Highlights: The US banking sector grew increasingly optimistic after a group of major US banks said they would come together to aid the industry’s crisis. Investors are also betting on tech stocks, hoping the recent bank turmoil could push the Fed to shift to a lower rate hike next week. Despite the volatile week, all three US indexes are on track to end the week higher. 

ECB delivers huge interest rate hike despite banking sector "tensions" (2 min read)
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The European Central Bank (ECB) has increased interest rates by 0.5%, despite banking stress and financial market tension. Prices continue to rise rapidly across the European Union, with initial estimates showing inflation year-over-year at 8.5% in February, and core inflation hitting a record 5.6%. The ECB anticipates inflation will average 5.3% this year, and not fall close to its 2% target until 2025. The decision demonstrates the ECB's determination to tackle inflation aggressively, and the big question is whether the Fed will follow a similar path next week.

US banking system sound but not all deposits guaranteed, Yellen says (5 min read)
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US Treasury Secretary Janet Yellen said the US banking system remains sound and deposits are safe, but denied that all uninsured deposits were now guaranteed. This follows emergency measures taken to ensure depositors at the bank collapses last week did not suffer losses. Yellen stressed that banks would only receive emergency treatment if the Fed, FDIC, and herself decided that failing to protect uninsured depositors would create significant economic and financial consequences. The FDIC insurance limit of $250,000 per depositor remains in place.

Warren Buffett's Berkshire Hathaway spends close to $500 million on Occidental stock in 3 days (2 min read)
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A recent SEC filing revealed that Warren Buffett’s Berkshire Hathaway bought another 7.9 million shares of Occidental Petroleum since Monday as oil dipped. Along with the shares accumulated in the last 12 months, Berkshire now has a total stake of 208 million shares or 23.1% of the company. With approval from regulators in August to increase their Occidental ownership to 50%, Berkshire is likely not done building their stake. Chevon is another oil giant that Berkshire has a huge stake in, which might indicate they are bullish on the energy sector.

Bank shares rebound off lows as big banks consider coming to the aid of First Republic (2 min read)
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First Republic’s stock has plummeted nearly 75% since the collapse of SVB as many speculate it to be the next to fall. However, it reversed some of the losses and gained 10% on Thursday after 11 major US banks struck a rescue deal to pledge $30 billion in deposits. The news also pushed other regional bank stocks higher, which were also hammered this week but less severely than the First Republic. In addition to concerns about more failures, potential regulation changes and smaller deposit bases for mid-sized banks were also hurting regional bank stocks.

How Are ETF Dividends Taxed? (4 min read)
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ETF dividends are taxed primarily depending on the types of dividends that are distributed. For US investors, it comes in two forms, qualified and nonqualified. Qualified dividends are usually from ETFs that hold US-listed stocks and meet specific criteria set by the IRS. Nonqualified dividends are derived from REITs, foreign stocks, or bonds, and are taxed at a significantly higher rate. Investors should keep in mind that ETF dividends are not taxed while in a retirement account such as IRA or 401(K). More details on the tax implication are available in the article.

First Trust ETF Covers ‘Inflation Sensitive’ Equities (3 min read)

First Trust has launched the Bloomberg Inflation Sensitive Equity ETF (FTIF), which invests in equities from sectors that typically outperform during inflationary periods. The ETF’s underlying strategy starts with ranking US-listed companies based on inflation metrics from the energy, industrials, materials, and real estate sectors. It then selects the top 50 companies with the highest free-cash-flow yield over the trailing 12 months, capped at 20 stocks per sector. FTIF has an expense ratio of 0.6% and is listed on NYSE.

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Thomas

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