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March 19: More bank failures, govt attacking crypto, stocks collapse (Recap Ep219)

In this week’s recap, recent economic data have shown inflation in line with target and have eased investor concerns about bank contagion, although year-over-year inflation remains elevated at 6%. The inflation rate has declined for the eighth consecutive month, with a slowdown in food price increases offsetting higher gasoline prices and another rebound in rents. Food prices are up 9.5%, energy prices are up 5.2%, clothing prices are up 3.3% and new vehicle prices are up 5.8%. Housing costs are up 8.1%, accounting for more than 70% of the overall increase. In the banking sector, First Republic is the fourth bank to fail this year, but reports suggest that the nation’s largest banks are discussing a joint bailout of the lender. The Wall Street Journal has also reported that 186 banks have been found to have vulnerabilities similar to Silicon Valley Bank.

In the commodities market, oil has continued to suffer losses as the ripple effects of the biggest U.S. banking collapse since 2008 continue to be felt across financial markets. Oil prices fell to 15-month lows on Wednesday, with U.S. crude down 14.89% from $76.68 to $66.74 and Brent down 13.44% from $82.78 to $72.97. Meanwhile, UBS AG has reported that China is stepping up its efforts to mine lithium and is expected to account for nearly a third of global supply by mid-decade. The bank expects Chinese-controlled mines, including projects in Africa, to increase production to 705,000 tons by 2025, up from 194,000 tons in 2022. This would increase China’s share of this essential mineral for electric vehicle batteries to 32% of global supply, up from 24% last year. In other news, the London Metal Exchange has found bags full of stones instead of nickel in one of its warehouses, raising fears that the claims about #gold and #silver are also true. On a positive note, gold had its best week in three years and jumped back above $1,900 an ounce.

In corporate news, United Airlines’ shares fell by 5.37% on Tuesday, closing at $46.21, after the carrier forecast a Q1 loss due to weaker demand growth compared to other months and higher fuel costs. Tesla has announced that it is returning to using electric vehicle motors with no rare earth elements, but this move may be problematic as China is a major producer of these elements. On Tuesday, Meta Platforms announced that it will cut 10,000 jobs this year, becoming the first Big Tech firm to announce a second round of mass layoffs as the industry braces for a deep economic downturn. The cuts are part of a restructuring effort that will end hiring for 5,000 openings, stop lower-priority projects, and flatten layers of middle management. Meanwhile, Samsung expects to invest $230 billion over the next 20 years to develop the government-called world’s largest chip-making base, in line with efforts to boost the national chip industry. On Wednesday, T-Mobile US Inc announced that it will buy Ryan Reynolds’ Mint Mobile for $1.35 billion, allowing T-Mobile to tap into a larger share of the pay-as-you-go customer base. The numbers are expected to swell as credit-challenged people shy away from hefty monthly bills. In other news, Saudi Aramco has reported a record-breaking net income of $161.1 billion, a staggering 46.5% surge in its net income due to strong crude oil prices, resulting in a blowout annual profit.

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