Bank Crisis Survivors Remember How Fast the Dominoes Can Fall
Comparisons to the 2008 banking crisis have become a little harder to ignore in recent days. Steve Chiavarone doesn’t want to scare anyone, but what he remembers most from the last banking crisis was how sure most people were that it wouldn’t happen. At his New York office in early 2008, Wall Street’s best and brightest — “strategist after strategist after strategist after strategist,” recalls Chiavarone, now senior portfolio manager at Federated Hermes — paraded through to say that even if a recession hit, it’d be shallow and short. That’s not, of course, how things played out. A few months later, “you’d go to your office every day and something that you never thought would happen would happen,” he said. [time-brightcove not-tgx=”true”] All sorts of crises have been predicted by financial Cassandras in the aftermath of 2008. In reality, they’re exceedingly rare in markets. And yet, with three US banks down, a fourth teetering and the government-brokered acquisition of a fifth — and much larger — institution in Europe, the comparisons to that episode have become a little harder to ignore. Not that this episode will match the magnitude of that one. While odds of a recession are way up, authorities are better equipped today to deal with stress in the financial system, and the largest banks are stronger than they were then. Reasons for Wariness But for the current class of investing professionals who seem largely unperturbed by recent events — desensitized perhaps by the years of false warnings — there are important messages to be gleaned from the first-hand accounts of veterans, like Chiavarone, of that crisis. His biggest: Things can unfold in ways that seemed inconceivable just weeks earlier. “It’s one of the reasons I’ve been as cautious as I have,” he said. And given the pace at which events are unfolding, and how there are new potential problem areas that didn’t exist back then — high inflation, for instance, and the boom in the opaque world of private credit — telling the difference between investor courage and complacency has become a more urgent matter. “The equity market has largely treated the recent events as a surgical strike on a specific cohort of stocks,” Goldman Sachs Group Inc.’s head of hedge fund coverage Tony Pasquariello wrote in a trading note Thursday. “I find that a bit remarkable.” On Sunday, UBS Group AG agreed to buy Credit Suisse Group AG for $3.2 billion in a government-brokered deal aimed at containing a crisis of confidence. The Swiss National Bank has agreed to offer a liquidity line of 100 billion francs ($108 billion) to UBS as part of the deal, while the government is granting a 9 billion-franc guarantee for potential losses from assets UBS is taking over. In markets, bets on crisis that have been busting bears for years are in scant evidence today. The Nasdaq 100 just had its best week since November, credit spreads are about a third of their level in 2008 and the dollar is falling. And while Treasury volatility is the highest since 2008, crushing quants and other big managers, it wasn’t enough to keep hedge funds from snapping up single stocks last week at the fastest pace since January 2021, according to a trading note from Morgan Stanley. That’s all consistent with a belief stress in finance will be contained. Unnervingly, it’s not totally inconsistent with the outlook that prevailed before 2008’s storm, which ended up knocking American stocks down by more than half. One of the signature properties of bank stress is the speed with which dominoes fall when faith breaks, said Adam Crisafulli, the founder of Vital Knowledge in New York. Built on Confidence “You want banks to be as boring, as stodgy as possible,” said Crisafulli, who was working at Bear Stearns when it had to be bailed out by JPMorgan Chase & Co. in 2008. “The entire business model is predicated on confidence. So even if you are very, very comfortable with the financials, if the market has lost confidence in a financial institution, it’s very difficult for a financial institution to rebut or refute that loss of confidence.” Francesco Filia, chief investment officer at Fasanara Capital in London, was working in cross-asset derivatives at Merrill Lynch when it was sold in a bailout months after the Bear Stearns collapse. When the 2008 catastrophe broke out, he says, its full dimension was hard to see. “From the inside, you don’t capture the full scale of the crisis,” Filia said. “You’re always too far from the decision power. We were looking at our own CDS widening and wondering what might have happened, but not knowing what was being discussed in terms of rescue packages.” A difference between 2008 and now is inflation, which threatens to complicate the Federal Reserve’s response should things mushroom. While bond traders wasted little time pricing out future interest rate hikes in the aftermath of Silicon Valley Bank’s collapse, consumer costs continue to rise at more than twice the pace central banks have targeted. For investors, there’s a no-win aspect to it all — either inflation remains high or is finally arrested by a recession spurred by stressed-out banks reining in credit. “There’s never just one issue,” said Steve Sosnick, chief strategist at Interactive Brokers, who was helping co-manage Timber Hill’s $3 billion to $4 billion market-making book in 2008. Back then, “every time you thought it was going to get better, it didn’t. Every time you think it’s all done, something else is hiding out. It was inevitable that hiking rates now would break something, just as it was inevitable then that hiking rates and cracking down on crappy mortgages would break something.” Kris Sidial is a professional short, running tail-risk strategies for hedge fund Ambrus Group, so it’s no surprise he’s pessimistic. He plans to hold on to bearish bank options that he has already ridden to a 40-fold profit over the last month. “When the Credit Suisse thing popped up, it was a sign that there’s another body,” he said in a telephone interview Saturday. “It’s very binary. There’s really no in-between situation here where this drags out,” he said. “This is either going to get fixed — there’s going to be government intervention and this gets fixed — or it’s going to be a nightmare.” Sidial said he’s already worrying about finding prime brokers who won’t collapse in unison should contagion spread. “Forget US equity markets, the whole world is connected to the banking system. If that hits, everything’s going with it. You can destroy tech, you can destroy everything else, but banking is the one thing where if that goes down, there’s massive repercussions.” At the same time, upheaval often leads to opportunity in the market, says Paul Nolte, a senior wealth manager at Murphy & Sylvest Wealth Management, who was an adviser at a boutique investment firm in 2008. “We’ve seen this play out more than a few times. When the Fed panics, that’s usually a pretty good time for investors to start nibbling in the financial markets. This past week was a perfect example,” he said. His firm has been adding to its position in Comerica Inc., a regional bank, and adding exposure to broad benchmarks like the S&P 500 and Nasdaq Composite. Rich Steinberg, chief market strategist at Colony Group, survived 2008 even after Lehman Brothers went bankrupt on his birthday, which left him “under my desk sucking my thumb.” His wife walked in with a job application for a bakery noting: “You’re up early, you could always go and like make bread before you come into the office.” The application is still on his desk. There’s a lesson in his survival. “Don’t confuse a great brand with not having risk. The second thing is don’t panic in great franchises.” Also: “Try not to outsmart the market when you really see names under a lot of pricing pressure. The psychodynamics in these really turbulent times can really bring valuations and or pricing swings way greater than you think.” These days, “I walk down the hall to the other portfolio managers and I’m just looking for validation,” Steinberg said. “I’m pretty panicked about having even a 5% exposure to the financials. What do you think? And everybody collectively said just hold tight. Like, don’t make the mistake of blowing out.” In 2008, banks were more leveraged while regulators had much less experience dealing with systemic stress, said Arthur Tetyevsky, a financials strategist at Seaport Global Holdings who worked in a similar role but at HSBC Holdings Plc during the financial crisis. At the same time, because the market is now dominated by passive funds, it’s not as easy to get out of big positions. “The most important lesson that was learned back then is that a problem requires a quick response. You know, backing of the regulators, backing up of supervisors,” he said. “I’m seeing a response rate that’s much, much quicker today compared to 2008.” How inflation affects that response remains a wild card. “You had a very benign inflationary environment back in 2008,” said Crisafulli of Vital Knowledge. “And that essentially meant that central banks were only limited by their imagination. That’s now obviously not the case.” — With assistance from Emily Graffeo, Lu Wang and Denitsa Tsekova......»»
How bad is the banking crisis?
Central banks, regulators and governments are rushing to save banks from collapsing. But the uncertainty is far from over. People walk by the New York headquarters of Credit Suisse on March 15, 2023 in New York City.Spencer Platt/Getty Images On Sunday, UBS acquired the embattled Credit Suisse for $3.25 billion. The Fed along with five other central banks announced coordinated action to reassure global banks. While immediate contagion risks seem to have been contained, concerns still linger over what the next blind spots are. You know something is wrong when six big central banks from around the world decide to join hands in order to reassure financial markets. That too on a Sunday night.Hours after UBS announced it will acquire Credit Suisse for $3.25 billion, the Federal Reserve, along with the European Central Bank, the Bank of England, the Swiss National Bank, the Bank of Canada and the Bank of Japan announced fresh measures to ensure there is enough funding for global financial institutions amid the current stressed market conditions.American economist Nouriel Roubini, or "Dr Doom" as he is often referred to, broke down this measure in a tweet."Use of Fed international swap lines spikes during severe risk off episodes when there is shortage of global dollar liquidity: GFC, EZ crisis, temper tantrum, Covid 3/20 shock. Expect another likely spike now. That is why the CBs coordinated action today," Roubini tweeted Sunday night.To make sense of those acronyms, GFC refers to the global financial crisis of 2007 to 2009, EZ crisis is the Eurozone crisis of 2009 onwards, temper tantrum likely refers to the taper tantrum of 2013, and the Covid 3/20 shock is when global markets went haywire in the early stages of the pandemic. It's wild to think that the current market situation is similar to the ones mentioned on Roubini's list. But the events of the past two weeks have investors - both institutional and retail - worried over financial stability and the fate of the economy.So, you might be wondering: Just how bad is the banking crisis?In less than two weeks, three US banks, Silvergate, SVB, and Signature Bank, and a big global lender like Credit Suisse have collapsed, bringing back fears of a full-blown financial crisis.So how big is this crisis then?"Despite the shockwaves, we expect that the banking crisis could ultimately prove to be beneficial for global markets for several reasons," deVere Group's Nigel Green said in a note on Monday morning.Green adds that the "emergency lifelines" that the regulators and governments have provided to the banks have curbed any risk of contagion within the sector and the chances of turmoil spreading across other firms and sectors has been contained.It all started with the collapse of Silvergate, SVB ,and Signature Bank in the US. Crypto-friendly bank Silvergate announced it would liquidate, before SVB was shut by the regulators on March 10 and put under the control of the Federal Deposit Insurance Corp (FDIC). The FDIC later seized Signature Bank.Things moved very quickly in the case of SVB - the country's 16th largest bank. As soon as SVB announced it needed to raise capital, customers panicked and rushed to withdraw their money. The speed at which clients withdrew their funds from SVB shows how quickly a bank run can take place in the digital age.The Treasury, the Fed and the U.S. President himself rushed to reassure the depositors that their money was safe. However, another crisis was brewing in Europe.Investors had been watching the slow decline of Credit Suisse over the years, mainly attributed to its accounting errors, its involvement in multiple scandals, billions in losses, several turnaround plans and more. But the SVB collapse exacerbated those concerns as investors started looking around at other banks that could be in a similar position."A harsh spotlight has been focused on banks in the last week and while it has been for many of the wrong reasons, it has also served to highlight to investors that the rules imposed in the wake of the 2008 financial crisis mean that most banks are in a strong position to withstand shocks," deVere's Green said.That said, banks across the world are still adjusting to the steep surge in interest rates. Lenders had gotten used to years of low-cost borrowing due to a regime of ultra-low interest rates maintained by central banks around the world. But the sudden increase in rates over the past year has borrowers struggling to manage their portfolios."The week ahead looks like a movable feast already, but it seems a safe bet that further central bank intervention is on the cards: and further changes in the global financial architecture, with a larger role for government/regulators," Rabobank said in a research note on Monday.What's next?Investors will be watching two big themes in the market over the next few days to understand how the banking crisis is going to play out.On Sunday, Credit Suisse said that as part of the rescue deal, the Swiss regulator requires almost $17 billion of the lender's so-called Additional Tier 1 (AT1) debt to be written down to zero."That appears to have spooked investors and has led to a sell-off in other bank debt and that's weighed on share prices," Russ Mould, Investment Director at AJ Mould said in a research note on Monday morning."It means the banking crisis we've seen over the past few weeks has started a new chapter rather than reaching its ending."AT1 or Contingent Convertible (CoCo) bonds are basically debt securities that convert into equity when the capital buffers of a bank fall below a certain level. After the 2008 financial crisis, the Bank of International Settlements (BIS) made it necessary for all European banks to issue CoCo bonds.The second big event this week is the Federal Reserve's interest-rate decision on Wednesday. Most economists and market watchers had been predicting a 25 basis point rate hike from the Fed, taking the US central bank's benchmark rate to 5%.However, the coordinated action from the Fed and five other central banks on Sunday night is seen by many as a step toward pausing rate hikes. The market has been choppy over the past few weeks and while the central banks, the regulators and governments have stepped in to contain contagion, there is still a lot of uncertainty over how the high inflation, high interest-rate environment will impact the global economy."Central banks know that besides having to try and tame stubbornly high inflation, they also need to ensure financial stability. The events of the last week which rocked confidence will certainly give them cause for pause," deVere's Green said."The growing case for interest-rate hikes to be paused will be cheered by global markets."Read the original article on Business Insider.....»»
At a high-stakes meeting in Moscow, China has to decide whether Putin"s failure in Ukraine means it"s time to cross a red line
China aligned itself with Russia without explicitly supporting its war on Ukraine. A meeting between Xi Jinping and Vladimir Putin may change that. China's Xi Jinping and Russia's Vladimir Putin together in Moscow on March 20, 2023.Russian pool via AP China's President Xi Jinping is in Moscow Monday for a state visit. Some analysts believe China is poised to escalate its support for Russian in Ukraine. Yet other say that Xi is seeking to act as peace broker in the war. Chinese leader Xi Jinping landed in Moscow on Monday for a three-day meeting with Russia's President Vladimir Putin.While there he will have to make a choice — maintain China's ambivalent position on Russia's bloody invasion of Ukraine, or go in harder on its support for Russia.In announcing Xi's visit, a Chinese foreign ministry spokeswoman said China would uphold "an objective and fair position" on the war in Ukraine and "play a constructive role in promoting talks for peace."Some analysts believe the façade of neutrality is beginning to crack, and Xi is revealing his true motives in visiting Putin, an international pariah who is now the subject of an arrest warrant from the International Criminal Court for his army's actions in Ukraine.China's Xi Jinping at a welcoming ceremony at Moscow's Vnukovo airport on March 20, 2023.ANATOLIY ZHDANOV/Kommersant Photo/AFP via Getty Images"This fits into a much broader strategic framework where a Russia-China axis is forming, and they've been deepening their military ties for the past decade," said Jonathan Ward, founder of the Atlas Organization, a US consultancy focused on Chinese and Indian national strategy, in a call with Insider. China has provided key diplomatic and economic support for Russia during the war, resisting attempts by the US and its allies to isolate it.Not long before the invasion the two declared their partnership would have "no limits" — since the war began they have increased trade, with the Chinese purchase of Russian oil handing the Kremlin an economic lifeline. China has sought to portray the war in Ukraine as a result of Western meddling, citing the massive influx of Western weaponry to Ukraine's armed forces.But China may now be preparing so cross the same line and offer weapons of its own to Putin's Russia.On Thursday Politico reported that Chinese companies have already been sending rifles, body armor and drone parts to Russian entities.A file photo from 2018 shows Russia's Vladimir Putin with China's Xi Jinping at a visit by Putin to Beijing.GREG BAKER/POOL/AFP via Getty ImagesChina's US embassy in response denied exporting any weapons, and said it remained "committed to promoting talks for peace."Ward said that the situation was reaching a "crisis point," with Russia struggling to make headway on the battlefield despite notionally having a far stronger military than Ukraine.If that dynamic continues, Ward said China may decide to risk the wrath of the West and openly provide lethal aid. He said that Russia remained a key strategic partner of China, and Beijing saw the war as a way of distracting Western powers while it builds and extends its own global power. "My sense would be that China does not want Russia to fail in this war. And if we do see them stepping in to help support Moscow on the battlefield, then I think the mask is fully off," he said. Other analysts believe that China's motives are more complex. Robert Daly, Director of the Kissinger Institute on China and the US, told Insider that China's reluctance to sever economic ties with the West would probably prevent it from providing weapons to Russia.He believes that China wants to cast itself in the role of global peace-maker, noting that Beijing is riding high after successfully brokering a deal between the two most powerful enemies in the Middle East: Iran and Saudi Arabia."I think they're gonna want to take the peacemaker [role] out for a spin because this works very well for them," said Daly.Xi's plans for peace have been rejected by Ukraine. But Daly said that Xi was not seeking to impress leaders in Kyiv, or countries in the West, but in the less-developed nations where China has built extensive alliances through infrastructure contracts, and domestically.It's likely, he said, that China is also eyeing lucrative reconstruction contracts in post-war Ukraine, so may see a protracted conflict as in its interests."I think it's the ideal scenario, to place peacemaker," he said. "Not only have an alternative vision of world order, but they're also a provider of global public goods. That's an ideal Chinese outcome."China in essence faces a tightrope walk as it seeks to balance its support with Russia, with its wish to build and strengthen its trade empire. "China faces a strategic dilemma in its positioning vis-à-vis Russia. It does not want to abandon one of the few other major powers with which it enjoys deepening ties," said Ali Wyn, an analyst with the Eurasia Group."The longer the war persists, however, the more damage the Sino-Russian relationship will do to Beijing's relationships with advanced industrial democracies."Read the original article on Business Insider.....»»
South Korea tried to push an almost 70-hour work week, but was forced to rethink after millennials and Gen Z protested
South Korea suggested a 69-hour work week in March after businesses complained about being unable to meet deadlines due to current working limits. The South Korean government proposed a 69-hour work week in March to appease business complaints.PARK JI-HWAN/Stringer/Getty Images South Korea is rethinking a 69-hour work week proposal after millennials and Gen Z protested. The proposal was a potential solution to business complaints about being unable to meet deadlines. South Koreans work some of the longest hours in the world, averaging 1,915 hours annually in 2021. The South Korean government is rethinking a plan to increase the work week to 69 hours, after a furious wave of backlash from Millennials, Gen Z, and labor unions, according to numerous reports. South Korean President Yoon Suk Yeol's senior secretary Kim Eun-Hye said the government is taking a new "direction" after negative public opinion about the proposed increase, adding that the government wants to protect worker's rights, CNN reported on Sunday. The government suggested a new plan earlier in March to allow employers to increase the maximum weekly working hours to 69 hours, from the current limit of 52 hours, per The Korea Herald.At present, companies must limit overtime work to 12 hours per week, according to measures introduced in 2018 by Yoon's predecessor. The changes were a potential solution to business complaints about being unable to meet deadlines because of the working limit. But the government has been forced to revise its strategy after opposition from younger generations including Millennials and Gen Z, a number of reports say.After ditching the policy, the government will attempt to "communicate better with the public, especially with generation Z and millennials," the Guardian reported Kim Eun-Hye as saying."The proposal does not make any sense… and is so far from what workers actually want," 25-year-old Jung Junsik, a university student from Seoul told CNN. "My own father works excessively every week and there is no boundary between work and life." Labor unions like the Federation of Korean Trade Unions have attacked the plan calling it "toxic" and "anachronistic," and saying that the government would be "forcing workers into ultra-long hours of intensive work," the Financial Times reported. South Korea is infamous for its long working hours, with the average citizen working for 1,915 hours in 2021, according to the Organization for Economic Cooperation and Development. That ranks among the five highest working hours in developed nations, and well above the 1,716 hours worked on average by people in the OECD. In the US, the average worker worked 1,767 hours in 2021.Many Korean workers have lost their lives to "Gwarosa" — a Korean word for death by overwork, as the country's working hours exceed the average across the world. Yoon, a conservative from the People Power Party, won the presidential election in 2022 and criticized the 52-hour work week saying workers should labor for long hours, last year. "Workers should be allowed to work 120 hours a week and then take a good rest," he said, per the Korea Times. Read the original article on Business Insider.....»»
Georgia county said it was too costly to spend $10,000 a year on health cover for trans employees. It spent $1.2 million fighting it, lost, and has to pay anyway.
Houston County spent nearly $1.2 million fighting an employee who wanted a change to their health plan to cover gender-affirming surgery. Sgt. Anna Lange in a video for Houston County's Sheriff's Department.Houston County 911/YouTube A Georgia county refused to change a health plan to cover a trans employee's surgeries, citing the cost. The bill would have been about $10k a year for transition-related care for employees, per ProPublica. The county spent nearly $1.2 million in legal fees fighting it in court, and lost. Local Georgia officials refused to change a department's health insurance plan to cover the gender-affirming surgery of a trans employee, citing cost as a reason.But Georgia's Houston County ended up paying a private law firm nearly $1.2 million to fight the employee in federal court, far more than the estimated $10,000 a year it would have cost to add transition-related care to the health plan, ProPublica reported.And this month a federal judge ordered it to cover transition care for its employees."It was a slap in the face, really, to find out how much they had spent," Anna Lange, the sheriff's deputy who filed a federal discrimination lawsuit, said."They're treating it like a political issue, obviously, when it's a medical issue," she said.Lange came out as a transgender woman to her colleagues in 2017, after working for the Houston County Sheriff's Office for more than a decade, legal documents show. She wanted to go ahead with gender-affirming surgeries but found out that the county's health plan had exclusions, meaning that it would not cover the cost of the procedures.Lange was able to use retirement funds and savings to pay for top surgery in 2018, but could not afford to pay for bottom surgery, which costs approximately $25,000, according to legal documents.She sent letters to the insurance administrator and the county asking them to remove the health insurance plan exclusions in both 2018 and 2019, but her appeals were denied, ProPublica reported.In early 2019, she went to the county board of commissioners' meeting to ask it to remove the health plan's exclusions.The board said it would not make any changes, leading Lange to file a lawsuit against the country for employment discrimination.Lange said the county, which describes itself as "Georgia's most progressive county," was subjecting her to "inferior treatment" by denying her medical care.The county's lawyers cited concerns about rising costs if the exclusion were to be removed, warning of a hypothetical situation in which an employee could seek multiple surgeries in one year. Houston County spent $57,135 on a budget expert to make the case, per ProPublica.Lange's attorneys, meanwhile, hired their own expert, who said that including transition-related care in the health plan would add about 0.1% to the cost of all claims — about $10,000 per year.The amount is so small that in actuarial terms it could be considered "immaterial," the expert said.In total, Houston County spent $1,188,701 in direct payments to private law firms from the date the lawsuit was filed to December 31, 2022, ProPublica reported, citing billing records it obtained. The legal fees amounted to three times Houston County's annual budget on physical and mental health, it said.Houston County did not immediately respond to Insider's request for comment.After years of fighting in the courts, Lange won her case in 2022, with the federal judge citing a US Supreme Court ruling in 2020 against employment discrimination based on transgender status.The county appealed, but this month a federal judge ordered Houston County to cover transition care for employees, and Lange is now starting the process of scheduling her surgery, per ProPublica.Read the original article on Business Insider.....»»
Credit Suisse rescue: The biggest winners and losers from UBS"s historic deal
From UBS itself to Credit Suisse's AT1 bondholders, here are the main winners and losers from the biggest story in markets right now. UBS agreed to buy its biggest rival Credit Suisse for just over $3 billion Sunday.NurPhoto/Getty Images UBS agreed to take over rival bank Credit Suisse for just over $3 billion Sunday. The Swiss government forced through the deal in a bid to quell fears of a global banking crisis. From UBS itself to Credit Suisse's AT1 bondholders, here are the main winners and losers from the biggest story in markets right now. UBS agreed to buy longtime rival Credit Suisse on Sunday in a historic deal that'll merge two of Europe's biggest banks.The Swiss government forced through the 3 billion franc ($3.25 billion) deal, which came after Credit Suisse's Zurich-listed shares plunged 70% in a single week as the collapse of SVB Financial sparked fears of a global banking crisis.Here are the main winners and losers from the biggest story in markets right now:Losers: Credit SuisseThe 167-year-old Swiss bank stands out as the biggest loser from Sunday's rescue deal.The global banking crisis that erupted last week weighed on Credit Suisse's already battered stock, which plunged 70% in the space of five days.Now, the onetime banking titan has been forced by its own government to accept a takeover bid from its biggest rival, which values it at less than half its market capitalization as of Friday's closing bell.It's hard to think of a more humiliating fall from grace since the 2008 financial crisis.Winners: UBSThe Zurich-based bank has snapped up its longtime rival at a fraction of its market value – and can draw on support from its government and the Swiss National Bank to absorb some of its losses from the takeover.UBS will see its assets under management swell to just under $2 trillion if it can complete the deal, according to data from S&P Global – which is more than the amounts managed by blue-chip US rivals like Goldman Sachs and Morgan Stanley.But these are still uncertain times for European bank stocks – and that could take some of the shine off any potential deal, according to one analyst."Under normal circumstances, I would say it is an absolutely fantastic deal for UBS," Morningstar equity analyst Johann Scholtz said, per Reuters. "In the current environment, it is a bit more complicated as there is a lot of uncertainty generally in the markets."Losers: Saudi Arabia, Qatar, and NorwaySome of the world's biggest investors are suffering this morning due to their exposure to Credit Suisse.Top shareholder the Saudi National Bank – whose chairman helped to crater the Swiss bank's stock price by ruling out upping his stake on Wednesday – has lost 1.1 billion francs in just 15 weeks, according to data from Bloomberg.The Riyadh-based bank loaded up on Credit Suisse shares for 3.82 francs ($4.12) apiece in November – way clear of the 0.76 francs that UBS will pay the Swiss lender's shareholders as part of its takeover deal.Qatari and Norwegian sovereign wealth funds were other big investors in Credit Suisse, although Norway's Norges Bank Investment Management said Monday that it had trimmed its stake earlier this year. Winners: Wall Street (for now)JPMorgan, Bank of America, and the rest of Wall Street now have one less rival, with UBS chairman Colm Kelleher indicating on Sunday that there'll be cutbacks at Credit Suisse's investment bank.The rescue deal could also help to contain some of the turmoil caused by the ongoing global banking crisis – although US investors are still fretting about regional bank First Republic, which saw its share price plunge 20% in Monday's premarket.Credit Suisse's key role in the global financial system also meant that many had deemed it "too big to fail" and so Wall Street's largest banks could feel the aftereffects of Sunday's takeover."It's a bigger deal than the collapse of SVB because Credit Suisse has an investment bank," Morningstar Investment Management's CIO Dan Kemp told Insider last week. "It's more part of the banking plumbing – and so worries about its health have always been more of a concern."Losers: AT1 bondholdersThe Swiss regulator said Sunday that it would write down the value of Credit Suisse's 16 billion franc Additional Tier 1 bonds to zero.The little known assets are special bonds that can be converted into shares if a bank's overall financial health falls below a certain level. They emerged after the 2008 financial crisis.Analysts have warned that the regulator's move to write off the bonds could weigh on other European banks looking to sell such debt, meaning the UBS-Credit Suisse deal could extend rather than end the banking crisis."The Swiss financial regulator has ordered that Credit Suisse's AT1 bonds be written down to zero. That appears to have spooked investors and has led to a selloff in other bank debt and that's weighed on share prices," AJ Bell investment director Russ Mould said Monday."It means the banking crisis we've seen over the past few weeks has started a new chapter rather than reaching its ending," he added.Read the original article on Business Insider.....»»
UBS is set to buy Credit Suisse for $3.2 billion. The megadeal could make the banking crisis worse.
The UBS-Credit Suisse megadeal could make it tougher for the Fed to fight inflation without causing a recession. UBS acquiring Credit Suisse has major implications for markets and the US economy.Mike Segar/Reuters UBS has agreed to acquire Credit Suisse for $3.2 billion, as the banking crisis rages on. The Swiss megadeal has implications for US banks, markets, the economy, and interest rates. Here's a closer look at what the UBS-Credit Suisse could mean for American investors. UBS has agreed to acquire Credit Suisse for 3 billion Swiss francs ($3.2 billion). The government-brokered deal aims to calm jittery investors and depositors, and halt the burgeoning banking crisis before it spirals out of control.The planned mega-merger is just the latest development in a dramatic couple of weeks. Three US banks have folded, regulators have rushed to contain the fallout with emergency measures, and Warren Buffett has reportedly spoken to senior White House officials about potentially stepping in to save the day.The Swiss agreement has major implications for US investors. They range from its impact on financial markets and the banking sector, to its potential effect on the American economy and interest rates.Here's a closer look at what the deal could mean.What pressures led to the deal?Credit Suisse has faced a series of scandals in recent years, ranging from bad bets to corporate espionage. Recently, the Swiss banking giant revealed there were "material weaknesses" in its financial reporting.Investors got worried it could be caught up in the turmoil driven by the US bank failures. Their reaction tanked its stock and bonds, and drove up the cost of insuring against the bank defaulting on its debt.Swiss authorities determined the lender was at risk, and pushed UBS to acquire it. The Swiss National Bank has agreed to lend UBS the equivalent of $108 billion to help it see through the merger.Meanwhile, Switzerland's financial regulator has wiped out $17 billion worth of Credit Suisse bonds and removed the need for UBS shareholders to approve the transaction.What does it say about the threat to banks right now?Swiss officials' involvement in the deal, and the substantial sweeteners they've provided to make it happen, suggest they're deeply concerned about the ongoing banking crisis.Those growing worries are reflected in the concerted effort taken by the US Federal Reserve and other central banks at the weekend. They've come together to help foreign banks get access to US dollars by offering swap operations every day through April, rather than once a week. The mega-takeover also has clear parallels with the banking deals sealed during and after the 2008 financial crisis. That's when JP Morgan scooped up Bear Stearns and Washington Mutual, Bank of America acquired Merrill Lynch, and Wells Fargo bought Wachovia.If more deals lead to more consolidation in the banking industry, that could reflect pressures on smaller lenders are growing, forcing them to seek safety in the arms of larger, wealthier peers.What sparked the concerns about banks?The current turmoil was touched off by Silicon Valley Bank, Signature Bank, and Silvergate all shutting down in the past couple of weeks.In SVB's case, it ran into trouble because it had a high percentage of uninsured deposits. It also invested in long-dated bonds that have plunged in price over the past year, as the Fed hiked interest rates.The bank's cash-hungry, venture-capital-backed customers rushed to pull their money out after SVB sold bonds at a loss and tried to raise fresh capital. They were worried the bank could fail, and they would lose most of their cash.The wave of withdrawals overwhelmed the bank, spurring the Federal Deposit Insurance Corp. (FDIC) to take control and later guarantee all of its deposits. The FDIC also took the same action at Signature, while Silvergate voluntarily closed down.Meanwhile, the Fed established an emergency lending program to help banks easily access capital to weather any further pressures. The banks' challenges, and authorities' efforts so far in response to them, made investors sour on global banks, paving the way for UBS to acquire Credit Suisse.How could the Swiss deal affect markets?Governments worldwide will be hoping the UBS takeover of Credit Suisse will calm fears about the chance of more bank failures. The Swiss government's "whatever it takes" approach could also help restore faith in the financial system.But investors could interpret the rushed deal — seen as a bailout by some — as a sign of desperation in the face of a real threat to vulnerable banks. On Monday morning, UBS shares slumped 7% and the Euro Stoxx Bank Index slid 1%. That suggest the Swiss bank's shareholders aren't impressed by the deal terms, and that the market isn't reassured about the prospects for other lenders.What does the transaction mean for the US economy and interest rates?The UBS-Credit Suisse deal may be a mixed blessing for Americans. It could help to cool inflation, but might also raise the odds of a recession.US inflation spiked to a 40-year high last year, spurring the Fed to lift interest rates from nearly zero to upwards of 4.5% over the past 12 months — and it could raise them again at its meeting this week.Rate hikes help curb price increases as they make borrowing more costly and encourage people to save instead of spend. But at the same time, they can dampen consumer demand and weigh on the prices of stocks and other assets. They can also lift the risk of a recession by pushing unemployment higher.Americans could see the UBS-Credit Suisse deal as evidence of serious underlying problems in banks and the wider financial system.As a result, they might become more conservative in their spending, investing, and hiring — and that might not change until they're certain more banks aren't going to fail. They need to be reassured they aren't going to lose their jobs or suffer a big blow to their retirement savings.That could help the Fed in its inflation fight, but might pose to a risk to financial stability and employment — two other priorities for the central bank.Fed officials could face a situation where they want to hike rates further to crush inflation, but doing so could heap further pressure on lenders and exacerbate the banking crisis, increasing the risk of a broader economic downturn.What does this all mean for the current banking crisis?American investors may well see the UBS-Credit Suisse deal as evidence of a mad scramble to shore up liquidity among lenders and combine different banks.Also, they may view it as a harbinger of more bad news to come — the first in a wave of tie-ups. That's especially a risk given how things played out during the financial crisis.That means US stockpickers and bondholders will be watching for more red flags at domestic banks. They're also likely to keep a close eye on what the authorities do next, to gauge just how serious the current challenges are.Without an unlimited blanket guarantee on bank deposits, it's easy to imagine customers will be wary that more banks could fail. They could seek to park their funds in safer places.The turmoil could weaken inflationary pressures by leading banks to tighten their lending, and by confidence among consumers and businesses.But it could also mean the Fed faces a double whammy: stubborn inflation against a backdrop of fragile growth and employment.That would give it an impossible choice: halt its interest rate hikes and let prices keep rising, or march foward with rate increases that threaten to ramp up pressure on banks and drag the economy into a recession.In short, there are several reasons to think the UBS-Credit Suisse merger could spook investors and exacerbate the banking crisis.Read the original article on Business Insider.....»»
Credit Suisse shares tumble 55% as its UBS rescue deal fails to calm bank-crisis jitters
Shares in Credit Suisse plummeted, leading stocks in European banks lower as the lender's takeover by UBS failed to calm nerves about a wider crisis. Credit Suisse in Geneva.Fabrice Coffrini/AFP/Getty Images Credit Suisse shares fell almost 55% Monday after UBS agreed to buy the lender for $3.2 billion. Swiss authorities drove the takeover to try to stop Credit Suisse's troubles spreading to other banks. European bank stocks dropped in a sign the attempt to calm nerves may not be paying off. Credit Suisse shares fell over 50% Monday, as European bank stocks recouped losses, after UBS agreed to take over the beleaguered Swiss banking giant.UBS on Sunday said it plans to buy embattled Credit Suisse in a deal valued at 3 billion Swiss francs ($3.2 billion), which will see it take on up to $5.4 billion in its former rival's losses. The move was orchestrated by Swiss regulators, the latest in government efforts around the world to stave off a brewing bank crisis. Zurich-listed shares in Credit Suisse tumbled 54.3% to 0.85 Swiss francs ($0.92) at last check, dropping as much as 60% in premarket trading. US-listed shares in the financial giant were 53.2% lower at $0.94.Meanwhile, UBS shares were up 3.4% in Zurich to 17.70 Swiss francs, after falling as much as 16% in premarket trading. The US-listed stock was 4.3% higher at $18.92, having fallen in premarket trading.Shareholders in Credit Suisse face big losses, with its acquisition price pegged at 99% below its peak in 2007, according to Bloomberg. Holders of Credit Suisse's AT1 bonds will also take a hit, as they are being written down after the Swiss regulator decided to reduce their value from 16 billion Swiss francs ($17.2 billion) to zero.AT1 bonds were created after the Global Financial Crisis of 2007 to 2009 to pass the risks from crises onto investors rather than onto taxpayers.More broadly, European banking stocks edged higher, after falling earlier Monday as investors worried about the long-term fallout for the sector from the Credit Suisse rescue deal. An index of banks on the STOXX 600 was up 0.24% at last check, after sliding over 1% earlier.Investors appear to not yet be convinced that official interventions to fend off a market meltdown in banks are paying off. The Swiss National Bank's lifeline offer of a $54 billion loan Thursday wasn't enough to calm fears about Credit Suisse, reflecting potentially heavy pressure on its deposits. The past couple of weeks have been a turbulent time for the global banking sector, after Silicon Valley Bank, Signature Bank, and Silvergate Capital all folded in recent days. Read the original article on Business Insider.....»»
I"ve worked remotely abroad since 2016. I"m never going back to Canada because life overseas is so much more affordable.
Peggy Bree Tam can't afford the lifestyle she desires in Toronto, so she works remotely from Santa Marta, Colombia, and plans to stay there. Peggy Bree Tam moved from Canada to Colombia and plans on staying there.Peggy Bree TamPeggy Bree Tam works remotely for a Canadian-based company as a project manager.She's been in Colombia since 2021 and believes Toronto housing prices have gotten out of control.Tam's money goes farther in Colombia and she's now accustomed to the lifestyle she can afford there.This as-told-to essay is based on a conversation with Peggy Bree Tam, 30, about her experience leaving her hometown of Toronto, Canada, to pursue a digital nomad lifestyle. Tam, a project manager, currently lives in Santa Marta, Colombia, and has no intentions of moving back to Canada. This interview has been edited for length and clarity.I first started working remotely in 2016 as a freelancer. I've worked from Peru, Thailand, and Mexico. I got to Colombia in October of 2021.When I wanted to embark on this nomadic journey I relied on my freelance clients. It was stable, but it wasn't something that I could've relied on if I wanted to have savings.I've been working remotely full-time as a project manager for eight months or so. I've found that working nine-to-five for a company is pretty great. I don't have to constantly go out and hustle. Everything is set — I have benefits and my laptop is provided.In the beginning, I was driven to work remotely by my curiosity of what it could be like to try a different structure outside of what I had grown accustomed to in Toronto, and by the difference in cost of living.I remember being so excited in 2016 that my rent in Mexico was $200 a month. That opened my eyes to the fact that it's a possibility to actually live comfortably, because all I'd known were Toronto prices where rent now has to be at least 800 Canadian dollars a month.Toronto has become too pricey to live comfortablyMy motivation to work abroad has changed since 2016. This recent commitment to moving to and working in Colombia is because Toronto is too expensive.I have a condo in Toronto that I'm renting out to a tenant, but there's no way I'd be able to live there and have savings with all of the living expenses that come from Toronto's pricing. There's just no way.I bought my condo in 2019, right before COVID, for around CAD$500,000. It's a one bedroom in a new building. I had help from my parents and that's the only way that could ever exist in my name. Right now I'm renting it out and that covers the mortgage, so I'm not making much money from it.When dabbling in these other locations, I realized that everything was so cheap. Every time I would go to these places and come back to Canada, it just never made sense to continue being in Canada.Obviously I have property in Canada, but when I think about being able to afford the lifestyle that I live now in the future — based on the income that I'm currently making — I would not be able to match it in Canada.Tam said coworking spaces in Colombia only charge around $4 a day.Peggy Bree TamI pay about CAD$600 to CAD$700 a month for my apartment in Santa Marta. It's a pretty good sized space. There's two bedrooms, and I have a living room and a kitchen.There's no way that price could even be a thing in Downtown Toronto.Colombia offers me more adventure and financial freedomSometimes I feel so guilty for saying how cheap everything is in comparison, but everything is cheaper than in Canada to be honest: food, phone bill, internet, coworking space. It's like 20,000 Colombian pesos [about $4] a day to work at a coworking spot here, but in Canada I think that you would have to pay more than CAD$200 a month.I would say if you were to make $3,000 a month and live in Colombia, you'd be able to live like royalty.Because I'm able to afford my living expenses and my food, it makes everything else so enjoyable. I can go on weekend trips and not break my budget.I love that on weekends I can do random things. I can enjoy weekend trips that are uncommon. I don't think just anybody can say, "Oh, I went to Machu Picchu over the weekend." I just love those little adventures that I go on during weekends.Tam enjoying a weekend getaway to Manizales, Colombia.Peggy Bree TamI don't really see myself going back to Canada.Aside from being able to sustain myself monetarily, being able to really do good here in Colombia is another thing that reinforces my decision to stay here.There's a church here in Santa Marta that I'm helping build and that has definitely fulfilled many things in my heart, and that makes me want to stay even longer.I enjoy that I finally have somewhere I can live and not have to worry too much about spending. I'm able to just be comfortable.Read the original article on Business Insider.....»»
Bill Gates says "we need a fire department for pandemics" as he worries we"re unprepared for the next one
Microsoft co-founder Bill Gates has been outspoken on disease outbreaks. His charitable foundation donated more than $2 billion to tackle COVID-19. Bill Gates.Michael Loccisano/Getty Images Bill Gates wrote a New York Times op-ed Sunday warning about future pandemics. He supported the WHO's global health emergency corps, calling it a "fire department for pandemics." "We can't afford to get caught flat-footed again," Gates wrote. Bill Gates called for a "fire department for pandemics" as he warned that the world could be unprepared for the next one, in a New York Times op-ed published Sunday."We can't afford to get caught flat-footed again," Gates wrote in the essay three years since the World Health Organization first described COVID-19 as a pandemic. He said it "marked the culmination of a collective failure to prepare for pandemics, despite many warnings."The Microsoft co-founder has been outspoken on disease outbreaks for many years, delivering a TED talk in 2015 urging that a pandemic is "the greatest risk of global catastrophe." The Bill & Melinda Gates Foundation says it donated more than $2 billion to the global COVID-19 response since January 2020, and last May, Gates published the book "How to Prevent the Next Pandemic."A 2021 study from the Proceedings of the National Academy of Sciences, which analyzed outbreaks of infectious diseases over the past 400 years, found that there's a 38% probability of a pandemic similar to COVID-19 occurring in a person's lifetime – and that this could double in coming decades."I worry that we're making the same mistakes again. The world hasn't done as much to get ready for the next pandemic as I'd hoped," Gates said in his Times essay.But he added he was "optimistic" about the global health emergency corps – a network of health leaders around the world designed to promote collaboration between different countries. Or as Gates puts it in the NYT: "Just as firefighters run drills to practice responding to a fire, the Emergency Corps plans to run drills to practice for outbreaks."First announced last October, it is part of a WHO strategy designed to be achieved by 2030. In a January report, the WHO said: "All countries should be able to call on a national professional network of trusted and trained national experts ... in order to prevent and be operationally ready to rapidly detect and respond to new health threats.""The Global Health Emergency Corps will represent massive progress toward a pandemic-free future," Gates wrote in the Times. "The question is whether we have the foresight to invest in that future now before it's too late."Read the original article on Business Insider.....»»
"Dr. Doom" economist Nouriel Roubini says the US banking system is in a dangerous position and the Fed can"t win no matter what it does with rates
"It's too late to find a solution that prevents a hard landing and prevents severe financial stresses," "Dr. Doom" economist Nouriel Roubini said. Nouriel RoubiniAP Images Banks are in a dangerous spot and a recession is foretold, according to Nouriel Roubini. The Fed is be torn between cutting rates to ease volatility and raising rates to fight inflation, he said. "It's too late to find a solution that prevents a hard landing and prevents severe financial stresses." The US banking system is in a dangerous position, and the Fed can't win no matter what it does with interest rates, according to "Dr. Doom" economist Nouriel Roubini.Roubini, who predicted the 2008 recession and is known for his gloom-and-doom prognostications on Wall Street, warned of trouble stemming from the recent collapse of Silicon Valley Bank, which has sparked fears of a banking crisis."It's an extremely dangerous moment, because there's now significant stress in some parts of the US banking system at a time when inflation is still too high," the top economist said in an interview with Bloomberg TV on Friday.That leaves central bankers in a lose-lose situation, he said, as the Fed is torn between fighting inflation, which it does by raising interest rates, or lowering financial volatility, which it can do by easing rates. Raising rates higher could spark more instability by shaking the banking system, but lowering rates in response to the turmoil could cause inflation to spiral out of hand again, leading to a stagflationary crisis, he warned."In some sense, the central banks now are damned if they do, damned if they don't," Roubini said. That dilemma, combined with mounting debt levels, makes the US bound for a recession, he added. Known as a "permabear" on Wall Street, he has been warning for months of a downturn and a stagflationary-debt crisis, and previously predicted that stocks could plunge another 30% as the US battles high inflation, sluggish growth, and debt problems that rival the 2008 crisis."I think whatever they do, they're going to end up in trouble. Because at this point, it's too late to find a solution that prevents a hard landing and prevents severe financial stresses," he added.That echoes the view of other commentators, who say a recession and more stock market pain are foretold. DataTrek co-founder Nicholas Colas told Insider he expected a downturn over the next year, and "Bond King" Jeff Gundlach said he saw a downturn coming over the next four months, pointing to a troublesome indicator in the US Treasury yield curve.Markets are expecting the Fed to issue another 25-basis-point rate hike at their next policy meeting this week, before pausing monetary tightening efforts and cutting rates later in the year.Central bankers have already raised interest rates 450 basis points over the last year to fight inflation, a move that threatens to push the US into recession and is partly responsible for the stark losses seen at SVB and other US banks, experts say.Read the original article on Business Insider.....»»
An airline has offered passengers counseling after a flight was diverted when it was hit by "severe wind-speeds" and high turbulence
TUI has offered all passengers on board a diverted flight from Tenerife to Manchester counseling from the Centre for Crisis Psychology. TUI Airlines Belgium Boeing 737-800 aircraft as seen departing from Eindhoven Airport. TUI has offered passengers on board a diverted flight counseling.Nicolas Economou/Getty Images TUI has offered counseling to passengers on board a diverted flight, per an airline spokesperson. The flight from Tenerife to Manchester was hit by "severe wind-speeds" during its descent. One passenger told Manchester Evening News people on board were "screaming" and "crying." Airline TUI has offered all passengers on board a diverted flight from Tenerife to Manchester counseling after the plane was hit by "severe wind-speeds," an airline spokesperson told Insider.The March 9 flight was diverted to East Midlands Airport – 80 miles away from Manchester airport in central and northwest England – after it was caught in the severe weather during its approach to Manchester airport, the airline confirmed. Passengers were "screaming" and "crying" during the incident, one traveler on board the flight, Gareth Slater, told Manchester Evening News.Slater told the local news outlet: "People were panicking, babies were screaming, women were crying. There were some young girls behind us in floods of tears."I was saying my prayers, to be honest. I didn't think I'd see my family again. It was just awful."The TUI spokesperson called the incident "rare" and said passenger's "safety was never compromised."They continued: "Once safely landed, the pilot entered the cabin and updated passengers as to what had happened, and ground transportation was arranged for them to continue on to Manchester that evening, although we apologize if there were any further delays with the arranged transportation."TUI has offered all those on the plane counseling from CCP (Centre for Crisis Psychology) should they need it," they said. The CCP specializes in trauma aftercare. Earlier this month, a Lufthansa flight from Austin to Frankfurt was forced to make an emergency landing after severe turbulence. At least seven passengers on board the flight were injured and sent to the hospital as a result of the turbulence, according to Metropolitan Washington Airports Authority.Read the original article on Business Insider.....»»
The 2023 spring equinox is here — here"s what it is and how it works
The spring equinox takes place on March 20, 2023. Here's how Earth and the sun align to cause the celestial event, and what it means. Earth is a like 7,917-mile-wide rotisserie chicken.NASA/Flickr The vernal or spring equinox of 2023 happens Monday, March 20. Equinoxes occur when Earth's tilted axis is perpendicular to the sun's rays. During an equinox at Earth's equator, the sun appears almost directly overhead. The year's spring equinox, also called the March or vernal equinox, falls on Monday March 20, at 5:24 p.m. EDT.To people who live in Earth's northern hemisphere, this astronomical event signals the arrival of spring, winter's end, and the increasingly warm and brighter days that come with the pending arrival of summer.For those in the southern hemisphere, though, fall will arrive: The days grow shorter, the weather cools, and the sunlight grows dimmer as winter approaches.What drives this all-important seasonal clock?Technically, two things: Earth's tilted axis and the planet's orbit around the sun.How the spring equinox worksThe Earth orbits the sun once every 365 days and six hours. Our planet also rotates once per day around a tilted axis.That tilt is about 23.5 degrees (for now) and bathes different parts of the world with various intensities of light over the course of a year. Meanwhile, the planet's rotation keeps the heating even, like a 7,917-mile-wide rotisserie chicken made of rock and a little water.Earth's rotation does not cause equinoxes. The spring equinox occurs when the sun's warming rays line up perpendicular to Earth's axial tilt:An illustration of the spring equinox.Shayanne Gal/Business InsiderIf you stand directly on the equator at noon in the Eastern Time time zone at noon, the sun will appear more or less directly overhead. Your shadow will also be at its absolute minimum.The sun also sets and rises roughly 12 hours apart during the equinox.But this moment won't last as the Earth makes its way around the sun at a speed of roughly 66,600 mph.Our planet's orbit is elliptical and its center of gravity slightly offset from the sun, so the time it takes to cycle through the seasons isn't perfectly divvied up.About 92 days and 19 hours after the spring equinox, the Earth will reach its summer solstice. Another 93 days and six hours later, the fall or autumnal equinox will occur.An illustration of the spring and fall equinox and the summer and winter solstice.Shayanne Gal/Business InsiderSome satellites fly around Earth in a geosynchronous orbit, which means they move fast enough to hover above one spot on the planet.This creates a great opportunity to photograph the planet over the course of the year and see how the the angle of sun changes.NASA's Goddard Space Flight Center created the animation below using geosynchronous satellite images taken over Africa, and it clearly shows the seasonal progression:Equinox is the first day of spring, but not for meteorologists March 20 is officially the first day of spring, but meteorologists take a very different view of our seasons. For them, spring started on March 1.That's because the calendar seasons don't line up with the astronomical seasons. The coldest three months of the year, which start in December, usually end in late February in the Northern hemisphere. so it makes sense that meteorological spring should start at the beginning of March.Springing forward may mess with your headThough most of us will be looking forward to the warming weather, spring is also associated with the dreaded daylight-savings time, which happened on March 12 in the US. Research has previously shown that heart attacks, strokes, and fatal car crashes all spike around the start of the time shift.It may come down to our sleep rhythms, our body is shocked by even an hour's difference in its sleep schedule, and that may make us more prone to deadly mistakes, Insider previously reported. A recent YouGov survey found 62% of Americans would rather drop daylight saving time. What about the egg-balancing trick?A stock image of a man balancing an egg on his finger. There is a myth that its easier to balance an egg on its tip on equinox.Adriana Duduleanu / EyeEm/Getty ImagesYou may hear people saying that it's possible to balance an egg on its end on equinox because of the way it is positioned in relation to the sun.Spoiler alert: it is a myth.You can balance an egg any old time you want, thanks to very small pores in its shell.Those pores create nearly invisible dimples in the shell upon which a (very, very) patient person can stand up the egg.And don't look for any gravitational interplay between Earth and the sun to help you out; it's far too weak to make a noticeable difference.This story was originally published on 6:19 p.m. EDT on March 19, 2018. Dave Mosher wrote a previous version of this article.Read the original article on Business Insider.....»»
Bitcoin soars to a 9-month high after Credit Suisse takeover fails to calm banking fears
Fundstrat said bitcoin's outperformance is a testament to its "outright resiliency" when you consider the failures of Signature Bank and Silvergate. Bitcoin.Photo by Getty ImagesBitcoin hit a nine-month high before reversing on Monday amid fears of an ongoing banking crisis.Credit Suisse was acquired by UBS in a deal that was essentially forced by the Swiss government.Amid a slew of bank failures, bitcoin's attributes are front and center as bulls talk up the benefits of a decentralized currency.Bitcoin surged as much as 4% on Monday amid fears of an ongoing banking crisis that started with the downfall of Silicon Valley Bank earlier this month and has now led to the takeover of Credit Suisse by UBS.The price hit its highest level in nine months in early trading, nearing the $30,000 mark which is set to represent a key resistance level as traders assess whether the banking crisis will spread or if it's fully contained. Bitcoin later gave up gains and turned negative.Still, the decentralized cryptocurrency appears to have finally found its time to shine as many of its long-talked-about attributes are front and center amid a run on banks and interventions by governments and central banks to instill confidence in global finance.The abrupt FDIC takeover of Silicon Valley Bank highlighted this dynamic, and it was on full display again over the weekend after the Swiss government essentially forced UBS to acquire Credit Suisse for just over $3 billion, with the government changing the law so shareholders were not required to vote on and approve the deal.The deal also wiped out $17 billion of additional tier 1 bond holders in an unprecedented move, given that equity holders were not fully wiped out in the deal.Since the FDIC took over Silicon Valley Bank on March 10, bitcoin has surged 42%, and it's up 63% from its mid-November low of about $15,500. "The strengthening correlation between bitcoin and gold, coupled with the ongoing banking crisis, suggests that some investors may be turning to bitcoin as an alternative investment," Fundstrat's head of digital assets Sean Farrell said on Friday.Fundstrat's Tom Lee said bitcoin's strong outperformance so far in 2023 is a testament to its "outright resiliency," especially when you consider the recent failures of FTX, Signature Bank, and Silvergate Capital."Despite this bitcoin is seeing accelerated gains. If this does not speak to the protocols resilience, I am not sure what does," Lee said on Monday. He recommended investors stay overweight the cryptocurrency.But Fairlead Strategies' Katie Stockton is waiting for more signs of support above the $25,000 level before turning more bullish on bitcoin. "A breakout would require consecutive weekly 'closes' above resistance and would complete a basing phase in a bullish long-term development. Next resistance is a nearby zone of $27,300 to $28,200... We would await confirmation before assuming a more bullish bias," Stockton told Insider on Friday. Read the original article on Business Insider.....»»
US stocks trade mixed as investors assess banking turmoil after UBS takeover of Credit Suisse
Regional bank shares remained under pressure as investors eye further contagion risk. First Republic stock fell after its credit rating was slashed again. Photo by TIMOTHY A. CLARY/AFP via Getty Images) US stocks were mixed as traders assess the impact of UBS' takeover of Credit Suisse. First Republic Bank fell 16% as S&P Global cut its credit rating yet again. Morgan Stanley's Mike Wilson said bank turmoil marks the start of a "vicious" end to the bear market. US stocks were mostly higher on Monday following a takeover deal of Credit Suisse by UBS over the weekend in an effort to calm concerns of a global banking crisis. On Sunday, UBS bought its smaller rival for $3.25 billion at the urging of regulators eager to shore up confidence in the country's banking system. "With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation," the Swiss National Bank said in a statement published Sunday afternoon.UBS stock was up 8% in the US, while Credit Suisse's US-listed shares dropped by 50% in morning trades. In the US, shares of regional banks parred some losses as traders assessed contagion concerns after the collapse of Silicon Valley Bank earlier this month. First Republic Bank plunged 16% after the opening bell as S&P Global cut its credit rating yet again.Mike Wilson, a top strategist at Morgan Stanley, said the failure in the banking sector markets the start of a "vicious" end to the bear market for stocks. "This is exactly how bear markets end — an unforeseen catalyst that is obvious in hindsight forces market participants to acknowledge what has been right in front of them the entire time," Wilson wrote in a note to clients.Here's where US indexes stood shortly after 9:30 a.m. on Monday:S&P 500: 3,926.14, up 0.24%Dow Jones Industrial Average: 32,053.26, up 0.6% (191.28 points)Nasdaq Composite: 11,589.39, down 0.34%Here's what else is happening today:UBS is set to acquire Credit Suisse for $3.2 billion, but deal could make the banking crisis worse.Here are the biggest winners and losers of the historic Credit Suisse and UBS takeover deal. Wall Street's most famous trader told Insider what it was like at the New York Stock Exchange the day Silicon Valley Bank collapsed,In commodities, bonds and crypto:West Texas Intermediate crude oil fell 0.12% to $66.66 per barrel. Brent crude, oil's international benchmark, dropped 0.3% to $72.80.Gold rose 0.6% to $1,985.60 per ounce.The yield on the 10-year Treasury ticked up three basis points to 3.43%.Bitcoin rose 3.16% to $26,651, while ether jumped 1.86% to $1,744. Read the original article on Business Insider.....»»
Russia"s former president suggested firing a hypersonic missile at The Hague after Putin"s ICC arrest warrant: "Look carefully into the sky"
Dmitry Medvedev said NATO wouldn't retaliate even if Russia bombed the International Criminal Court following its arrest warrant for Putin. Former President Dmitry Medvedev during a meeting at the Kremlin, September 20, 2022, in Moscow, Russia.Getty Images Dmitry Medvedev suggested striking The Hague with a hypersonic missile in a furious post on Monday. It came after the International Criminal Court issued an arrest warrant for Russia's Vladimir Putin. Medvedev, who mocked the court, frequently offers vitriolic rhetoric about the war in Ukraine. Former Russian President Dmitry Medvedev has suggested striking the International Criminal Court (ICC) in The Hague with one of Russia's hypersonic missiles, days after it issued an arrest warrant for Russia's President Vladimir Putin.In a lengthy and furious Telegram post on Monday, Medvedev wrote: "It is quite possible to imagine a hypersonic missile being fired from the North Sea from a Russian ship at The Hague courthouse."The Putin loyalist also wrote mockingly about the court, suggesting that NATO would not retaliate because the court is "only a miserable international organization, not the population of a NATO country.""That's why they won't start a war either," he added. "They'll be afraid to."The Netherlands, where the court resides, is a NATO member state. A spokesperson for the ICC told Insider it does not comment on "alleged political statements."Medvedev also advised the court's judges to "look carefully into the sky."On Friday, the ICC issued an arrest warrant for Putin relating to the "unlawful deportation" of children from occupied areas of Ukraine.This came a day after the UN denounced the forced deportations as war crimes. In his post, Medvedev railed against the ICC, saying it is part of a toothless international legal order in the grip of a few "Anglo-Saxon" countries.The USA, China, India, and Russia are not current signatories to the Rome Statute, the ICC's founding treaty.Medvedev also claimed that the arrest warrant for Putin heralds the collapse of international law, calling it "a grim sunset of the whole system of international relations."While the US' own relationship with the ICC has been fraught, on Friday President Joe Biden said the arrest warrant for Putin was justified.Medvedev, who was once viewed by the West as a potential harbinger of Russian liberalism, has become one of its most vitriolic commentators, as Insider's Sinead Baker previously reported.In fact, his posts often go beyond the rhetoric offered by Putin himself.In January, Medvedev proposed stationing a Russian warship, also armed with hypersonic missiles, within striking distance of the mainland US.He has also made repeated dark hints at Russia's nuclear arsenal, claiming last year that NATO would not take action if Russia detonated a nuclear bomb in Ukraine. Read the original article on Business Insider.....»»
3 things plaguing Olaplex that have nothing to do with the hair loss lawsuit
Besides a hair-loss lawsuit, Olaplex faces challenges growing the brand, from getting into new salons to maintaining market share against rivals. Olaplex faces multiple challenges, from fending off competitors to getting more stylists to recommend its products to customers, TD Cowen analysts say.Insider Olaplex is facing a lawsuit from users claiming the products made their hair fall out. But the hair care brand faces challenges growing its business, analysts say. From fending off rivals to expanding distribution, here are other challenges that the brand faces. Olaplex is facing a lot of challenges — and not just legal ones.The hair care brand is defending itself against a lawsuit from a growing number of users who claim that the company's bond-building products damaged their hair. In some cases, they say, it even fell off in clumps. Olaplex maintains that its products are safe, and CEO JuE Wong has said that the complaints are "a fact of life" in the hair care industry.But even if the company successfully stands its ground, Olaplex has other things to worry about.Analysts at TD Cowen downgraded Olaplex's stock in a note Thursday to "market perform" from "outperform." The change happened roughly two weeks after Olaplex posted earnings below analysts' expectations and cut its sales outlook for 2023."We remain positive on the prospect of [Olaplex] building a brand with a full suite of products in haircare and the potential to venture into skincare," the TD analysts, led by Joanna Kim, wrote. "However, in the near term, the business is being reset, and we believe it will likely take some time for management's turn-around strategies to take hold," they added.Here are the three biggest challenges that Olaplex faces going forward, according to the analysts:Consumers are using less Olaplex — and more rival products are popping upHair salons are a key source of Olaplex purchases. Many people encounter the product for the first time when their stylist recommends it or uses it during an appointment. But in its latest earnings report, Olaplex said that many customers are spacing out their visits, leading to lower sales of the product through salons. The TD Cowen analysts said sales growth through salons is unlikely to match the 44% growth rate that the company posted last year.When customers are in the market for a treatment or product, they also have a wider range of bond-building products to choose from than they did a year or two ago, the analysts wrote. Alternatives to Olaplex include Redken's Acidic Bonding Concentrate Kit and L'Oréal Paris EverPure."We also think there are more choices in hair care now, and consumers' spend is spread across more options than last year."Olaplex is investing in sales and marketing campaigns to boost sales — a move that risks disappointing investors focused on the company's profitAs a young brand, Olaplex kept its marketing and sales budgets slim. "However, [Olaplex] is now recognizing the need to invest in marketing and sales to support growth," the TD Cowen analysts said. That investment could take multiple forms, from educating stylists and retailers about what each Olaplex product does, to bolstering its public relations team to respond to press coverage, CEO Wong said during the earnings call in February.The move could increase Olaplex's sales in the long run, the analysts said. But in the short term, the company will spend more on marketing, translating into a thinner profit margin.Olaplex needs to get into high-end salons to reach new customersOlaplex products are in about 15% of all US salons, the TD Cowen analysts write. That leaves the brand plenty of room to expand, including into high-end salons with clients willing to spend more.Olaplex's products are "prestige," a term the beauty industry uses to describe items that sell for more than drugstore brands. A full set of Olaplex products costs $240 on the company's website.With that high pricepoint, "we think the next leg of growth in salons will likely come from penetrating premium salons," the analysts wrote.Read the original article on Business Insider.....»»
Millions of student-loan borrowers will experience "devastating" delays in debt relief if a GOP proposal to cut spending goes through, Biden"s Education Secretary says
Student-loan borrowers would see "decreased service hours and longer turnaround times" with debt relief under GOP spending cuts, Sec. Cardona said. U.S. President Joe Biden, joined by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC.Alex Wong/Getty Images Rep. Rosa DeLauro asked all federal agency heads how GOP spending cut proposals would impact them. The agencies responded on Monday, with Education Sec. Miguel Cardona outlining the "devastating" impact the cuts would have on student-loan borrowers. He said the cuts would delay student-debt relief and make it even harder to get customer service help. Federal agencies are responding to a Republican plan to cut spending levels — and its impacts don't look pretty.In January, House Appropriations Committee Ranking Member Rosa DeLauro wrote to all federal agency heads asking how a Republican plan to cap fiscal year 2024 spending at the 2022 level would impact their agencies and the Americans they serve. On Monday, the agencies responded. House Appropriations Committee Ranking Member Rosa DeLauro said in a statement that Republican proposals to cut spending on federal programs would "cause irreparable damage to our communities by gutting the programs every single American relies on. Those proposals are unrealistic, unsustainable, and unconscionable.""Continued Republican calls for cuts of this magnitude—both secret proposals from Republican leadership and public demands from extremists in the party—would be absolutely detrimental to all Americans, many of whom have not seen a pay raise in years and are struggling to pay their bills," DeLauro added. "The math is not there. These drastic cuts would put people at risk."Education Secretary Miguel Cardona, in his response, elaborated on the "devastating effects" the GOP proposal would have on students and parents who rely on financial aid — especially student-loan borrowers. He noted that while specifics of the Republican plan have yet to be publicly released, the Education Department analyzed the impacts of capping programs at the fiscal year 2022 level, and 22% below the currently enacted level for fiscal year 2023.Cardona said the impacts of the decreased spending would be significant when it comes to administering financial aid. A 22% spending reduction would cut $468 million to service financial aid, and if funding were kept at the 2022 level, "more than 40 million student loan borrowers would be impacted through decreased service hours and longer turnaround times to make changes to student loan repayment plans, or obtain a deferment, forbearance, or discharge of student loans."He added that 17.6 million parents and students who apply for financial aid could experience "multiple-hour wait times and reduced call center hours," and applications for loans could take "weeks longer to process." Student-loan borrowers are already faced with hours-long wait times to get simple questions answered from the companies that service their loans. With Biden's broad plan to cancel student debt stalled as the Supreme Court makes a final decision on the legality of the relief, borrowers have had questions on what the relief means for their repayment. One borrower, for example, recently told Insider that "no one is taking the time to help me or to listen to me," causing her to spend hours emailing and calling federal agencies to get help with repayment.Still, Democrats are waiting for a concrete plan from the opposing party on what type of spending cuts they want to see in a potential deal to raise the debt ceiling and keep the US on top of paying its bills, so it's unclear how exactly the Education Department will be impacted by any forthcoming cuts. But the agency already has a lot on its plate with minimal resources, given Congress approved a budget last year that did not increase Federal Student Aid's funding. Biden's recently released budget requested a funding increase for the agency to help facilitate a smooth transition to repayment for borrowers this year, but it's not likely to be approved by a GOP-led House.Read the original article on Business Insider.....»»
Auto expert says Tesla"s Model Y battery pack has "zero repairability," so a minor collision can junk the car
EV batteries bring all sorts of challenges when they get damaged after accidents. One expert says Tesla customers are especially at risk. Auto manufacturing expert Sandy Munro said the Tesla Model Y battery pack has "zero repairability."Tesla EV batteries can be hard to repair after accidents, so many often get scrapped. One expert said Tesla is especially at risk. Its Model Y battery pack goes "straight to the grinder" after an accident, he said. Tesla's revolutionary Model Y battery pack has a major flaw that means it has "zero repairability" after a collision, according to auto expert Sandy Munro.EV batteries can bring all sorts of challenges when they get damaged after accidents. It's difficult to repair and even assess them. Insurance companies are forced to write off even low-mileage EVs, raising insurance premiums in the process. Oftentimes, these batteries pile up in scrap yards — the opposite environmental result that should come from going electric. And they might not even be unsalvageable. But according to a Reuters report, Tesla customers are especially at risk."A Tesla structural battery pack is going straight to the grinder," Munro, a manufacturing expert known for his vehicle teardowns, told Reuters.Tesla did not immediately respond to a request for comment. Tesla also did not respond to Reuters' request for comment.It's hard to say exactly the extent to which this is happening with Teslas, and EVs overall, given they only account for a relatively small percentage of the global vehicle market. But this possibility could be a major turnoff to drivers considering electric.That's part of why automakers like Ford and GM have said they're making their battery packs easier to fix. And it's especially important as EV battery replacements could cost as much as $10,000 to $15,000. A Model 3 replacement might cost up to $20,000, Reuters reported. Tesla's approach has been a structural battery pack, which has largely been hailed as revolutionary. It means the pack, chock-full of large 4680 cells, is part of the vehicle's body. While that has helped Tesla cut production costs, there can be more risk to consumers and insurers, as it cannot be removed or replaced easily, per Reuters. Reuters cited experts that said Tesla and other automakers need to prioritize more easily repairable battery packs — and allow others access to battery cell data for repairs. That access to data, especially, has been debated as more EVs hit the roads. Reuters reported that insurers, leasing companies, and car repair shops have been battling auto companies for access to diagnostic data, without which firms have to write off potentially damaged EVs. Read the original article on Business Insider.....»»
UBS"s takeover of Credit Suisse has investors divided over the Fed"s next move. Here"s what the $3 billion deal could mean for US interest rates.
Goldman Sachs has ruled out an interest-rate hike by the Federal Reserve at its Wednesday meeting, citing "banking stress." The logo of Swiss banking giant Credit Suisse is seen on October 17, 2017 in Zurich.Fabrice Coffrini/AFP/Getty Images) UBS announced a $3.25 billion takeover deal of the beleaguered Credit Suisse on Sunday. The move builds on a spreading banking crisis, which has already seen the implosions of Silicon Valley Bank and Signature Bank. Investors are now keeping their eyes peeled as to what this means for the Federal Reserve's next interest-rate decision. March has been a tumultuous month for financial markets, and it's not over yet. The most anticipated event of the month is almost here – the Federal Reserve's monetary policy decision. On Wednesday, Chair Jerome Powell is expected to announce the central bank's next interest-rate move, following a 25-basis-point increase in February and 50-basis-points hike before that to cool inflation. At a March 7 meeting, Powell delivered a hawkish testimony where he indicated the Fed was prepared to keep tightening policy as inflation remained stubbornly high and a string of economic data suggested the US economy was too hot. It spurred investors to boost bets for a 50-basis point rate hike this month. Banking turmoilHowever, such expectations have since been swept aside by spreading turmoil across the global banking sector. On Sunday, UBS announced a $3.25 billion takeover deal of Credit Suisse as part of efforts to contain the crisis. That was followed by joint action from six major central banks to bolster market confidence via fresh measures to ensure easy funding conditions. The deal to rescue Credit Suisse follows the implosion of several US lenders, including Silicon Valley Bank, Signature Bank and Silvergate Capital, in recent weeks.Markets have now scaled back their rate-hike bets in light of the continuing banking jitters, now mostly anticipating a 25-basis-point increase or even a pause versus a 50-basis-point move expected earlier, according to the FedWatch Tool. Top voices like Elon Musk have also suggested the Fed could start cutting benchmark rates.The yield on the 2-year Treasury note has plunged almost 130 basis points since its March 8 highs, suggesting a U-turn in Fed rate expectations.Why would European bank woes affect Fed monetary policy? For the past many quarters, global central banks have been pursuing joint efforts to curb inflation by tightening monetary policy. While the aggressive rate increases have helped cool price pressures, they've also had some unwelcome side effects. They've dealt a blow to the stock market, the housing sector and now banking. A rapid rise in rates tends to hurt demand for loans, threatening banks' profitability. It can also reduce the value of investment assets held, as in the case of Silicon Valley Bank's bond portfolio. To raise rates or not to raise rates? "The Fed faces an intensified trilemma: how to simultaneously reduce inflation, maintain financial stability, and minimise the damage to growth and jobs. With financial stability concerns seemingly running counter to the need to tighten monetary policy to reduce high inflation, it is a situation that complicates this week's policy decision-making," said top economist Mohamed El-Erian in an Financial Times op-ed, adding that the central bank should avoid keeping rates unchanged and instead, hike them by 25 basis points. Meanwhile, Goldman Sachs has ruled out a Fed rate hike at this week's meeting, citing banking-system stress. JPMorgan's chief investment officer of fixed income, Bob Michele, echoed those views. He said the Sunday deal between UBS and Credit Suisse makes it less necessary for the Fed to tighten rates."I think the regulators in Europe, and Switzerland, and I think those in the US, when you circle back a week ago, responded with a speed we've never seen before and cut a lot of red tape and stopped this in its tracks… The Fed doesn't have to raise rates on Wednesday. The market's going to do the credit tightening for them," he told Bloomberg.Nobel Prize-winning economist Paul Krugman holds a similar view."The banking mess is, as far as I can tell, sufficient reason for the Fed to pause until we know more," he said in a tweet Monday.Read the original article on Business Insider.....»»