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Coffee With Greta: Regional Banks Still Sliding


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Good morning friends!

Futures are mostly lower as regional bank shares continue to drop and traders digest new economic data. 

Let’s get right to it!

Regional Banks Continue Slide

First Republic Bank (FRC) shares are tumbling 33.3% ahead of the open as concern about the future of U.S. regional banks continues. 

Other regional banks are also under pressure with PacWest Bancorp (PACW) dropping 17.8% and Western Alliance Bancorp (WAL) falling 7.6%. 

First Republic had the third highest rate of uninsured deposits among U.S. banks last week. 

It was behind SVB and Signature Bank, which were both shutdown by regulators. 

The bank has said it is weighing its options to stabilize its business, including a potential sale. 

But analysts say any sale under pressure may end up being a bad deal for shareholders.

Swiss National Bank Backs Credit Suisse

Credit Suisse (CS) shares are up 4.6% in premarket trade after the bank announced it will borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank. 

That money will be under a covered loan facility and a short-term liquidity facility at the Swiss National Bank. 

Credit Suisse said the money will, “support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.”

The measures come after Credit Suisse shares tumbled on Wednesday after the Saudi National Bank said it would not be able to provide more capital to the bank. 

Weekly Jobless Claims Tumble

Weekly jobless claims dropped more than expected last week. 

The Labor Department reported 192,000 Americans filed initial unemployment claims. 

That was down by 10,000 from the previous week’s revised level and better than expectations for 205,000. 

Continuing claims dropped by 29,000 to 1.68 million in the week ending March 4.

The data is a sign of the labor market maintaining strength amid the Fed’s rate hiking cycle. 

Housing Starts, Building Permits Surge

U.S home construction surged in February. 

The Census Bureau reported housing starts jumped 9.8% to a seasonally adjusted annual rate of 1.45 million units last month. 

That was sharply higher than expectations for starts to be unchanged at an SAAR of 1.31 million units. 

Single-family starts rose 1.1% while multi-family starts surged 24.1%. 

The growth is expected to continue in months ahead as new permits issued in February surged 13.8% to an SAAR of 1.52 million units.

That was also better than expectations for 1.34 million.

Single-family permits rose 7.6% while multi-family permits jumped 24.3%.

Philly Fed Manufacturing Index Remains In Contraction

Another key manufacturing gauge is deep in contraction territory. 

The Philadelphia Fed’s manufacturing index improved by just over 1 point this month to -23.2. 

That was worse than expectations for a -14.5 reading. 

New orders fell to -25.4 while shipments dropped to -28.2. 

Manufacturers also reported a decline in employment with the employment index decreasing from 5.1 to -10.3. 

That’s the second negative reading since June 2020 and the lowest reading since May 2020. 

This negative data comes after the Empire State manufacturing index dropped deep into contraction territory as well on Wednesday.

In Case You Missed It

  • Homebuilder sentiment rose unexpectedly in March. The National Association of Homebuilders sentiment index rose to 44 this month from 42 in February. That topped expectations for the survey to decline to 40. Builders have been feeling more confident about the future of the housing market this year as mortgage rates cool and demand remains high.

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