SVB decline, inflation, retail sales: What to know this week

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Two key economic data points will greet investors in the coming week ahead of the Federal Reserve’s next policy meeting as the investing public’s eyes — and beyond — turn to the latest developments from last week’s Silicon Valley bank collapse.

The February consumer price index (CPI) on Tuesday and February retail sales on Wednesday morning will reinvigorate investor hopes for the Fed’s next policy move.

According to data from Trading Economics, consensus forecasts are calling for the CPI to rise 6% on a headline basis and 5.5% on a “core” basis in February from last year. A 6% increase in inflation would mark the slowest annual increase in consumer prices since September 2021.

Investor attention on the Fed’s next moves, however, has waned as a top focus for investors in recent days with Friday’s shock collapse of the Silicon Valley bank and fears that it could lead to further damage to the broader financial system. What could mean the second largest bank failure in US history. ,

How futures open on Sunday evening and the follow-through in Monday’s trading session will be crucial in setting the tone for the week ahead. And it will provide a clue as to whether investors agree with many of the initial reactions to the collapse of the Silicon Valley bank — namely, that it represented a unique failure rather than the beginning of something larger.

As Yahoo Finance’s Jennifer Schoenberger reported Friday, TD Cowen analyst Jarrett Seaberg wrote Friday that the firm “does not view this as the beginning of a broader threat to the safety and soundness of the banking system.”

“Like Silvergate (SI), Silicon Valley had a unique business model that relied less on retail deposits than a traditional bank,” Seaberg said. “This left the bank more exposed to interest rate risk because its funding became more expensive, but its assets were not getting higher.”

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A view of the Park Avenue location of Silicon Valley Bank (SVB) in New York City, US, March 10, 2023. REUTERS/David ‘D’ Delgado

In a note to clients published Friday, Kabir Caprihan, an analyst at JPMorgan, echoed much of this sentiment, writing: “At the outset, we do not believe [Silicon Valley Bank’s collapse] To be systemic, but it reflects some of the structural issues that we have highlighted in our outlook and that affect our underweight on regional banks.”

The scale and particular challenges that have taken down the Silicon Valley bank are unique — its exposure to the cash-burning tech world punished most by investors during the Fed’s rate-hiking campaign at the top of this list. But the general story of deposit growth in 2021, outflows in recent months, and losses in securities portfolios is likely to challenge some regional banks in the near term.

A Bloomberg report late Saturday said the FDIC – which took control of the bank on Friday morning – was working to make up the entirety of uninsured deposits held with the bank, including more than 30%. Outlet reporting payment of 50% of the deposit amount was being discussed. ,

Bloomberg reported that Fed and FDIC officials have also discussed setting up a fund to backstop deposits from other institutions that could face a similar crisis at Silicon Valley Bank in the coming weeks. Across the Atlantic, UK finance minister Jeremy Hunt said the British government was working to ensure that the failure of the SVB would prevent any UK from needing cash “to pay its employees”. able to meet flow requirements.

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semaphore reported on the weekend Hedge funds are reaching out to start-ups with cash stuck in Silicon Valley banks and offering to buy their deposits at a discount, as some companies face a cash crunch with payrolls looming and its There is a potentially long road ahead to get ahead completely on the money you have accumulated. Failed Bank.

It comes as regulators find buyers for the Silicon Valley bank as well as the wealth management, investment and securities business housed under the bank’s former parent company, SVB Financial (SIVB). Bloomberg reported on Saturday that employees of the failed Silicon Valley bank would be on the job for 45 days.

Latest FDIC Update On the situation as of Saturday evening it said: “All depositors will have full access to their insured deposits as of Monday morning, March 13, 2023. The FDIC will pay advance dividends to uninsured depositors within the next week.”

The FDIC added: “Uninsured depositors will receive a receivership certificate for the balance of their uninsured funds. As the FDIC sells Silicon Valley Bank assets, future dividends may be paid to uninsured depositors.”

“The circumstances of the Silicon Valley bank collapse are so unique that it probably won’t trigger a wider financial transition,” wrote Paul Ashworth, chief North America economist at Capital Economics. “Still, it’s a timely reminder that when the Fed focuses singularly on reducing inflation by raising interest rates – it often breaks things.”


economic calendar

monday: No major financial release scheduled.

Tuesday: Consumer Price Index, YoY, February (+6% vs. +6.4% expected in January); Consumer Price Index, M-o-M, February (+0.4% vs. +0.5% expected in January); “Core” CPI, year-on-year, February (5.5% expected compared to 5.6% in January); “Core” CPI, month-on-month, February (+0.4% vs. +0.4% expected in January)

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Wednesday: MBA Mortgage Application; Producer Prices, YoY, February (+5.4% expected vs. 6% in January); Producer Prices, M-o-M, February (+0.3% vs. +0.7% expected in January); “Core” PPI, YoY, February (+5.2% expected vs. +5.4% in January); “Core” PPI, month-on-month, February (+0.4% expected compared to 0.4% in January); Retail Sales, Month-on-Month, February (-0.3% vs. +3% Expected in January); NAHB Home Builder Sentiment, March (42 Expected vs. 42 in February)

Thursday: Building Permits, February (1.238 million annual rate vs. 1.33 million in January); Housing Starts, February (1.31 million annual rate vs. 1.309 million in January); initial jobless claims (205,000 expected vs. 211,000 last week); Philly Fed Manufacturing Survey

Friday: Industrial Production, February (+0.4% expected vs. 0% in January); University of Michigan Consumer Sentiment, Early March Reading


income calendar

monday:gitlab (gtlb)

Tuesday:lenar (LEN); Estimation (GES); sentinel one(s); Stoneco (STNE)

Wednesday:adobe (adbe); Otley (OTLY); uipath(path); five down (five)

Thursday: FedEx (FDX); Dollar General (DG); G-III Apparel (GIII); Jabil (JBL); Signet Jewelers (SIG); Academy Sports (ASO); Williams-Sonoma (WSM); traeger (cook)

Friday, No notable earnings are scheduled for the release.

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