To The Moon

US Market - 20 Mar to 24 Mar 2023

I am still in a bit of a dazed coming off last week’s 3 worst events, in my opinion.

1. A 166 years old grand old dame ( $Credit Suisse Group AG(CS)$) coerced into an arranged marriage with an unwilling suitor ( $UBS Group AG(UBS)$) all for a mere $3.2 Billion.

2. US regional banks facing potential meltdown; despite the bigger banks extending an olive branch to the tune of $30 Billion.

3. Financial contagion further affected another Euro bank ( $Deutsche Bank AG(DB)$) as a result of the cost of insuring Deutsche's debt against default leapt to multiyear highs.

On top of the bank turmoil, US central bank has the guts to revise terminal rate up by another 0.25%.

The newly revised interest rate is now between 4.75% to 5.00%.

Looking at the above illustration, where both objectives are non-conflicting and mutually exclusive - I cannot help but admit that the Fed has made a “bold” and wise decision.

The bitter pill needs to be administered despite on-going surrounding distractions.

Market Closed Out Friday Positively :

• DJIA : +0.41% (+132.33 to 32,237.53).

• S&P 500 : +0.56% (+22.27 to 3,970.99). Strongest performing index on Fri (24 Mar).

• Nasdaq : +0.31% (+36.56 to 11,823.96). Inching closer back to the 12,000 mark.

As for the 3 Composite Indexes’ Moving Averages :

• Dow Jones index is still recovering its lost grounds

• S&P 500’s index managed to rise above its 20-day ma; leaving its 50-day ma to be conquered.

• Nasdaq index has been slowly powering above its 200-day, 50-day and 20-day ma.

Heading into the last week of Mar 2023, also the end of Q1 2023 - I think this is how things will be played out over the next 5 trading days.

• The above should be the “good” news that will bring the much-needed calm back to the banking sector; US regional banks.

• With SVB sort of a “done deal” state with details to be meted out, this leaves regional bank $First Republic Bank(FRC)$ to deal with.

• The “comforting” news is that FRC’s plummeted stock price from $115 (08 Mar 2023) to $12.36 (24 Mar 2023) - should have found its support

• Now it is about finding a restructuring solution to get the bank out of its current doldrum.

• Looking at an extract of US Top 10 Banks, they have been the unwilling victims dragged down by US regional banks over the past 2.5 weeks.

• I believe the calm to US regional banks will have its spillover effect on them.

• How fast & how soon these banks will be able to recover, believe it or not - will depend on their Q1 2023 earnings; to be released in Apr / May 2023 - as US companies enter into the Quarterly Earnings season again.

I will still be holding back on US bank stocks in the near term. This is because the geo-political tensions (Ukraine-Russia war, US-China face on conflict especially) is simmering at a higher temperature.

Should the Tiktok ban falls through; it might just be the last straw that breaks the camel’s back.

In this game of poker between the 2 titans, China with its trump card up its sleeves; is still not showing their hands yet. Agree ?

• Do you think First Republic Bank will be able to find a solution to their woes anytime soon ?

• Do you think the Top 10 US Banks will be able to recover their stock prices anytime soon ?

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