This week ahead || Jun 19th - Jun 23rd 2023
Here's some key news articles for the week ahead.
Powell speaks, FedEx reports: What to know this week
Get ready for a pivotal week ahead in the stock market! As the rally continues, all eyes are on the Federal Reserve and its chair, Jay Powell, who will testify before Congress. In corporate news, FedEx's earnings report will shed light on economic activity. The market's attention also turns to economic indicators, including jobless claims and manufacturing data. While stocks have soared, concerns about a potential economic downturn in the second half of the year linger. Will the euphoria of the AI revolution and strong corporate earnings keep the market going, or are we on the brink of a turning point? Discover the insights and predictions that are driving the discussion on Wall Street. Read more on the website linked to this post to stay ahead of the curve.
SVB agrees to sell its investment banking division
SVB Financial Group has reached an agreement to sell its investment banking division, SVB Securities, to a group led by Jeff Leerink and supported by funds managed by The Baupost Group. The deal involves a combination of cash, repayment of an inter-company note, and a 5% equity instrument. The sale does not include MoffettNathanson LLC, SVB's research business, which will remain part of the company. The transaction follows the takeover of Silicon Valley Bank by the Federal Deposit Insurance Corporation (FDIC) in March due to a bank run. SVB Financial Group is evaluating strategic alternatives for its division SVB Capital and other assets and investments.
Blinken, Qin hold 'candid' talks, US and China agree to meet again
The U.S. Secretary of State, Antony Blinken, and the Chinese Foreign Minister, Qin Gang, held talks in China to discuss their differences on various issues, including Taiwan and trade. Both sides emphasized the need for stable relations but did not reach any significant agreements. China reiterated its stance on Taiwan, considering it the most important issue and greatest risk in bilateral relations. The talks were seen as an opportunity to establish communication channels and prevent the rivalry between the two countries from escalating into conflict. The visit was closely watched worldwide due to the potential global repercussions of any escalation between the superpowers. While the talks were described as candid and constructive, the specifics of future meetings and agreements were not clearly defined. Both sides expressed a desire to facilitate travel and exchanges between their citizens. The visit by Blinken is expected to lay the groundwork for further bilateral meetings and potential meetings between President Xi Jinping and President Joe Biden later in the year.
Investor skepticism turns to optimism as U.S. stock rally rolls on
The recent 15% rally in the S&P 500 has reversed the sentiment of many investors who were previously cautious about equities. The National Association of Active Investment Managers' exposure index reached its highest level since late 2021, while cash levels among global fund managers hit their lowest point since January 2022. Discretionary investors have also shifted their positioning above neutral levels for the first time since February. Options investors are buying more calls, indicating bets on upside in stocks, at levels not seen in years. The increasing optimism in the market is supported by factors such as the resilient U.S. economy and advancements in artificial intelligence. Some Wall Street banks, including Goldman Sachs, have raised their forecasts for the S&P 500, expecting further gains. However, some caution that sentiment should not become too extreme, and while optimism is healthy for bull markets, excessive levels can lead to trouble. History shows that stocks tend to continue rallying after a 20% rise above their lows. Some investors believe stocks are already overheated and express concerns about the rapid increase in sentiment. Others believe the rally has room to run, pointing to the broader participation of stocks and positive market dynamics.
