Scroll down to see last week’s recap.
This week, more than 50 companies, including Boeing (BA), Netflix (NFLX), and SpaceX, will participate in the “biggest-ever” U.S. business mission to Vietnam, organized by the US-ASEAN Business Council. This mission will discuss investment and sales opportunities in the country, which is benefiting from a shift away from China amid Sino-U.S. trade friction. Aerospace manufacturers Boeing, Lockheed Martin, and Bell will meet with state-owned Vietnamese defense procurement companies to discuss possible deals. Meanwhile, streaming giant Netflix, also among the companies joining the trip, is planning to open an office in Vietnam. Participants will have meetings with Vietnam’s top political and regulatory leadership, including with Prime Minister, Pham Minh Chinh.
Events:
Tuesday, 21st of March:
- The Canadian CPI (Consumer Price Index) for February is expected to increase to 0.6%, compared to 0.5% in the previous month. CPI is a measure of the average change over time in the prices paid by consumers for a basket of goods and services. It is an important indicator of inflation and the overall health of the economy. A higher CPI indicates that the prices of goods and services have increased, while a lower CPI indicates that prices have decreased.
Wednesday, 22nd of March:
- The UK CPI (Consumer Price Index) for February is expected to decline from 10.1% to 9.8%, compared to February 2022. It calculates the percentage change in the price of a basket of goods and services typically consumed by households in the UK, comparing the current month to the same month in the previous year. It is a key economic indicator, as it provides insights into the state of the UK economy and the effectiveness of monetary policy.
- The US Federal Funds Rate is expected to increase from 4.75% to 5.00%. It is the interest rate at which banks and other depository institutions lend money to each other overnight to meet the reserve requirements set by the Federal Reserve. The Federal Reserve uses this rate as a tool to control the money supply and manage inflation. When the Fed increases the Federal Funds Rate, it makes borrowing more expensive, which can slow down spending and economic growth and help control inflation. Conversely, when the Fed lowers the Federal Funds Rate, it makes borrowing cheaper, which can stimulate spending and economic growth. The Federal Funds Rate is a key benchmark for many other interest rates, such as credit card rates, mortgage rates, and business loans.
Thursday, the 23rd of March:
- The SNB (Swiss National Bank) Policy Rate for Q1 is expected to remain the same – 1.00%. It refers to the interest rate set by the SNB for its monetary policy. It is the rate at which banks can borrow or deposit money with the central bank for short-term needs. The SNB Policy Rate is used to influence the level of economic activity and inflation in Switzerland by controlling the supply of money and credit in the economy. The SNB uses its monetary policy tools to maintain price stability, support economic growth, and maintain financial stability. The SNB Policy Rate is one of the key indicators of the Swiss monetary policy stance and is closely watched by financial markets.
- The UK Official Bank Rate for March is expected to rise by 0.25%, from 4.00% to 4.25%. Also known as the Bank of England Base Rate, it is the interest rate set by the Bank of England that commercial banks pay to borrow money from the central bank. This rate is used to influence borrowing and lending rates throughout the UK economy. The rate is based on several economic factors, such as inflation, economic growth, and unemployment. Changes to the Official Bank Rate can affect the interest rates that commercial banks charge their customers for loans and mortgages, which can impact consumer spending and overall economic activity.
- US Unemployment Claims is expected to uplift from 192K to 199K. It reports the number of individuals who filed for unemployment insurance for the first time during the previous week. The data, which is released weekly, is an important indicator of the health of the labor market. A higher number of unemployment claims suggests weakness in the job market, while a lower number suggests strength. Investors and analysts use this data to gauge the strength of the economy and to make investment decisions. Generally, a decrease in unemployment claims is viewed positively by investors, while an increase in claims is viewed negatively.
Friday, the 24th of March:
- The German Flash Manufacturing PMI for March is expected to rise to 47.0, compared to 46.3 in February. It is an economic indicator that measures the activity level of the manufacturing sector in Germany. Published monthly by the research firm IHS Markit, it is considered a leading indicator of economic health, as the manufacturing sector is a major contributor to Germany’s economy.
The PMI is based on a survey of purchasing managers in the manufacturing industry, who are asked about various factors such as production, new orders, employment, and inventories. The responses are then weighed up and combined into a single index number, with a score above 50 indicating expansion in the sector, and a score below 50 indicating contraction.
Notable Earnings:
Recap from Last Week (13.03.23 – 17.03.23):
- On Friday, shares of First Republic Bank (FRC) fell 32.8% despite a $30 billion deposit from 11 of the world’s largest financial institutions. First Republic’s shares fell after the bank suspended its dividend and revealed it had a cash position of $34 billion, excluding the new deposits. The bank also disclosed it had borrowed up to $109 billion from the Fed and $10 billion from the Federal Home Loan Bank. The intervention by the banking sector was seen as positive but not sufficient, and deeper problems at First Republic were also recognized. The bank’s shares have been affected by the recent collapse of Silicon Valley Bank.
Four major banks, Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WLF), are each making a $5 billion uninsured deposit into First Republic Bank as part of a $30 billion backstop by 11 banks. Orchestrated by Jamie Dimon, Janet Yellen, and Jerome Powell, the deposit is intended to help stabilize the banking landscape. The banks said in a joint statement that their move “demonstrates their overall commitment to helping banks serve their customers and communities,” and “reflects their confidence in First Republic and in banks of all sizes.” - Elon Musk expressed confusion over OpenAI’s shift from non-profit to a $30 billion for-profit company, following reports that he may develop a rival to OpenAI’s ChatGPT. OpenAI became a “capped-profit” company in 2019, enabling increased investments in “compute and talent.” Microsoft invested in OpenAI in 2019, and in January 2021, the former forged a $10 billion deal with ChatGPT’s parent. Musk has expressed concerns about ChatGPT’s “wokeness” and advocates for AI regulation.
- Artificial intelligence usage and discussions have surged in 2023, mainly driven by the release of ChatGPT by OpenAI in late 2022 and the competition between Microsoft (MSFT) and Alphabet (GOOG) for market dominance. Now, Apple (AAPL) is reportedly developing language-generating concepts, involving Siri and other teams. While the details are unknown, it is believed that Apple is either creating its own language models or utilizing existing ones. Siri has faced challenges in understanding accents and languages, and Apple could be seeking to improve this with the help of AI. Microsoft has already invested $10 billion in OpenAI to boost its Bing search engine, while Google is also competing in the AI chatbot and search results tools space.
- Credit Suisse (CS) will borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank through a covered loan facility and a short-term liquidity facility, as part of its efforts to support its core businesses and clients. The bank is also making a cash tender offer for certain debt securities. Credit Suisse CEO, Ulrich Koerner, said the measures demonstrate decisive action to strengthen the bank. Meanwhile, Saudi National Bank, Credit Suisse’s largest shareholder, said the bank has not asked for financial assistance and that Wednesday’s market panic was unwarranted.
Credit Suisse’s shares hit a new all-time low for the second day in a row due to regulatory restrictions that prevented a major investor from providing more cash. Trading on the bank’s shares was halted several times as it dropped below 2 Swiss francs. Although Credit Suisse meets capital and liquidity requirements, its share price drop led to a broader sell-off among European lenders. Credit Suisse’s largest investor, Saudi National Bank, said it could not provide further financial assistance due to regulatory issues. The bank’s CEO defended its liquidity position, stating it is “very, very strong.” The bank also disclosed “material weaknesses” in its financial reporting processes for 2022 and 2021. - The Biden administration has demanded that the Chinese owners of TikTok divest their stakes or face a potential U.S. ban due to national security concerns. Several other countries and entities have also banned or restricted the use of the app. These include New Zealand, India, Afghanistan, Pakistan, Belgium, Canada, Taiwan, U.S. government institutions and states, and the European Commission and Parliament.
Crypto:
Binance.US has been granted approval by a bankruptcy judge to acquire Voyager’s assets for $1 billion, despite objections from the U.S. government. The government had argued that the deal would absolve Voyager of any violations of tax or securities law. However, Judge Michael Wiles of the Southern District of New York disagreed, stating that the approved deal does not prevent regulatory action. He also emphasized that any delay would harm Voyager’s clients. The Binance.US acquisition, originally scheduled for March 15, has been extended to March 20.
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