Every Friday I recap “news you can use” from the week: a handful of quotes from major (and often expensive) news sources, so you can stay up to date on the news that affects your money without spending a dime and in less than a minute.
Here’s an overview of what happened this week.
Banking Crisis Hangs Over Economy, Rekindling Recession Fear (March 17, New York Times)
Markets remained volatile on Friday — stocks had their worst day of the week — as leaders in Washington and on Wall Street sought to keep the crisis contained.
Even if those efforts succeed — and veterans of previous crises cautioned that was a big “if” — economists said the episode would inevitably take a toll on hiring and investments as banks pulled back on lending, and businesses struggled to borrow money as a result. Some forecasters said the turmoil had already made a recession more likely.
US Banks on Bumpy Path as First Republic’s Troubles Persist (March 19, Bloomberg) Shares in First Republic Bank fell as much as 37% in premarket trading on Monday, following last week’s record 72% retreat. The lender was downgraded by S&P Global Ratings for a second time on Sunday after being cut to junk just days ago, even after the bank received $30 billion from eleven US banks to stave off a potential collapse.
The bank panic of 2023 could be just what the stock market needs to make money for investors again (March 20, MarketWatch) The S&P 500 could beat inflation by 8% over the next 12 months. That cheery prospect emerges from an analysis of the U.S. stock market’s reaction to past banking panics. Though stocks not surprisingly declined in the immediate wake of those past crises, they almost always recovered quickly. On average a year later, the market was well above where it stood before the crisis erupted.
US Home Resales Jump by Most Since 2020, Ending Year-Long Slide (March 21, Bloomberg) US sales of previously owned homes rose in February by the most since mid-2020, snapping a record year-long slide tied to rising interest rates and affordability constraints.
Contract closings increased 14.5% last month to an annualized pace of 4.58 million, according to data released Tuesday by the National Association of Realtors. Both the monthly advance and rate of sales exceeded the highest forecasts in a Bloomberg survey of economists.
More than 139,000 tech-sector employees have lost their jobs since the start of 2023 (March 21, MarketWatch) The data suggest that 2023 is firmly on pace to surpass 2022 for global tech redundancies, with 505 tech companies laying off 148,180 employees since the start of the year. Last year, 1,024 tech companies laid off a total of 154,336 employees, according to Layoffs.fyi.
Home Prices Fell in February for First Time in 11 Years (March 21, Wall Street Journal) The national median existing-home sale price fell 0.2% in February from a year earlier to $363,000, the first year-over-year decline since February 2012. Median prices, which aren’t seasonally adjusted, were down 12.3% from a record high in June.
Bill Gates says AI is only the second revolutionary tech advancement in his lifetime (March 21, MarketWatch) “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the internet, and the mobile phone,” Gates wrote. “It will change the way people work, learn, travel, get healthcare, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”
Fed Raises Rates but Nods to Greater Uncertainty After Banking Stress (March 22, Wall Street Journal) The Federal Reserve approved another quarter-percentage-point interest-rate increase but signaled that banking-system turmoil might end its rate-rise campaign sooner than seemed likely two weeks ago.
The decision Wednesday marked the Fed’s ninth consecutive rate increase aimed at battling inflation over the past year. It will bring its benchmark federal-funds rate to a range between 4.75% and 5%, the highest level since September 2007.
Investors Turn More Bearish on Stocks After Fed, Survey Shows (March 22, Bloomberg) Investors are convinced the Federal Reserve will hike again this year and won’t pivot to monetary easing until 2024 — an outlook they see as bearish for stocks.
That’s the dominant view of about 350 respondents to an Instant MLIV Pulse survey in the hours following the Federal Open Market Committee meeting on Wednesday.
Bank of America identifies the next bubble and says investors should sell stocks rather than buy them after the last rate hike (March 24, MarketWatch) History, according to the BofA team, says to sell the last interest rate hike. “Credit and stock markets are too greedy for rate cuts, not fearful enough of recession,” they say. After all, when banks borrow from the Fed in an emergency, they tighten lending standards, which in turn results in less lending, and that leads to less small-business optimism, which eventually cracks the labor market.
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I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.