My top 10 things to watch Monday, March 13
1. First Republic Bank (FRC) down 60% early Monday, leading bank stocks lower into the open. The overall market opens lower, the morning after regulators took extraordinary measures to protect depositors at failed Silicon Valley Bank, owned by SVB Financial (SIVB), and Signature Bank (SBNY).
2. Regulator action quells systemic risk from banks (an outcome I pushed before Sunday evening's announcement) that had deposit risk and duration risk in the bond portfolios. Money leaving stocks and piling into bonds and pushing yields lower. Fed interest rate hike at March meeting could be on hold.
Sign up for my Top 10 morning thoughts on the market email newsletter for free
3. Will all banks be worth less until we smoke out the ones that are in trouble? Arguably no, because the Fed has funding for all banks that made the mistake of being at the wrong part of the yield curve. Meaning they took too much durational risk at the time of Fed tightening. Bond prices move opposite yields.
4. First Republic down big as it needed special help to keep a run from destroying it. JPMorgan (JPM) helped save this one. FRC sees large deposit outflow because of huge mix of deposits over FDIC insured $250,000 level; and because they, too, lent against stock that hadn't yet IPO-ed.
5. Citi upgrades Charles Schwab (SCHW) to buy from neutral (hold) but lowers price target to $75 per share from $83. Believes cash sorting in place. I question this in that they apparently have more duration risk than others and might need the Fed help. Bank of America cuts SCHW price target to $60.
6. JPMorgan and its fortress balance sheet emerges as a winner in deposits fleeing smaller banks, say Wells Fargo analysts. Upgraded JPM to overweight from equal weight (buy from hold). Boosts price target to $155 per share from $148.
7. Even though depositors have now been covered, still seeing a pullback from the smaller banks anyway. JPMorgan shares, along with other major banks such as the Club's Wells Fargo (WFC) and Morgan Stanley (MS), are being dragged down as well.
8. Wells Fargo analysts upgrade Club holding Eli Lilly (LLY) to overweight from equal weight (buy from hold). Hikes price target to $375 per share from $360. Wells downgrades Merck (MRK) to equal weight from overweight (hold from buy). Cuts PT to $115 from $120.
9. Meta Platforms (META) looking at huge cost savings, perhaps as much as $1.1 billion, with another 13% headcount reduction.
10. Wolfe says feeling consumers less secure and Tesla (TSLA) already cutting prices, so moves to peer perform from outperform (hold from buy).
(Jim Cramer's Charitable Trust is long WFC, LLY, MS, META. See here for a full list of the stocks.)
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.
THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
