SVB hearing, consumer confidence, quarter end: 3/27/2023 - 3/31/2023
The first of many Congressional hearings on Silicon Valley Bank's failure will be a key event this week, while investors also look to hold onto stock gains during a strong first quarter of the year.
Markets
Dow Jones: 32,237.53 (+0.41%) 📈
S&P 500: 3,970.99 (+0.56%) 📈
Nasdaq: 11,823.96 (+0.31%) 📈
*Stock numbers as of market close on March 24th
An eventful first quarter will come to a close this week with the shadow of a banking crisis hanging over a market that has remained resilient this year, with the Nasdaq sitting on a 12% year-to-date gain through Friday's close and the S&P 500 up 3.4% so far this year.
In the week ahead, the first of what will likely be several Congressional hearings on the events surrounding Silicon Valley Bank's collapse will be held Tuesday, when the Senate Banking Committee grills Federal Reserve vice chair for supervision Michael Barr and FDIC chair Martin Gruenberg, among others.
On the economic data front, reads on consumer confidence from The Conference Board and the University of Michigan will pick up some initial readings on how the current banking crisis affects average Americans.
Still, investors are likely to remain focused on how markets react to rolling concerns about banks worldwide with recent volatility and how wild price swings — particularly in the bond market — resolve as we reach the final day of the quarter on Friday.
"Next week's data calendar will be busy, but none of the releases are likely to offer markets direction until Friday," wrote John Canavan, lead U.S. analyst at Oxford Economics.
Data on personal income and spending, including February's latest read on the personal savings rate, will be released Friday morning, offering an overview of how U.S. consumers spend and save across categories.
On the earnings side this week, news flow will remain muted as we remain about two weeks out from the first-quarter earnings season ramping up. However, investors will closely watch results from Micron Technology MU 0.00%↑ for updates on investment in the tech space and result from Lululemon LULU 0.00%↑ and RH RH 0.00%↑ for additional checks on higher-end consumers.
Cal-Maine Foods CALM 0.00%↑, the biggest egg producer in the United States, will also likely get a few more eyeballs on its report, as investors track how the big swings in egg prices over the last few months translate to corporate results.
Last week, all three major averages rose more than 1% — though none logged a gain north of 2% — during a week that began with Swiss banking giants UBS UBS 0.00%↑ and Credit Suisse CS 0.00%↑ announcing an emergency merger finished, and investor concerns about the health of German banking giant Deutsche Bank DB 0.00%↑ bubbling up to cap the week.
Wall Street analysts appear both sanguine about the status of Deutsche Bank and, to some extent, frustrated by continued questions about what may be "the next" bank to fail during this crisis.
"We have no concerns about Deutsche’s viability or asset marks. To be crystal clear — Deutsche is NOT the next Credit Suisse," Stuart Graham and Leona Li, strategists at Autonomous, a subsidiary of AllianceBernstein.
Data out late Friday also gave investors one of the strongest indications of how much stress the U.S. banking system has endured. The Federal Reserve's weekly report on bank balance sheets reveals small and mid-sized banks lost $120 billion during the week ending March 15.
"While the SVB-linked panic and lack of FDIC insurance on deposits above $250k explain most of the shifts last week, it is the surge in interest rates that is having the bigger effect," wrote Paul Ashworth, chief North America economist at Capital Economics.
"Since peaking almost exactly one year ago (remember the Fed’s first rate hike came at the mid-March 2022 meeting), deposits at all domestic banks have fallen by $663bn, or 3.9%, as money has flowed into money market funds and bonds," Ashworth added.
"Unless banks are willing to jack up their deposit rates to prevent that flight, they will eventually have to rein in the size of their loan portfolios, with the resulting squeeze on economic activity another reason to expect a recession is coming soon."
Events Calendar
Monday, March 27
Dallas Fed Manufacturing Survey, March (-10 expected, -13.5 previously)
BioNTech BNTX 0.00%↑, Carnival Cruise CCL 0.00%↑
Tuesday, March 28
The Conference Board Consumer Confidence, March (101.5 expected, 102.9 previously)
Richmond Fed Manufacturing Index, March (-8 expected, -16 previously)
Micron Technology MU 0.00%↑, Walgreen Boots Alliance WBA 0.00%↑, Luluemon LULU 0.00%↑, Cal-Maine Foods CALM 0.00%↑, Dave & Busters DAVE 0.00%↑, Jefferies JEF 0.00%↑, McCormick MKC 0.00%↑
Wednesday, March 29
Pending home sales, February (-2.3% expected, +8.1% previously)
RH RH 0.00%↑, Cintas CTAS 0.00%↑, Conn's CONN 0.00%↑, Paychex PAYX 0.00%↑, Sportsman's Warehouse SPWH 0.00%↑, Verint Systems VRNT 0.00%↑
Thursday, March 30
Initial jobless claims (196,000 expected, 191,000 previously)
Fourth quarter GDP, third estimate (+2.7% expected, +2.7% previously)
BlackBerry BB 0.00%↑, AngioDynamics ANGO 0.00%↑
Friday, March 31
Personal income, February (+0.3% expected, +0.6% previously)
Personal spending, February (+0.3% expected, +1.8% previously)
MNI Chicago PMI, March (43.9 expected, 43.6 previously)
University of Michigan consumer sentiment, March (63.4 expected, 63.4 previously)
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Excellent report, as always, Akash.
Wonderful report. Thank you.
Have you heard any information that the Chinese comi companies TicTok & bytedance are also clients of SVB receiving federal support funds