Yesterday, in a sea of green, the Nasdaq 100 lost ground, about -0.7%, after having overperformed the previous sessions. The Dow Jones recovered 0.6%. At the same time, US bond yields rose, the dollar fell, and so did gold. Oil jumped and cryptocurrencies fell. Let's take a look at the mechanics at work behind these movements.

First, there has been an undeniable easing on the banking crisis front. The purchase of the assets of Silicon Valley Bank (a subsidiary of the now-defunct SVB Financial) by First Citizens has helped to improve confidence levels. Just to keep things a little speculative, First Citizens' stock rose 54% in the process, but let's just say that part of the fire is starting to be extinguished. Even the likes of First Republic and Comerica rebounded, by 12% and 5% respectively. In Europe, banks also breathed a sigh of relief yesterday, with the new-ex ugly duckling, Deutsche Bank, rebounding 6%. And today, shares of Swiss bank UBS were up more than 2% while Credit Suisse advanced more than 3%, after CEO Ralph Hamers said the bank considers this takeover of Credit Suisse as a growth opportunity, in an internal memo seen by Reuters.

Let's not kid ourselves, this kind of mess can't be solved in three weeks. But stability and confidence play a major role in the process, so the gauge of the undecorated optimists has gained a few points against the perennial doomsayers. This gauge was also reinforced by the publication on Monday of the speech that Fed vice-chairman Michael Barr is due to give to US lawmakers today. In it, he explained that institutions are doing what is necessary to guarantee deposits in the country. At the same time, it was hard to see him declaring that from now on, it's every man for himself. But it's better to say it.

The rebound in banks coincided with a strong rally in oil, which pulled up energy stocks. Traders talk about the unwinding of strategies at the end of the month, after a correction phase, which leads to a technical recovery. For lack of a better explanation, this one may be valid. At the same time, the reduction of the risk premium has caused safe havens like the dollar and gold to crumble.

Let's now turn to the two movements that may seem divergent in this context of easing. The outburst of weakness in cryptocurrencies is rather easy to justify: the CFTC, the US supervisory body for derivatives, has filed a complaint against Binance, asking for a ban on the marketing of certain products by the platform. The regulator accuses the company and its boss, Changpeng Zhao, of having set up a system to circumvent compliance rules. American authorities, overwhelmed by the agility of the sector, are going on the offensive. They are also promising other initiatives.

But what interests us most this morning is the rise in US bond yields, which has weighed on the performance of technology stocks. Let me remind you that access to abundant and cheap financing conditions is one of the main drivers of growth stocks. When rates rise, the Nasdaq suffers (-30% last year as the Fed lined up tightening measures). The rise in yields has coincided with a wave of calls for caution on the path of monetary policy. JPMorgan Chase's chief strategy officer thinks stocks are currently at the highest point of the year. His colleague at Morgan Stanley is no more optimistic when he expects a wave of downward earnings revisions. At BlackRock, they think that investors are kidding themselves if they think that the Fed will cut rates in the near future. That is, unless the banking crisis deepens and the spiral of "credit events" gets out of control. "Credit event" is the fancy term for "bankruptcy". In short, a bit of a comeback that weighed on the Nasdaq, which until yesterday I remind you was outperforming the Stoxx Europe 600 by 10% for the month of March alone.

Today, all three Wall Street indexes were slightly down in pre-market trading. Among the day's events, Christine Lagarde is scheduled to give a speech in Frankfurt, which she could use to get some messages across (probably on financial stability). There will also be a series of macroeconomic statistics in the United States, as well as the speech of Michael Barr on Capitol Hill, the content of which is already known.

 

Economic highlights of the day:

Four indicators in the United States today: wholesale inventories, the FHFA house price index and the Conference Board consumer confidence and Richmond Fed manufacturing indexes. All the agenda is here.

The dollar is slightly down to EUR 0.9226 and GBP 0.8120. The ounce of gold is losing ground, around 1965 dollars. North Sea Brent crude is worth USD 77.66 a barrel and US WTI light crude USD 72.78. The yield on 10-year US debt rebounds to 3.51%. Bitcoin is trading around 27,000 dollars.

 

In corporate news:

  • Lyft said Monday that founders Logan Green and John Zimmer would step down as CEO and chairman of the group, and that board member and Amazon alumnus David Risher would take over as CEO, as the ride-hailing company struggles to catch up with rival Uber. The stock gained 6% in pre-market trading.
  • Tesla - The U.S. federal highway safety agency, NHTSA, said Tuesday it was opening an investigation into 50,000 of Tesla's Model X vehicles after receiving two complaints of front seatbelt failures.
  • Virgin Orbit, billionaire Richard Branson's company, will extend unpaid leave for most of its employees as negotiations to find new funding continue, the group's chief executive said in an email to employees Monday. The stock is down 14.6 percent in premarket trading.
  • Alibaba - The New York-listed Chinese group's stock is up about 9.3 percent in premarket trading after Bloomberg reported that it plans to split its business into six units, each of which is considering fundraising or IPOs.
  • Boeing - The Canadian government said Monday that it has asked to study the possibility of buying 16 P-8A Poseidons to replace its fleet of CP-140 Aurora aircraft.
  • Albemarle - Australia's Liontown Resources said Tuesday it had rejected an offer from Albemarle, the world's largest lithium producer, valuing it at $3.7 billion. The group's stock is down 1.8% in pre-market trading.
  • Microsoft, Activision Blizzard - Japan's competition authority said Tuesday it did not expect the merger between the two groups to harm competition, paving the way for Microsoft to acquire the publisher of hit video games like Call of Duty for $69 billion.
  • Berkshire Hathaway increased its stake in Occidental Petroleum to about 23.6 percent after buying nearly 3.7 million additional shares, according to a document filed Monday with the Securities and Exchange Commission (SEC).
  • Pinterest will end leasing of some office space as part of a restructuring plan, the platform said Monday, which began a roughly 4 percent reduction in its workforce in February.
  • Alphabet asked a U.S. federal judge Monday to dismiss a Justice Department complaint that the group illegally abused its dominant position in the online advertising industry.
  • Nvidia presented new research that explains how artificial intelligence (AI) can be used to improve component design.

Analyst recommendations:

  • Barclays: JP Morgan sticks with Buy rating. The target price has been revised downwards and is now set at GBp 200 as compared to GBp 240 previously.
  • BioNTech: Jefferies maintained its Neutral recommendation. The target price is decreased from USD 230 to USD 145.
  • Carnival: Wells Fargo Securities upgrades to equal-weight from underweight. PT up 2.4% to $9.
  • Centamin: Liberum resumes coverage at sell targeting GBp 94.
  • FactSet: Raised to Neutral at Redburn
  • Marathon Petroleum: J.P. Morgan downgrades to neutral from overweight. PT up 16% to $149.