Raphael Stevens

Micron Technology headquarters in Boise, Idaho, March 28, 2021.
Jeremy Erickson | Bloomberg | Getty Images

Check out the companies making headlines in midday trading Tuesday.
PagSeguro — Shares popped 4.1% on Tuesday after Citi upgraded the Brazilian payment stock to buy from neutral. The firm called the company’s fourth-quarter earnings unsurprising and said it is still in rough waters, but shares were more attractive following recent underperformance. Stone, which was also upgraded by Citi to buy from neutral, edged higher as well on Tuesday.

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Affirm — The pay-later service lost 7.3% after Apple announced a competing service. Apple shares were down about 0.9%.
Occidental Petroleum — The energy stock jumped 4.3% on Tuesday after a regulatory filing showed Warren Buffett’s Berkshire Hathaway purchased an additional 3.7 million shares for $216 million on Monday and last Thursday. TD Cowen upgraded Occidental to outperform from market perform following the news.
Micron Technology — The semiconductor stock dropped 0.85% ahead of its scheduled second-quarter earnings report after the bell on Tuesday. Analysts expect revenue of $3.71 billion and a loss per share of 67 cents, according to FactSet. Micron’s shares have gained more than 18.5% in the last six months. 
PVH — Shares soared 20% after the apparel company’s fourth-quarter adjusted earnings per share came in at $2.38, beating estimates of $1.67, per Refinitiv. Its revenue of $2.49 billion beat expectations of $2.37 billion. PVH’s guidance for the first quarter and full year also surpassed estimates.
Paramount — Shares of the media giant gained 3.1% during Tuesday’s trading session on a rating upgrade from Bank of America from neutral to buy. The bank highlighted Paramount’s strong lineup of assets that could help the business in the event it puts itself up for sale.

McCormick & Company — The spice maker’s stock price jumped 9.6% after reporting better-than-expected earnings for the first quarter. McCormick reported quarterly earnings of 59 cents per share, while analysts surveyed by FactSet expected 50 cents per share. 
Alibaba — Shares soared by nearly 14.3% after the e-commerce giant said it would split its company into six separate business groups, with each group having the potential to raise outside funding and go public.
Ciena — The technology company gained about 4.7% on Tuesday after Raymond James upgraded the stock to strong buy from outperform.
Walgreens Boots Alliance — Shares of the pharmacy giant rose more than 2.7% after the company reported an increase in its quarterly revenue despite seeing a sharp decline in demand for Covid tests and vaccines. Walgreens posted revenue of $34.86 billion for the most recent quarter, compared to analysts’ estimates of $33.53 billion, according to Refinitiv.
Carnival Corp — The cruise operator’s stock price rose 6.1% on Tuesday after Wells Fargo upgraded Carnival to equal weight from underweight. The firm said it sees a more balanced risk/reward for the company
— CNBC’s Alex Harring, Yun Li, Jesse Pound and Michelle Fox Theobald contributed reporting.
Correction: According to FactSet, Micron is expected to post a loss of 67 cents per share. A previous version misstated the estimate. More

How quickly things change. A few weeks ago analysts were convinced the global economy was powering ahead. Now they worry about a deep recession caused by fallout from the collapse of Silicon Valley Bank (svb) and the rescue of Credit Suisse. “From no landing to hard landing”, as Torsten Slok, an economist at Apollo Global Management, an asset manager, has written. Analysts at JPMorgan Chase—better at economics than metaphors, one hopes—say that “a soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending)”. Evidence from before the recent banking chaos suggested that global gdp was increasing at an annualised rate of around 3%. In rich countries, job markets were on fire. So far there is scant evidence of a shift in “real-time” data towards slower growth. A “current-activity indicator” produced by Goldman Sachs, a bank, derived from a variety of high-frequency measures, looks steady. Purchasing-manager indices showed a slight improvement in March. Weekly measures of gdp produced by the oecd, a rich-country club, are holding up. ubs, another bank, tracks global gdp growth as priced by financial markets (in prices of oil and cyclical shares, for example). This currently indicates growth of 3.4%, versus 3.7% before svb collapsed.It is still early days. The pain may be on the way. And as the JPMorgan analysts illustrated with their metaphor, economists have two worries. The first is uncertainty. If people fear a banking crisis and the accompanying economic pain, they may cut consumption and investment. The second relates to credit. Financial institutions, fearing losses, may pull back on lending, depriving firms of much-needed capital. Fortunately, though, there is reason to believe that the recent banking turmoil will have less impact than many fear. Take uncertainty first. Research published by the imf in 2013 finds that leaps in uncertainty—which had been caused by things like America’s invasion of Iraq and bank collapses—can trim annual gdp growth by up to 0.5 percentage points, largely because firms delay investment. If such a hit were to materialise, global growth would fall from 3% to perhaps 2.5%. Yet unless the turmoil continues, the impact is unlikely to be that significant—because the bank collapses made surprisingly little impression on people. A survey by Ipsos, a pollster, found that from early to mid-March American consumer confidence actually edged up, even as startups in Silicon Valley worried their money was going to vanish. An “uncertainty index” derived from analysis of newspapers by Nick Bloom of Stanford University and colleagues, rose a bit when the turmoil began, but is drifting back down. German business sentiment unexpectedly continued to improve in March. Global Google searches for terms related to “banking crisis” jumped in early March, but have also fallen again. It is hard to say why people are so blasé. Perhaps after the past years of pestilence and war, ructions in the banking industry seem like a walk in the park. Or perhaps people think governments will step in to protect them.Many economists worry more about the second problem: credit. If firms cannot get their hands on finance, they cannot grow so easily. On March 22nd Jerome Powell, chairman of the Federal Reserve, referred to a “very large body of literature” when asked about the connection between tighter credit conditions and economic activity. In the years after the global financial crisis of 2007-09, broken credit markets held back both short-term economic recovery and long-term productivity growth.After the collapse of svb, capital markets essentially froze. From March 11th-19th American corporations issued no new investment-grade bonds, having issued a daily average of $5bn in January and February. This caused consternation. But fewer people noticed that the market has since picked up. In recent days Brown-Forman, which makes Jack Daniel’s whiskey among other tipples, and NiSource, a big utility firm, have raised large amounts of money in debt markets. Although spreads on corporate bonds rose a little after the collapse of svb, they too have fallen back in recent days. Companies may have briefly held off issuing new debt to check that the coast was clear. It seems likely that March 2023 will turn out to be a fairly average month for corporate-debt issuance.Damage to the banking system will almost certainly prove more consequential. Since the start of March global banks’ share prices have tumbled by a sixth. Academic evidence suggests that falling share prices tend to hit loan growth. Banks may also cut back on lending if they see deposit outflows, or if they need to raise capital because investors doubt their safety. Indeed, banks across the rich world already appear to be tightening standards. The hit to bank lending implies a growth drag of around 0.4 percentage points in both America and the euro area, according to a new paper by Goldman Sachs. The turmoil may have hit American banks harder, but the euro-zone economy is more dependent on bank lending. That could cut global growth yet further, from 2.5% to something more like 2%.Although the recent banking turmoil is hardly good news, it is unlikely to push the world economy over the edge. True, things could yet deteriorate. The discovery of another rotten bank could cause a downward spiral. Banks will take time to rebuild balance-sheets and get lending. Rising interest rates will continue to impede growth until central bankers judge their work done. But there are forces working in the other direction, too. One is the rebound of China. Economists expect the world’s second-largest economy to have grown by over 7% year on year in the second quarter of the year. Meanwhile, supply-chain bottlenecks have mostly disappeared and energy prices have fallen. Do not be surprised if the world economy’s unusual resilience continues. ■ More

Chinese technology stocks such as Alibaba and Tencent have been hammered in 2022 as regulatory pressure and a slowing Chinese economy weighed on growth. But investors are starting to feel slightly more optimistic toward Chinese tech giants in 2023.
Jakub Porzycki | Nurphoto | Getty Images

Check out the companies making headlines in premarket trading.
Alibaba — Shares jumped 9.8% after the e-commerce giant said it would split its company into six separate business groups. Each will have the potential to raise outside funding and go public.

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an hour ago

Lyft — The ride-sharing company added 5% after announcing its co-founders, CEO Logan Green and President John Zimmer, will soon step down from their day-to-day roles. Former Amazon executive David Risher will take the helm April 17.
First Republic Bank — The closely followed regional bank gained 3.6%. That follows an 11.8% rally in Monday’s session as investors bought back into the stock after selling off last week. Investors were contemplating whether a $30 billion rescue plan from a group of banks would be enough to shore up its liquidity.
Walgreens Boots Alliance — The pharmacy stock advanced 1.7% after the company posted better-than-expected fiscal second-quarter results. Adjusted earnings per share came in at $1.16, above the $1.10 anticipated by analysts, per Refinitiv. Meanwhile, the company reported revenue at $34.86 billion, beating the $33.53 billion expected by Wall Street.
PVH — Shares of the apparel company jumped more than 12% following a better-than-expected fourth-quarter report. PVH generated $2.38 in adjusted earnings per share on $2.49 billion of revenue. Analysts surveyed by Refinitiv were expecting $1.67 in earnings per share on $2.37 billion of revenue. Revenue from the Tommy Hilfiger and Calvin Klein brands grew by 3% each, and PVH’s revenue guidance also topped expectations.
PagSeguro — Shares gained 5% after Citi upgraded the Brazilian payment stock to buy on the back of fourth-quarter earnings. While the firm said the earnings report was largely unsurprising and the company was still in “rough waters,” shares were more attractive following a bout of underperformance.

Ciena — The technology company added 3.1% following an upgrade to strong buy from outperform by Oppenheimer, which cited Ciena’s entry in the edge router market as a catalyst.
Occidental Petroleum — The energy stock jumped 1.9% in premarket after a regulatory filing showed Warren Buffett’s Berkshire Hathaway purchased an additional 3.7 million shares for $216 million on Monday and last Thursday. The move boosted the conglomerate’s stake in the oil giant to 23.5%.
Paramount — Shares of the legacy media giant advanced 5% on Tuesday morning on a rating upgrade from Bank of America from neutral to buy. The firm highlighted the company’s strong lineup of assets that could help Paramount value itself at a premium compared with the market in the event the business is ever put up for sale.
Fox — Shares slipped more than 1% after Bank of America downgraded the media company to neutral from buy, saying there were no near-term catalysts to drive the stock price up.
Array Technologies — The renewable energy stock added 3.6% following an upgrade to buy from hold by Truist. While the firm said the company should see some weakness in the first quarter, it will be helped by domestic and international tailwinds later in the year.
— CNBC’s Arjun Kharpal, Jesse Pound, Michelle Fox, Brian Evans and Yun Li contributed reporting.

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Banking stocks have taken a beating in March, as contagion fears spread following the collapse of U.S.-based Silicon Valley Bank and the emergency rescue of Credit Suisse by Swiss rival UBS.
“Markets are trying on to find points of weakness at the moment. I don’t think we are at all in the place that we were in in 2007/8…but we have to be very vigilant,” Bailey told lawmakers.

Andrew Bailey, Governor of the Bank of England, attends the Bank of England Monetary Policy Report Press Conference, at the Bank of England, London, Britain, February 2, 2023. 
Pool | Reuters

LONDON — Bank of England Governor Andrew Bailey on Tuesday vowed to be “very vigilant” amid ongoing volatility and suggested that the market is “testing out” banks to find weaknesses.
Global banking stocks have taken a beating in March, as contagion fears spread following the collapse of U.S.-based Silicon Valley Bank — the largest bank failure since the financial crisis — and the emergency rescue of Credit Suisse by Swiss rival UBS.

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Bailey told the U.K.’s Treasury Select Committee that U.S. authorities are dealing with particular issues relating to regional banks stateside, and that Credit Suisse was an “institutional story” — but affirmed that the U.K. banking system is “in a strong position capital and liquidity-wise.”
Friday saw a sharp sell-off of European banking shares led by Deutsche Bank, which confounded many analysts, given the German lender’s return to consistent profitability, along with its robust capital and liquidity position.
Deutsche recovered partially on Monday to lead gains as the market panic appeared to subside, after First Citizens agreed to buy a large chunk of failed Silicon Valley Bank’s assets.
“I also think what we saw at the tail end of last week, Friday in particular, when there were quite sharp market movements [were] moves in markets to, if you like, test out firms,” Bailey told lawmakers.
“I would not want to say that those in my estimation are based on identified weaknesses, more than testing out, I mean there is quite a bit of testing out going on at the moment.”

Bailey pointed out to differences between U.S. and U.K. regulations in the treatment of interest rate risk in the banking book (IRRBB) — which refers to prospective risks to bank capital and earnings from adverse movements in interest rates — as a key reason why the British system was not as exposed as were U.S. regional banks.
The Bank of England revealed last week that it warned U.S. regulators of the mounting risks at SVB prior to its collapse, flagging that its Prudential Regulation Authority had “understood that SVB UK was exposed to concentration risk, as it provided loans to and took deposits from the same relatively concentrated client base in the innovation sector.” It said it warned the firm and the San Francisco Federal Reserve of this risk and of “overlap of clients on the asset and liability side of the balance sheet” of SVB UK.
The U.S. Federal Reserve and other central banks around the world have hiked interest rates aggressively over the past year, in a bid to rein in soaring inflation, and tightening monetary conditions have left some banks’ bond portfolios exposed.
Bailey also echoed market consensus that, within Europe, the forced sale of Credit Suisse was caused by “idiosyncratic” features that would not cause stress in the U.K. banking system.
“Markets are trying on to find points of weakness at the moment. I don’t think we are at all in the place that we were in in 2007/8, we’re in a very different place to then, but we have to be very vigilant,” Bailey said in response to a question about whether the banking system was now out of the woods.
“So if I give you the answer ‘I don’t think there’s a problem going forwards,’ I do not want to give you for a moment the idea that we are not very vigilant, because we are. We are in a period of very heightened, frankly, tension and alertness, and we will go on being vigilant.”

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The collapse of U.S.-based Silicon Valley Bank, the biggest bank failure since the global financial crisis, sparked a sell-off in banking stocks as contagion fears spread.
The S&P 500 Banks index climbed 3% on Monday, but remains down 22.5% over March, while in Europe, the Stoxx 600 Banks index closed 1.7% higher Monday but has shed more than 17% this month.
Citi concluded that, in the absence of a clear explanation for Friday’s stock price moves, we are in an “irrational market.”

A slogan is written on the sidewalk in front of the global headquarters of Swiss bank Credit Suisse the day after its shares dropped approximately 30% on March 16, 2023 in Zurich, Switzerland.
Arnd Wiegmann | Getty Images News | Getty Images

The collapse of U.S.-based Silicon Valley Bank, the biggest bank failure since the global financial crisis, and the emergency rescue of Credit Suisse by Swiss rival UBS, sparked a sell-off in banking stocks as contagion fears spread.
Deutsche Bank was the next target, with shares plunging and the cost of insuring against its default spiking at the end of last week — despite the German lender’s strong capital and liquidity positions.

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The market panic appeared to subside Monday after First Citizens agreed to buy a large chunk of failed Silicon Valley Bank’s assets. The S&P 500 Banks index climbed 3% on Monday, but remains down 22.5% over March, while in Europe, the Stoxx 600 Banks index closed 1.7% higher Monday but has shed more than 17% this month.
The volatility — at times in the absence of any discernible catalyst — has led market watchers to question whether the market is operating on sentiment rather than fundamentals when it comes to fears of a systemic banking crisis.
“This isn’t like Lehman Brothers subject to counterparty risk in complex derivatives during the subprime mortgage crisis,” Sara Devereux, global head of the fixed income group at asset management giant Vanguard, noted in a Q&A Friday.
“The banks in recent headlines had risk management issues with traditional assets. Rapidly rising rates exposed those weaknesses. The banks were forced to become sellers, realizing losses after their bond investments were well below face value.”

She suggested the likes of SVB and Credit Suisse may still be standing today had they not lost the confidence of their clients, evidenced by massive depositor outflows from both banks in recent months.

“It was more of a ‘sentiment contagion’ rather than the true systemic contagion we saw during the global financial crisis. Vanguard economists believe that the damage has been largely contained, thanks to the quick action of federal agencies and other banks,” Devereux said.

‘Irrational market’

This view was echoed by Citi, which concluded that in the absence of a clear explanation for Friday’s moves, what we are seeing is an “irrational market.”
The slide in Deutsche Bank’s stock price — which fell 8.6% Friday — could be one example of this. The bank launched a huge restructuring effort in 2019 and has since posted 10 straight quarters of profit. Shares recovered 6.2% on Monday to close above 9 euros ($9.73) per share.

‘The first bank crisis of the Twitter generation’: The pressure on banks is very different from 2008

There was some speculation that the drop could have been driven by Deutsche’s exposure to U.S. commercial real estate or a Department of Justice (DoJ) information request to a number of banks in relation to Russian sanctions, but Citi joined the chorus of market analysts concluding that these were insufficient to explain the moves.
“As we witnessed with CS, the risk is if there is a knock on impact from various media headlines on depositors psychologically, regardless of whether the initial reasoning behind this was correct or not,” the strategists added.

Is Europe different?

Dan Scott, head of Vontobel Multi Asset, told CNBC on Monday that the introduction of the Basel III framework — measures introduced after the financial crisis to shore up banks’ regulation, supervision and risk management — means European banks are all “heavily capitalized.”

Credit Suisse bondholders prepare lawsuit after contentious $17 billion writedown

He pointed out that ahead of its emergency sale to UBS, Credit Suisse’s common equity tier 1 ratio and liquidity coverage ratio, both key metrics of a bank’s strength, suggested the bank was still solvent and liquid.
Scott said failures were an inevitable consequence of rapid tightening of financial conditions by the U.S. Federal Reserve and other central banks around the world in a relatively short space of time, but he stressed that big European lenders face a very different picture to small- and medium-sized U.S. banks.
“We’ve seen a lot of stuff breaking and haven’t really been paying attention because it’s been outside of regulated capital. We saw stuff breaking in the crypto world but we just kind of ignored it, then we saw SVB and we started paying attention because it was getting closer and closer,” Scott told CNBC’s “Capital Connection.”
“I think the issue is on the small- and medium-sized banks in the U.S., they are not Basel III-regulated, they haven’t been stress-tested and that’s where you start seeing real issues. For the core, the big cap banks in Europe, I think we’re looking at a completely different picture and I wouldn’t be concerned.”

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