Dayana Mustak
Good afternoon. Here’s what you need to know to end your day.
- First Republic Bank survives, but still needs to find a way forward.
- US short-term inflation expectations fell to a nearly two-year low.
- Google employees are petitioning for better handling of job cuts.
What a whirlwind of a week. First Republic Bank staved off a potential collapse for now, but it’s done little to soothe investors’ fears
- The troubled lender—down 81% this year—is in talks to raise money from other banks or private equity firms by issuing new shares, the NYT reported.
- Bill Ackman sayshe hears BofA may buy collapsed Signature Bank, and warned that until uninsured deposits are protected, the cost of capital will rise for smaller banks. “I don’t think this is good for America,” he tweeted.
- We also learned that the San Francisco Fed gave formal warnings to Silicon Valley Bank over a year ago, including one about how the bank tracked interest-rate risks.
- Speaking of the Fed, ex-Treasury Secretary Larry Summers says the central bank shouldn’t “allow financial dominance” and be spooked into easing its campaign to contain inflation amid the banking turmoil.
- President Biden called for tougher penalties on bank executives whose “whose mismanagement contributed to their institutions failing.”
- US stocks tumbled and bond yields fell, capping a tumultuous week for global markets.
What Else Is Happening
US short-term inflation expectations fell in early March to the lowest level since April 2021. Respondents expect inflation to rise 3.8% over the next year, the University of Michigan’s preliminary reading shows. Long-run views also eased, but consumer sentiment still fell due to persistently high prices.
In other news:
- Big tech is benefitting from the banking crisis: More than $500 billion in market value has been added to the four biggest US technology companies this week.
- Turkey and Hungaryboth signaled they’d ratify Finland’s accession into NATO, bringing the military alliance a step closer to welcoming its 31st member
- Coinbase is exploring plans to set up a new crypto-trading platform overseas as the US ramps up crypto scrutiny.
- Strawberry prices are expected to rise as California’s $3 billion industry struggles with flooded farms after a torrent of downpours.
Paid subscriptions made sense when Apple Music and Spotify joined in, but the subscription economy has gone too far, Leticia Miranda writes. With a looming economic downturn, people are looking to cut costs. Companies will need to think more creatively about how they can help consumers save either time or money.
Weekend Reading
Businessweek delves into the Silicon Valley Bank collapse to see how a regional bank for a specific industry became a case study of everything that can suddenly go very wrong in the financial system. Bloomberg Opinion’s John Authers and Isabelle Lee explore what led up to the trouble in global banking this week and analyze what happens next. And Foxconn finds that making electric cars is much harder than building iPhones.
By the Way
About 1,400 Alphabet employees have signed a petition addressed to CEO Sundar Pichai calling for better treatment of staff during the layoff process as the company cuts 12,000 jobs. They demanded freezing new hires, seeking voluntary redundancies before compulsory ones and giving priority to laid off workers for job vacancies.
America’s smallest banks, which typically serve local businesses and hold $10 billion or less in deposits, have been seeing an increase in inflows in recent days as the failure of three US banks dented confidence in the stability of the sector.
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