What You Need To Know This Week — March 23rd, 2019
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
U.S. TREASURY YIELD CURVE INVERTS AS RECESSION FEARS MOUNT
The spread between 3-month T-bills and 10-year Treasury bonds inverted, or turned negative, for the first time since 2007. A slowdown in U.S. and German manufacturing activity added to fears of a global slowdown, causing long-term bond yields to fall. This is a concern as an inverted yield curve is one of the most popular leading indicators of a recession.
IPO MARKET HEATS UP AS LEVI STRAUSS GOES PUBLIC
The 166-year-old blue jeans giant Levi Strauss & Co surged more than 30% in its stock market debut. Levi’s initial public offering was over 10 times oversubscribed, signalling voracious demand from investors and foreshadowing a strong stock market debut. The IPO window remains open and many companies are looking to capitalize on the high market demand, including Lyft, Pinterest, Slack and Uber. Insatiable demand for these IPOs is proving that investors are craving growth, even if it comes with negative profitability. As they say, “when the ducks quack, feed them”.
SHORT SELLERS INCREASE BETS AGAINST CANADIAN BANKS
Steve Eisman, noted short seller and character in the book The Big Short, has been raising his bet against Canadian bank stocks. A combination of slowing economic growth, a softening housing market and a decline in credit growth is leading to worries about potential loan losses at the Canadian banks. Collective wagers by shortsellers against the banks have risen 19% since the start of the year, to US$12.3 billion.
FED KEEPS RATES STEADY AND SIGNALS NO MORE RATE HIKES IN 2019
As expected, the U.S. Federal Reserve kept its policy rate unchanged at 2.25% — 2.50% at the central bank’s two-day meeting this week. Fed Chairman Jay Powell indicated that rate hikes in 2019 are unlikely, blaming below-target inflation and slowing economic growth. The Fed also stated that it would slow its balance sheet runoff and end it entirely by September. Some market participants believe that the Fed is done its rate hiking cycle and may now be cutting rates in the near-to-medium term.
RECOMMENDED ARTICLES, PODCASTS, BOOKS AND TWEETS
Hear from the Bloomberg Trillion’s podcast hosts discuss the fee war happening in U.S. equity index ETFs.
Sell-side research: “only 1% of the 40,000 reports posted weekly by brokers is actually read by portfolio managers”.
Manulife wins court battle against hedge funds trying to turn universal life-insurance policies issued in the 1990’s into investment funds that could invest an unlimited amount of money at guaranteed returns of at least 4%.
Calpers doubles down on private equity: “We need private equity, we need more of it, and we need it now.”
Canadian public cryptocurrency companies panic as audit firms refuse their business. A large public cryptominer reached out to 15 auditors, and all of them declined the business. No audit would mean delisting from the stock exchange.
CVS starts selling CBD products as part of a distribution deal with Curaleaf Holdings. Curaleaf shares rallied over 40% on the news for the week.
Google announces cloud gaming platform Stadia, which will be accessible through almost any device as the Google controller will connect directly to the data centers that host the games.
In a bid to expand its technology platform, BlackRock is buying risk platform EFront for $1.3 billion.
-The Accelerate Team
