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Coffee With Greta: Is Another Bank Failing?


DJIA Futures: -69 (-0.2%)

SPX Futures: -11 (-0.3%)

NASDAQ Futures: -13 (-0.1%)

Good morning friends!

Futures are falling as regional bank fears return.

Let’s get right to it!

PacWest Plunges

PacWest Bancorp (PACW) shares are plunging 37.7% ahead of the open amid concerns it will be the next regional bank to fail. 

In a statement this morning, the bank confirmed reports that the bank is reviewing “strategic options”, including a potential sale.

PacWest said it “will continue to evaluate all options to maximize shareholder value.”

The statement also said it had not experienced “out-of-the-ordinary deposit flows” after the failure of First Republic Bank earlier this week.

The news is dragging down other regional banks as well with the SPDR S&P Regional Banking ETF (KRE) down 3.9%, Western Alliance Bancorp (WAL) dropping 14.4%, and Comerica (CMA) sliding 7%. 

PacWest reported Q1 earnings last week, which showed total deposits declined by $5 billion in the first quarter to $28.2 billion. 

But the bank said it was already seeing a rebound in deposits at the end of the quarter and into the beginning of Q2. 

The turmoil for PacWest comes after the Fed said on Wednesday that the U.S. banking system is sound and resilient. 

Qualcomm Falls On Weak Guidance

Qualcomm (QCOM) shares are falling 7.5% in premarket trade after reporting fiscal Q2 results that were in line with expectations but issuing weak guidance. 

Here’s how the chipmaker’s results compared to analysts’ estimates: 

  • Adjusted EPS: $2.15 as expected
  • Revenue: $9.28 billion vs $9.1 billion expected

Total revenue dropped 17% year over year, driven by a slowdown in demand for its cellphone chips. 

That drop is expected to continue with Qualcomm forecasting $8.5 billion in fiscal Q3 revenue, missing expectations of $9.14 billion. 

The company also forecast EPS of $1.80 vs analysts’ estimates of $2.16.

Moderna Reports Surprise Q1 Profit

Moderna (MRNA) shares are up 1.8% ahead of the open after reporting a surprise profit in the first quarter. 

Here’s how the pharmaceutical giant’s results compared to analysts’ estimates: 

  • EPS: $0.19 vs a loss of $1.77 per share expected
  • Revenue: $1.86 billion vs $1.18 billion expected

That profit surprise came despite lower demand for the company’s Covid vaccine. 

Revenue was down 30% year over year. 

Moderna maintained its full-year guidance for around $5 billion in Covid vaccine revenue.

Weekly Jobless Claims Climb

Weekly jobless claims rose more than expected last week as the labor market continues to slowly tighten.

The Labor Department reported 242,000 Americans filed initial unemployment claims. 

That was up by 13,000 from the previous week and higher than 236,000 expected. 

Continuing claims though fell by 38,000 to 1.81 million in the week ending April 22.

Q1 Productivity Tumbles

Worker productivity dropped more than expected in the first quarter. 

The Bureau of Labor Statistics reported productivity fell 2.7% annually vs expectations for a 1.9% decrease. 

Output during the quarter rose just 0.2% while hours worked rose 3%. 

And labor costs picked back up as well. 

Unit-labor costs rose 4.5% in Q1, up from 3.3% in Q4. 

Over the past 12-months, unit labor costs have risen 5.3%.

Those rising wages have been a problem for the Fed in its fight against inflation.

Trade Deficit Narrows

The U.S. trade deficit narrowed in March as exports rose. 

The Commerce Department reported the deficit dropped by $6.4 billion to $64.2 billion. 

The decline came as exports rose by $5.3 billion to $256.2 billion. 

Imports fell by $1.1 billion to $320.4 billion. 

The goods deficit with China fell by $2.3 billion to $22.9 billion in March.

In Case You Missed It

  • The Federal Reserve hiked rates as expected by 25 basis points on Wednesday. That puts the federal funds rate in a range of 5% to 5.25%, the highest since August 2007. The FOMC statement seemed to hint this will be the last rate hike as it removed language about future policy tightening being appropriate. But Fed Chair Jerome Powell said in his press conference, “A decision on a pause has not been made today.” Powell emphasized that “the process of getting inflation back down to 2% has a long way to go.”

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