Highlights: Deutsche Bank stock had a short sell-off on Friday morning that dragged several US regional bank stocks lower. However, much of the losses were reversed and some even rallied later in the day. The S&P 500, Nasdaq, and Dow finished the week with gains of 1.4%, 1.6%, and 0.4% respectively.

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Yellen chairs closed US Financial Stability Oversight Council meeting (2 min read)
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US Treasury Secretary Janet Yellen calls for a private unscheduled Financial Stability Oversight Council (FSOC) meeting on Friday. The FSOC, led by the Treasury and including heads of other regulatory agencies, meets regularly to discuss US financial stability risks and oversight initiatives. The meeting comes amid global banking contagion fears spread, but no details on the meeting's subject were disclosed to the public. Yellen previously said regulators are prepared to safeguard uninsured bank deposits if failures threatened more deposit runs.

Bond Traders Bet Fed Will Cut Rates by June as Bank Stress Grows (4 min read)
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Despite Jerome Powell affirming no rate cuts this year, bond traders added to bets that the Fed will cut rates as soon as June. Global bonds rallied on Friday, with renewed concern over the banking sector spurring demand for safe assets and conviction that central banks will have to switch their focus to financial stability from inflation. Bank stocks also continued to fall after reports of Credit Suisse and UBS are among lenders under scrutiny in a US Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions.

Deutsche Bank is not the next Credit Suisse, analysts say as panic spreads (5 min read)
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Deutsche Bank stock fell on Friday after a spike in their cost of insuring against defaults and was caught in the panic of the European banking sector. However, many analysts were scratching their heads as to why Deutsche bank, which has posted 10 consecutive quarters of profit and has a robust capital and solvency position, has become the next target. The banking contagion concerns across Europe and the US continue to spread among investors and were deepened further by the Fed and other central banks’ decision to keep lifting rates higher.

Ford CEO: Tesla is going to see 'more price competition' in the EV market (2 min read)
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Ford CEO Jim Farley predicts that Tesla's profit margins will decline as more competition enters the market. He cites the recent price drop in Tesla's vehicles as evidence that more price competition will follow. Ford plans to cut costs and aims to achieve an 8% operating margin in its EV business by 2026. By comparison, Tesla's operating margin was 16.8% in 2022, an increase from 12.1% in the year prior. Analysts believe that Ford's success in EVs is crucial to driving its stock higher.

BBEU’s Mysterious Flows Dominance (2 min read)
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The JPMorgan BetaBuilders Europe ETF (BBEU) is the top US-listed ETF for inflows this year, despite being newer and more expensive than its main competitor, the Vanguard Europe ETF (VGK). After the major US market sell-off last year, many have suggested looking abroad, with Europe as a promising area. BBEU and VGK’s performance has moved in lockstep since both ETFs have the same top 10 holdings. A possible reason for BBEU’s lead in flows could be JPMorgan’s distribution network and its ability to cater to a far broader audience than Vanguard.

The Pros Fail to Meet the Moment With Bond ETFs (3 min read)
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Recent performance data suggests passive investing is still preferred in the bond ETF world. Only 50% of actively managed bond ETFs outperformed their respective indexes last year, and just 40% are beating them so far this year. Morningstar said that active bond ETFs may help tilt the odds compared to a mutual fund due to lower fees and tax efficiency, but more is needed. Furthermore, active bond ETFs are not necessarily cheaper as the average expense ratio for active bond ETFs is 0.49%, compared with 0.4% for bond mutual funds.

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Thanks,
Thomas

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