production and capacity utilization, released at 9:15 am, followed at 10:00 am by February’s leading economic indicators index and March’s consumer confidence report. All times Eastern.
It’s another quadruple Witch Friday, with $2.8 trillion option contracts expiring.
Anyone who buys stock in First Republic
FRC
at the opening on Thursday and selling at the close could have yielded about 60% for the day. The recovery came after a consortium of major banks pledged $30 billion in deposits for the lender. However, shares are down 5% to the opening bell on Friday after First Republic said it should suspend its dividend to save cash.
FedEx Stocks
FDX
were up 11% in premarket action after the parcel delivery company delivered results that showed cost savings and the ability to raise prices helped bottom line.
Shares in Sarepta Therapeutics
SRPT
drop 20% after the FDA said it would hold an advisory committee on the company’s treatment of Duchenne muscular dystrophy.
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The graph
Here’s CNN’s Fear & Greed Index. It is a compilation of seven indicators: market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand.
Eagle-eyed readers may notice that it fell into “Extreme Fear” this week — below the 25 line — before coming back in just “Fear.” The last time the chart fell this low, in October 2022, was a recent bottom for the S&P 500.
Toppers
These were the most active stock tickers on MarketWatch as of 6am Eastern.
| Ticker | Security name |
|
TSLA |
Tesla |
|
FRC |
Bank of the First Republic |
|
BBBY |
Bed bath & beyond |
|
GME |
GameStop |
|
AMC |
AMC Entertainment |
|
HUBC |
Cyber security hub |
|
NVDA |
Nvidia |
|
CS |
Credit Suisse ADR |
|
AAPL |
Apple |
|
TRKA |
Troika Media |
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