David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Yellen to chair financial stability council meeting as bank worries persist

    This note from MarketWatch may be of interest. Here is a section: 

    Treasury Secretary Janet Yellen will convene a meeting of the Financial Stability Oversight Council Friday.

    FSOC comprises the heads of the nation's top financial regulators, and was created in the wake of the 2008 financial crisis to enable the government to coordinate efforts at combating systemic risks to the U.S. economy.

    The announcement comes amid concerns over the health of the banking sector following the recent failures of Silicon Valley Bank and Signature Bank.

    The uncertainty is being felt overseas as well with shares of Germany's Deutsche Bank (DBK.XE) slumping as its credit default swaps widened.

    Financial sector equities (XLF) were under pressure Friday, ranking as the worst performing sector in the S&P 500 in morning trade.

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    Email of the day on getting the bad news out on a Friday

    Collapses of Large Banks on Fridays:

    - Friday, Mar. 14, 2008: Bear Stearns hit by liquidity crisis

    - Friday, Sept. 12, 2008: Last trading day before Lehman Brothers declares bankruptcy

    - Friday, Sept. 26, 2008: Washington Mutual seized by regulators marking largest bank collapse in US history

    - Friday, Mar. 10, 2023: SVB seized by regulators, marking 2nd biggest bank failure in US history

    - Friday, Mar. 10, 2023: Signature Bank sees $10 billion in withdrawals, seized by regulators 2 days later

    - Friday, Mar. 17, 2023: UBS bids for Credit Suisse, $CS, to avoid its collapse

    - Friday, Mar. 24, 2023: Deutsche Bank, $DB, credit default swaps hit 4-year high on contagion fears

    Just about every large bank failure in recent history has occurred on a Friday.

    This can't be a coincidence.

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    Short Sellers Step Up Bets Against Office Owners on Bank Turmoil

    This article from Bloomberg may be of interest. Here is a section: 

    “What’s changed in the last few weeks is the credit markets,” said Rich Hill, chief of real estate strategy research at Cohen & Steers Capital Management Inc. “It went from a story of work-from-home and the impact on occupancy and the lack of rent growth to also the compounding of tighter financial conditions given everything happening with banks.”

    Fears of tighter credit are adding to risks for offices that have been building for some time, Green Street analysts wrote in a Tuesday report. Hedge fund manager Jim Chanos, Marathon Asset Management and Polpo Capital Management founder Daniel McNamara are among those who have been betting for months that landlords will struggle to lure staff back to workplaces. 

    “This regional banking crisis is just throwing fuel on the fire,” McNamara said in a telephone interview. “I just don’t see a way out of this without a lot of pain in the office sector.” 

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    Political moves heat up as Indonesian parties hunt for presidential, vice-presidential candidates

    This article from the Strait Times may be of interest to subscribers. Here is a section: 

    The PDI-P, which secured 22 per cent of parliamentary seats in 2019, is the only party that can nominate candidates without having to ally with other parties. Both Mr Widodo and Mr Ganjar are members of PDI-P.

    For Mr Ganjar, the main obstacle to being named PDI-P’s presidential candidate is his own party, said Padjadjaran University political communication expert Kunto Adi Wibowo.

    “If Ganjar wants the nomination, PDI-P should be the one to nominate him. He doesn’t want to quit his own party. But will Megawati (Sukarnoputri) give the ticket to Ganjar while she is grooming Puan (Maharani)?,” he said.

    Ms Megawati is PDI-P’s chief, while Ms Puan, her daughter, is the House of Representatives Speaker and ranks low in electability rating polls.

    Prof Firman noted that both PDI-P and Gerindra may finally have to strike a “tough deal” if they cannot come up with their nominees amid the constant rise in popularity of Dr Anies, given the solidity of his support. 

    “If they are forced by pressing circumstances, they will make a deal and resort to the most popular candidates,” he said.  

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    Private Lenders See Bank Woes Pushing Borrowers to Direct Loans

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    Tencent Surges After China Ad Rebound Helps It Resume Growth

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    WeChat’s fledgling short-video feed has been a rare bright spot in Tencent’s portfolio. The company is under pressure to better monetize China’s most ubiquitous app, just as users and marketers flee to rivals like ByteDance. WeChat’s video accounts tripled in views last year, garnering more than 1 billion yuan of ad sales through the feature in the fourth quarter.

    “The ads turnaround is pretty positive, showing that WeChat video accounts is a real opportunity for Tencent,” said Vey-Sern Ling, senior equity advisor for Asia technology at Union Bancaire Privee. “New approvals of game titles for the domestic market could also help growth this year.”

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    Why the French Are Angry About a Plan to Retire at 64

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    Hardly. The world’s population of people aged 60 years and older is expected to double by 2050, according to the World Health Organization, while fertility rates are in long-term decline. The financial strain is challenging old-age support systems and leaving many countries facing tough choices about raising the age of retirement, cutting benefits or lifting taxes. Pension shortfalls will be the equivalent of about 23% of world output by 2050, the Group of 30 consultancy estimated. One key measure is the old-age dependency ratio — the number of older people compared to the population that is working age. In Europe and North America, that ratio will be about 50 per 100 by 2050, according to UN forecasts, a rise from 30 per 100 in 2019. In short, we’re on a trajectory toward a smaller share of people paying taxes and a higher proportion drawing pensions. By 2035, the basic US system known as Social Security will no longer be able to cover payments, forcing a 20% reduction in benefits, according to its trustees. 

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