Coffee With Greta: Fed Meeting Day 1, Regional Banks Pop
DJIA Futures: +308 (+1.0%)
SPX Futures: +34 (+0.9%)
NASDAQ Futures: +73 (+0.6%)
Good morning friends!
Futures are rising as the Fed meeting is set to begin and regional banks bounce back.
Let’s get right to it!
Fed Meeting Day 1
The Federal Reserve begins its two-day policy meeting today.
The meeting comes in the wake of the banking crisis which has caused traders to shift their expectations to a smaller rate hike.
CME Group’s FedWatch Tool shows over 83% of traders expecting a 25 basis point rate hike tomorrow.
That’s a reversal from 3 weeks ago when the market was pricing in a larger 50 basis point move.
But some investors are calling for the Fed to pause rate hikes or even cut rates this week.
In a tweet on Monday, Pershing Square CEO Bill Ackman said, “The [Federal Reserve] should pause on Wednesday. We have had a number of major shocks to the system.”
Tesla CEO Elon Musk responded to that tweet calling for a rate cut.
Musk said, “Fed needs to drop the rate by at least 50bps on Wednesday.”
Regional Banks Bounce Back
First Republic Bank (FRC) shares are rallying 23.5% ahead of the open, leading the overall sector higher.
The SPDR S&P Regional Banking ETF (KRE) is up 4.6% in premarket trade.
The bounce back in regional banks comes after Treasury Secretary Janet Yellen said the government is ready to provide more support if the banking crisis worsens.
In a speech at the American Bankers Association, Yellen said the government is could backstop more deposits like was done at Silicon Valley Bank.
She said, “The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
But she also expressed confidence in the banking system and the actions taken to support it so far.
Yellen said, “The situation is stabilizing. And the U.S. banking system remains sound. The Fed facility and discount window lending are working as intended to provide liquidity to the banking system. Aggregate deposit outflows from regional banks have stabilized.”
Coming Up: Existing Home Sales
The National Association of Realtors reports February existing home sales at 10:00 a.m. ET.
That report is expected to show the pace of sales accelerated last month to a seasonally adjusted annual rate of 4.2 million units from 4 million in January.
The housing market saw a brief jump in demand at the start of the year as mortgage rates cooled slightly.
In Case You Missed It
- Amazon (AMZN) shares dropped 1.3% on Monday after the company announced more layoffs. In a memo to employees, CEO Andy Jassy said the tech giant will lay off 9,000 employees in the coming weeks. The cuts are on top of the previously announced layoffs which totaled more than 18,000 employees. Jassy said the latest round of layoffs will primarily impact employees in Amazon’s cloud computing, human resources, advertising, and Twitch livestreaming businesses.