You have likely seen the news that Silicon Valley Bank failed last Friday and was taken over by the FDIC. On Sunday, the FDIC also took over Signature Bank and announced policy measures intended to shore up confidence in the banking system. We don’t have all the details on the Silicon Valley Bank failure yet, but it looks like extremely poor judgment by management ultimately led to the collapse of the bank and acted as the catalyst for a classic run on other banks. So what happened? Like all banks, Silicon Valley Bank (SVB) owned a portfolio of bonds (mostly Treasury and … [Read more...]
Will Japan Keep Buying U.S. Treasuries?
After a buying spree, investors are wondering if Japanese investors will continue to buy U.S. Treasury bonds. Kate Guguid reports for the Financial Times: Japanese investors have piled into foreign debt this year — but analysts have warned that the revival in demand from one of the cornerstones of the US Treasury market is unlikely to last. Data from Japan’s ministry of finance reported this week showed that investors bought ¥4.1tn ($30bn) of foreign debt in February, the largest total since September 2021. That follows net buying of ¥1.1tn in January, and marks a pause in the dramatic … [Read more...]
GM’s Electric Vehicle Push Stalls
Efforts by General Motors to ramp up electric vehicle production have not been working out. Mike Colias reports for The Wall Street Journal: General Motors Co. Chief Executive Mary Barra has called 2023 a breakout year for the company’s electric-vehicle push. It is off to a slow start. The Detroit auto maker is dealing with the slower-than-expected rollout of two high-profile electric vehicles, the GMC Hummer EV and the Cadillac Lyriq, increasing pressure on Ms. Barra after GM lost EV market share to rivals last year. More than 15 months after GM began building theelectric GMC Hummer … [Read more...]
Are Rising Rates Endangering Small Town Budgets?
Many small towns use short-term borrowing to pay bills between revenue collections. Higher rates could be threatening that finance model. Heather Gillers reports for The Wall Street Journal: Rising interest rates are squeezing cash-strapped towns and school systems that use short-term borrowing to keep cash flowing while they wait for property tax dollars to come in. A-rated cities and school districts are paying 3.16% for a one-year loan issued March 3, compared with 0.21% at the beginning of 2022, according to data from Refinitiv MMD. In places where local budgets are already burdened by … [Read more...]
Tesla Is Dropping Its Prices
Tesla has announced price cuts for two of its vehicles, the Model S and the Model X. Alyssa Lukpat reports The Wall Street Journal: Tesla Inc. decrease; red down pointing triangle lowered the prices of two of its most expensive models in the U.S., the Model S and Model X, in its latest round of price cuts as the company tries to boost demand in a competitive market. Tesla dropped the base price of its Model S luxury sedan from $94,990 to $89,990, which is about a 5% cut, according to the company’s website. Tesla lowered the base price of its Model X sport-utility vehicle from $109,990 to … [Read more...]
Global Liquidity Is Increasing Despite the Fed
Despite efforts by the Federal Reserve, European Central Bank, and the Bank of England to decrease global liquidity, it is increasing instead and driving investors into riskier assets. Joseph Adinolfi reports for MarketWatch: Gains for global equities have left many on Wall Street perplexed as stocks — especially high-risk growth names with little or no profits — have rebounded from last year’s punishing selloff, resisting both the pull of more attractive bond yields, and the threat of higher interest rates. But some Wall Street analysts say they’ve found an explanation that has little to … [Read more...]
China Hopes Recovery Dims Memories of Zero COVID Debacle
China's communist government found itself in trouble with its people when it became apparent just how damaging its misguided "zero COVID" policies were. Now the government is hoping a rapid economic recovery will be able to paper over its embarrassing COVID performance. Stella Yifan Xie and Keith Zhai report in The Wall Street Journal: Economic activity in China expanded sharply for a second straight month, in an early sign the country may be shaking off the impact of pandemic curbs sooner than expected. A gauge of manufacturing rose at the fastest pace in more than a decade in February, … [Read more...]
Industry Races to Diversify Away from China
A trend in manufacturing companies diversifying their operations away from China has been accelerating, and now Apple suppliers are joining the exodus. Nguyen Xuan Quynh and John Boudreau report for Bloomberg, writing: Apple Inc.’s Chinese suppliers are likely to move capacity out of the country far faster than many observers anticipate to pre-empt fallout from escalating Beijing-Washington tensions, according to one of the US company’s most important partners. AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China, which today cranks out … [Read more...]
Is That an Echo You Hear in the Market?
The recent rally in tech shares has given hope to investors who have made money in them for the last decade, but Ruchir Sharma suggests in the Financial Times that the rally is just an echo. He writes: The recent surge in tech stocks has true believers buzzing that the downturn of late last year is over and the boom of the past decade is back. But the opposite case is more likely. This surge had all the hallmarks of an echo bubble — a brief rebound of the kind that has punctuated the long decline of every major bubble in the past century. Over the past decade, driven by record-low interest … [Read more...]
Is There Room for Morgan Stanley in the Crowded ETF Industry?
Morgan Stanley is entering the crowded ETF industry with six new products, including two actively managed ETFs. Steve Johnson reports in the Financial Times: In a parallel universe Morgan Stanley might be Europe’s pre-eminent exchange traded fund provider. In this one it is the wet-behind-the-ears newbie, beaten to the punch by the more than 400 issuers globally that have already entered the ETF fray. Despite its tardiness Morgan Stanley, the 18th-largest manager in the world with assets of $1.3tn, and the biggest without ETFs, has ambitious plans. Six ETFs were unveiled in the US … [Read more...]
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