Watch For:

EIA Weekly Petroleum Status Report, Pending-Home Sales for February; Federal Regulators Will Appear Before a House Panel to Discuss the Collapse of SVB.

Today's Top Headlines/Must Reads:

- As Interest Rates Rose, Banks Did a Balance-Sheet Switcheroo

- Banking Worries Fuel Gold Price Rally

- UBS Brings Back Former CEO Sergio Ermotti After Credit Suisse Deal

- International stocks outperform, decouple from U.S. equities by 'unusual degree'

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Opening Call:

Stock futures rose on Wednesday as investors appeared ever more relaxed about the health of the bank sector and the prospects for interest rates.

Strength in China-focused technology stocks - after traders took news of entrepreneur Jack Ma's re-emergence and Alibaba's restructuring as a sign of Beijing easing its crackdown on the sector - were also helping the mood.

Read more here

"Investor sentiment improves as price action in bank stocks point at waning stress. The S&P500 - which benefited from falling yields due to the Silicon Valley Bank collapse - is now sitting above the 200-day moving average," Swissquote Bank said.

"But a move above the 4000-4200 range will likely be challenging unless the next earnings season comes with a positive surprise. Therefore, we could see gains in the S&P 500 rapidly fade if the U.S. yields trend higher with the waning bank stress. But maybe not today!" Swissquote added.

The CBOE VIX index has dropped below its long run average of 20, a sign that traders are much calmer than of late.

VIX futures were now back in contango, a more normal structure where longer-term contracts are priced higher, Fundstrat noted, and added that "this normalization of spread is often a sign investors see the worst of the crisis behind."

"That is generally a constructive sign and is certainly counter to the general gloom of investors post-SVB failure. This ultimately becomes an important point. If investors are gloomy and expect a financial crisis to follow, but this doesn't happen, this means sentiment and positioning will be key. In many ways, this could be the setup now."

Read Markets Shift Attention Back to High Inflation

Read Market Seems to Have Drawn a Line Under Systemic Banking Worries

Stocks to Watch

Bank shares looked set to continue their recovery. Among regional lenders, First Republic Bank gained 3% premarket and PacWest Bancorp rose 2%. Bank of America gained 1%.

ADRs of Alibaba fell 1% premarket. That put the stock on course to hand back a small part of the previous day's gains, which were fueled by the Chinese e-commerce giant's plans to split itself into six independently run companies.

Arcturus Therapeutics completed the initial objectives with its partnered Covid-19 and flu vaccine programs under collaboration with CSL Seqirus. Shares rose 22% in after-hours trading.

Helbiz said it is refocusing the group's operations toward micro-mobility and shutting down operations in most of the unprofitable cities it operates. Shares rose 19% in after-hours trading.

Lululemon Athletica jumped 14% after the clothing retailer reported fiscal fourth-quarter earnings and sales that beat analysts' expectations and issued better-than-expected guidance for the current fiscal year.

Lucid Group rose 2% after the electric vehicle startup said it would be cutting staff by 1,300 employees, or about 18% of the workforce, in a bid to save money.

Micron Technology's stock gained 2% premarket after it said industry fundamentals are starting to improve. Still, Micron reported a sharp drop in quarterly revenue and said it was cutting staff, as it grapples with weaker demand and lower prices for memory chips. Shares of fellow chip companies Nvidia and Qualcomm also gained.

N-Able is set to join the S&P SmallCap 600 index. Shares rose 10% in after-hours trading.

UBS gained 3% as it was announced that Sergio Ermotti would return as chief executive. Ermotti had run UBS for nine years until 2020.


The dollar is unlikely to gain significant ground until uncertainty over the banking sector eases, Commerzbank said, adding that the market remains more sceptical towards the U.S. than the eurozone.

"That is why the dollar has a more difficult standing against the euro, as the Fed has become a little more cautious whereas the ECB has continued its rate cycle almost unaffected by the events of the past weeks and continues to sound restrictive."

"As a result, levels in EUR/USD above 1.08 seem justified," Commerzbank added.


Sterling could fall against the euro after recent gains as the ECB shows more resolve to raise interest rates further than the BOE, ING said.

ECB member Madis Muller joined the "hawkish" rhetoric of other policymakers Tuesday by signalling that there's still room to lift rates, ING said.

"We saw EUR/GBP fall below 0.8800, but we don't expect the pair's weakness to be very sustainable as we see the market pricing for Bank of England tightening as too aggressive and policy divergence should be a primary driver for a higher EUR/GBP."


Crude futures were higher on supply concerns and signs pointing to strengthening U.S. demand.

The continued closure of a key pipeline for Iraqi oil is supporting prices, ING said. The pipeline handles around 400,000 barrels a day of oil.

"Supply concerns continue to prop up prices," ING said.

Data on U.S. crude stocks reportedly showed a large drawdown following weeks of rising inventories, slumping by over 6 million barrels a day, according to API data.


Base metals and gold were weaker, with relative calm in the markets following recent banking sector turmoil.

Deutsche Bank said the calm is most felt in bond markets and Fed futures, with yields starting to rise and the market trimming expectations of rate cuts from the central bank.

Commodity Prices Outlook

Commodity prices, especially oil, have been hit during the banking crisis this month, and Swiss bank UBS expects prices to move higher for the rest of the year amid a weaker dollar and higher demand coming from China.

The Swiss bank expects commodity prices to boradly rise 20% in the next 12 months with the gains led by energy and industrial metals, while gold will also be a valuable hedge.

"Our stance is backed by China's recovery, an expected inflection point in the Fed's rate-hiking cycle and the associated weaker U.S. dollar, several unresolved supply-side issues due to lacking investment or geopolitics, persistently low inventories in key consuming countries, and ongoing weather risks," UBS added.




UBS Brings Back Former CEO Sergio Ermotti After Credit Suisse Deal

UBS Group AG said its former leader Sergio Ermotti will return as chief executive, as the Swiss banking giant moves into a new era with its takeover of Credit Suisse Group AG.

Mr. Ermotti, who previously ran UBS for nine years, will start on April 5 after the bank's annual general meeting, it said.


Jamie Dimon to Face Questioning in Lawsuit Over JPMorgan's Epstein Ties

Jamie Dimon will be questioned in a civil lawsuit over JPMorgan Chase & Co.'s relationship with Jeffrey Epstein, people familiar with the matter said.

The U.S. Virgin Islands sued JPMorgan late last year, saying the bank facilitated Esptein's alleged sex trafficking and abuse by allowing him to remain a client and helping him send money to the late financier's victims.


For Alibaba, Six Is Bigger Than One-And a Smaller Target

Six is bigger than one. Simple arithmetic, but that's also the market verdict for Alibaba's plan to split itself into six units. The market may or may not have it right on the nitty-gritty numbers-but the political dividend could be just as important.

Shares of the Chinese e-commerce giant rose 14% in New York on Tuesday, adding $33 billion to its market value. Alibaba said Tuesday that it will restructure the company into six independently run companies-each with its own CEO and board. Those will include Chinese commerce, global e-commerce, cloud computing, local services, logistics and entertainment. The core Chinese e-commerce business will stay wholly owned by Alibaba but each of the other units could seek their own funding, and maybe eventually conduct initial public offerings.


The Metaverse Is Quickly Turning Into the Meh-taverse

The metaverse that was the hot thing in tech less than two years ago has cooled.

Walt Disney Co. has shut down the division that was developing its metaverse strategies, The Wall Street Journal reported this week. Microsoft Corp. recently shut down a social virtual-reality platform it acquired in 2017. And Mark Zuckerberg, who renamed Facebook to Meta Platforms Inc. to signal his seriousness about the metaverse, focused more on artificial intelligence on an earnings call last month.


EV Startup Lucid Cuts 18% of Workforce, Including Some Executives

Lucid Group Inc. plans to lay off approximately 1,300 employees, or 18% of its workforce, as the electric-vehicle startup looks to cut operating expenses and preserve cash ahead of releasing a second model next year.

The California-based company, which sells luxury electric sedans priced at $87,000 and above, expects to complete the head-count reductions by the end of the second quarter.


Lululemon's stock soars 13% on revenue, earnings beat

Lululemon Athletica Inc.'s stock vaulted 13% in extended trading Tuesday after the clothing retailer reported quarterly results that topped analyst revenue and earnings estimates, and offered strong full-year revenue guidance.

Lululemon LULU reported fiscal fourth-quarter net earnings of $119.8 million, or 94 cents a share, compared with net earnings of $434.5 million, or $3.36 a share, in the year-ago quarter. Adjusted earnings were $4.40 a share.


Cal-Maine Foods profit jumps eightfold, revenue more than doubles as egg prices rise

Cal-Maine Foods Inc. on Tuesday reported that revenue more than doubled and its profit increased eightfold in the third quarter, as prices for eggs rose significantly and even as avian bird flu continued to affect egg production.

Cal-Maine Foods CALM shares rose about 4% after hours, after falling 1.8% in the regular session to close at $54.27, as its results beat Wall Street expectations.


As Interest Rates Rose, Banks Did a Balance-Sheet Switcheroo

As the Federal Reserve's interest-rate hikes sent bond prices plunging last year, some of the country's largest banks used a simple accounting maneuver to help keep billions of dollars of losses from piling up on their books.

They declared that they intended to hold on to large portions of their money-losing bonds until they matured rather than selling them, and they then changed the bonds' accounting labels accordingly. From then on, the bonds would be frozen in time, no matter how far their values fell in the market.


Banking Worries Fuel Gold Price Rally

Banking-sector turmoil and worries about the economy have gold prices hitting $2,000 a troy ounce for the first time in a year.

The most-actively traded gold futures contract has jumped 7.4% to $1,973.50 this month, reaching an intraday high of $2,014.90 last week and on pace for the largest monthly percentage increase since May 2021. Prices hadn't topped $2,000 since Russia's invasion of Ukraine last spring.


BlackRock says the market is wrong on the Fed. Here are the bonds it's recommending now.

The Federal Reserve is going to stop throwing punches, but it's not about to cut interest rates even as signs of fragility in the financial sector emerge, says leading fund manager BlackRock.

In a note from the BlackRock Investment Institute, the fund manager says the Fed, and other central banks, have made clear that banking troubles wouldn't stop them from hiking interest rates.


International stocks outperform, decouple from U.S. equities by 'unusual degree'

International stocks are broadly outperforming this quarter, decoupling from the U.S. to an unusual extent, according to DataTrek Research.

"Non-US stocks have decoupled from domestic equities by a statistically unusual degree over the last 50 days," said Nicholas Colas, co-founder of DataTrek, in a note Tuesday. This together with their outperformance may bode well for flows into international stocks heading into the second quarter, according to the note.


German Consumer Sentiment Set to Improve in April, Helped by Lower Energy Prices

Consumer confidence in Germany is expected to improve again in April, its sixth gain in as many months, prompted by lower energy prices, though momentum in the month weakened as recession fears loom.

Germany's forward-looking consumer-sentiment index forecasts confidence to tick up to minus 29.5 in April from a downwardly revised minus 30.6 in March, the highest level since July 2022, according to data from market-research group GfK published Wednesday.


Australian February Inflation Data Opens Door to Rate Hike Pause

SYDNEY-Australia's inflation pressures cooled in February, opening the door to a pause in the Reserve Bank of Australia's campaign of aggressive interest-rate increases that began almost a year ago.

The monthly consumer-price index rose 6.8% in the year to February, down from 7.4% in January and 8.4% in December, the Australian Bureau of Statistics said Wednesday. Economists had expected an annual CPI increase of 7.1% in February.


Lawmakers Scold Fed Over Silicon Valley Bank Collapse

Senators rebuked the Federal Reserve for failing to prevent the collapse of Silicon Valley Bank despite identifying risks beforehand, while the central bank's top regulator blamed the firm's executives for not fixing its problems.

In an appearance Tuesday before the Senate Banking Committee, Michael Barr, the Fed's vice chairman for banking supervision, defended the actions of the Fed's supervisors and said the central bank had privately raised concerns with SVB before its March 10 collapse and had given the lender poor ratings for managing its risks.


Ukraine Downs Russian Warplane Near Bakhmut

Ukraine said its forces shot down a Russian warplane near Bakhmut while repelling multiple attempts by the Kremlin's forces to seize the eastern city, which has become an important prize in the broader war.

Bakhmut, a small city in Ukraine's eastern Donetsk region, has become a central battleground in Russia's assault on the country, with the fight there taking on increasing symbolic and strategic importance to both sides after more than six months of brutal combat. Ukraine's forces have held out in the city against overwhelming Russian firepower after the Kremlin's forces began targeting the area last summer.


Kevin McCarthy Pushes for Debt-Ceiling Talks as Unity Eludes GOP

WASHINGTON-House Speaker Kevin McCarthy tried to prod President Biden into starting talks over spending cuts as a condition for raising the debt ceiling, just as Republicans are struggling to unite around a blueprint for negotiations ahead of dual deadlines later this year.

The White House released its own budget proposal earlier this month and has said it won't negotiate on spending until Republicans put forward their own plan. Mr. McCarthy has rejected that notion and said in a letter to Mr. Biden that talks should start as soon as possible. While neither budget would have a chance of becoming law, they serve to outline the parties' policy intentions.


Trump Grand Jury Won't Consider Hush-Money Probe Again This Week

The Manhattan grand jury investigating Donald Trump's role in paying hush money to a porn star has concluded its work for the week, according to people familiar with the matter, making the timing of any potential charges against the former president unknown.

The grand jury isn't expected to meet Wednesday, when it has often heard Trump-related evidence, and any work the panel does on Thursday is expected to be on other cases, the people said. It isn't clear whether grand jurors will consider the Trump matter next week, according to the people.


Jamie Dimon to Face Questioning in Lawsuit Over JPMorgan's Epstein Ties

Jamie Dimon will be questioned in a civil lawsuit over JPMorgan Chase & Co.'s relationship with Jeffrey Epstein, people familiar with the matter said.

The U.S. Virgin Islands sued JPMorgan late last year, saying the bank facilitated Esptein's alleged sex trafficking and abuse by allowing him to remain a client and helping him send money to the late financier's victims.


Fire Started in Protest at Mexican Migrant Detention Center Kills Dozens

Thirty-eight migrants were killed and 30 others injured in a fire at a migrant detention facility in the border city of Ciudad Juárez, Mexico, started by occupants protesting their impending deportation, authorities said Tuesday.

A surveillance video showed migrants trapped in locked cells as the fire erupted, while two guards appeared to make no attempt to release the detained men as smoke filled the detention area. The authenticity of the video was confirmed by Interior Minister Adán Augusto López.


Taiwan President's U.S. Trip Touches a Flashpoint in U.S.-China Ties

The U.S. and China have described Taiwan as the most volatile flashpoint in their increasingly fraught bilateral relations.

Now, after months of sparring by Washington and Beijing over the Ukraine war, a suspected surveillance balloon, TikTok and other issues, Taiwan is set to return to the center of great power tensions, with the island's leader traveling to the U.S.


U.S. Stops Sharing Data on Nuclear Forces With Russia

The U.S. has informed Russia that it will no longer exchange key data on its strategic nuclear forces following Moscow's decision to suspend its participation in the New START treaty cutting long-range nuclear arms, U.S. officials said Tuesday.

"This is the first action we have taken within the treaty in response to Russia's suspension," a senior Biden administration official said. "It is our goal to encourage Russia to return to compliance with the treaty."


Too Much U.S. Government Information Is Classified, Report Finds

WASHINGTON-U.S. officials classify information that should either be public or more widely shared within the government, hobbling national defense objectives and jeopardizing congressional oversight of the executive branch, a Washington research organization found in a new report.

The findings, published Tuesday by the Nonproliferation Policy Education Center, stem from a nearly two-year review of the U.S. classification system and are based on interviews with dozens of current and former officials from the Pentagon, intelligence agencies, the State Department and elsewhere, as well as congressional staffers.




Constellation Software 4Q

Dollarama 4Q

Fennec Pharms 4Q

Neo Performance Materials 4Q

VIQ Solutions 4Q

Economic Calendar (ET):

Nothing major scheduled

Stocks to Watch:

Avino Silver & Gold Mines 4Q EPS 1c; 4Q Rev $14.6M; 4Q Adj EPS 3c


Galiano Gold 4Q Gold Production Was 34,090 Ounces; AGM Expected to Produce 100,000 to 120,000 Ounces at AISC1 Guidance of Between $1,900/oz to $1,975/oz in 2023; 4Q Rev $57.8M; 4Q EPS 13c; 4Q Net $83.7M; 4Q Adj Loss/Shr 3c


Goeasy Provides Update on Canada Budget, Announces New Funding Capacity;

Expects to Keep Posting Annual Rise in Adj Diluted EPS, Despite Govt Plan to Lower Max Allowable Rate of Interest to 35%; Govt Rate Cap Plan May Seriously Affect Other Lenders, Reducing Competition and Driving Business to Those With Operating Leverage;

Goeasy: Well-Placed to Adapt to Potential Rate Change by Accelerating Strategy of Continously Reducing Weighted Average Interest Rate Charged to Borrowers; To Keep Expanding Products, Distribution Channels, Leveraging Risk-Based Pricing to Cut Borrowing Costs for Consumers;

Has Also Raised Senior Secured Revolving Credit Facility by C$100M to C$370M; Has Received Approval From Canadian Insurer for C$150M of Additional Financing;

Enhancements Complement Existing C$1.6B Revolving Securitization Warehouse Facilities, Will Be Used for General Purposes; Confident That Existing Funding Facilities, Ability to Raise Additional Debt Financing, Will Fund Organic Growth Targets


Sierra Metals 4Q Revenue From Metals Payable $46.2 M; 4Q Loss/Shr 16c; Special Committee Continues to Evaluate Certain Strategic Alternatives


Expected Major Events for Wednesday

06:00/GER: Apr GfK consumer climate survey

06:45/FRA: Feb Housing starts

06:45/FRA: Mar Consumer confidence survey

08:00/ITA: Feb Foreign Trade non-EU

08:30/UK: Feb Monetary & Financial Statistics

08:30/UK: Feb Bank of England effective interest rates

08:30/UK: Feb Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit

11:00/US: 03/24 MBA Weekly Mortgage Applications Survey

12:30/US: 4Q U.S. International Investment Position

14:00/US: Feb Pending Home Sales Index

14:30/US: 03/24 EIA Weekly Petroleum Status Report

23:01/UK: Feb UK monthly automotive manufacturing figures

23:01/UK: Mar CBI Growth Indicator and Service Sector Survey

23:50/JPN: Mar Provisional Trade Statistics for 1st 10 days of Month

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Expected Earnings for Wednesday

Abraxas Petroleum (AXAS) is expected to report for 4Q.

Accelerate Diagnostics Inc (AXDX) is expected to report $-0.13 for 4Q.

Aerovate Therapeutics Inc (AVTE) is expected to report for 4Q.

Arlington Asset Investment Corp (AAIC) is expected to report $0.04 for 4Q.

Atreca Inc (BCEL) is expected to report for 4Q.

Avalo Therapeutics Inc (AVTX) is expected to report for 4Q.

Axcella Health Inc (AXLA) is expected to report for 4Q.

Cathedral Energy Services (CET.T) is expected to report for 4Q.

Cintas Corp (CTAS) is expected to report $2.99 for 3Q.

Clovis Oncology Inc (CLVSQ) is expected to report $-1.72 for 4Q.

Codiak BioSciences Inc (CDAK) is expected to report for 4Q.

Conn's (CONN) is expected to report $-0.88 for 4Q.

Constellation Software (CSU.T) is expected to report $6.25 for 4Q.

Dollarama (DLMAF,DOL.T) is expected to report $0.88 for 4Q.

Excellon Resources (EXN.T) is expected to report for 4Q.

GlycoMimetics Inc (GLYC) is expected to report $-0.17 for 4Q.

Lightbridge Corp (LTBR) is expected to report for 4Q.

Local Bounti Corp (LOCL) is expected to report for 4Q.

Lyra Therapeutics Inc (LYRA) is expected to report for 4Q.

Microbot Medical Inc (MBOT) is expected to report for 4Q.

Neptune Wellness Solutions Inc (NEPT,NEPT-T) is expected to report for 3Q.

NexImmune Inc (NEXI) is expected to report for 4Q.

Odyssey Marine Exploration Inc (OMEX) is expected to report for 4Q.

Oncocyte Corp (OCX) is expected to report $-0.09 for 4Q.

Paychex Inc (PAYX) is expected to report $1.24 for 3Q.

Pieris Pharmaceuticals Inc (PIRS) is expected to report $-0.21 for 4Q.

Professional Diversity Network Inc (IPDN) is expected to report for 4Q.

ReShape Lifesciences Inc (RSLS) is expected to report for 4Q.

Reading International Inc (RDI) is expected to report $0.10 for 4Q.

Security National Financial Corp (SNFCA) is expected to report for 4Q.

Semtech (SMTC) is expected to report $0.27 for 4Q.

Sharecare Inc (SHCR) is expected to report for 4Q.

Tattooed Chef Inc (TTCF) is expected to report for 4Q.

Telesat Corp (TSAT) is expected to report for 4Q.

TuSimple Holdings Inc (TSP) is expected to report for 4Q.

US Global Investors (GROW) is expected to report for 2Q.

UniFirst Corp (UNF) is expected to report $1.02 for 2Q.

Vyant Bio Inc (VYNT) is expected to report for 4Q.

bluebird bio Inc (BLUE) is expected to report $-0.38 for 4Q.

iSign Solutions Inc (ISGN) is expected to report for 4Q.

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Adobe Raised to Buy From Hold by Erste Group

Applied Molecular Trnsprt Cut to Neutral From Buy by Chardan Capital

Array Technologies Raised to Buy From Hold by Truist Securities

Carnival Raised to Equal-Weight From Underweight by Wells Fargo

Ciena Raised to Strong Buy From Outperform by Raymond James

Coherus BioSciences Raised to Buy From Neutral by UBS

Easterly Govt Properties Raised to Buy From Neutral by Compass Point

Elevance Health Raised to Outperform From Sector Perform by RBC Capital

Encore Capital Group Raised to Buy From Neutral by Janney Montgomery Scott

FactSet Research Raised to Neutral From Sell by Redburn Partners

Fox Corp. Cut to Neutral From Buy by B of A Securities

Genesco Raised to Buy From Neutral by Seaport Global

iHeartMedia Cut to Underperform From Neutral by B of A Securities

Marathon Petroleum Cut to Neutral From Overweight by JP Morgan

NextEra Energy Raised to Buy From Hold by Erste Group

Occidental Petroleum Raised to Outperform From Market Perform by TD Cowen

Paramount Global Raised to Buy From Neutral by B of A Securities

Parsons Raised to Outperform From Market Perform by William Blair

TD SYNNEX Cut to Hold From Buy by CFRA

Venus Concept Cut to Hold From Buy by Maxim Group

Walmart Cut to Hold From Buy by Erste Group

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

March 29, 2023 06:13 ET (10:13 GMT)

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