Highlights: The S&P 500 and Dow rose on Monday amid relief in banks after First Citizens BancShares agreed to buy the remaining assets, deposits, and loans of SVB. The tech-focused Nasdaq slipped as the Treasury yields had a rip-roaring start to the week after the St. Louis Fed talked up the potential of higher rates when many are betting on cuts later this year.

Commercial real estate is in trouble. Why you should be paying attention (5 min read)
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Economists are increasingly concerned about the $20 trillion commercial real estate (CRE) industry after decades of thriving growth bolstered by low rates and easy credit. Office and retail property valuations have been falling since the pandemic led to lower occupancy rates and changes in where people work and how they shop. Lending to CRE largely comes from small and mid-sized banks, where the pressure on liquidity has been most severe. Expert warns that banks’ massive exposure to CRE may impact banking stability and the larger economy.

Is the gold price sustainable at $2,000 as the short-squeeze runs its course? (4 min read)
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Gold's recent push above $2,000 was primarily driven by short covering, according to the latest data from the Commodity Futures Trading Commission (CFTC). However, some analysts suggested that the growing safe-haven interest amid the banking crisis could create sustainable bullish momentum in the price of gold. Although it’s not sure whether the Fed will hold or cut interest rates this year, it is also unlikely the central bank will continue to raise rates as the world deals with the early stages of banking turmoil.

First Citizens to Buy SVB After Biggest Failure Since 2008 (4 min read)

First Citizens BancShares has agreed to acquire Silicon Valley Bank in a deal that transforms it into one of the top 15 US banks. The acquisition comes after a run on deposits wiped out SVB in the largest US bank failure in over a decade. First Citizens will assume $56 billion in deposits, and 17 branches will begin operating as Silicon Valley Bank, a division of First Citizens. The deal could help to ease some of the turmoil that has engulfed the financial world, and regional bank shares rallied on the news, with First Citizens up more than 50%.

Winners And Losers Reveal The Market’s Flavor This Year: Nvidia Is Up, Pfizer Is Down (4 min read)

Nvidia, Meta, and Tesla are the best-performing stocks among the 167 US stocks with a market value of $100 billion or more this year, with gains ranging from 55% to 83%. Meanwhile, Pfizer, Bank of America, and ConocoPhillips are among the worst performers, with losses ranging from 16% to 21%. The winners are primarily expensive growth stocks in the technology sector, while the losers are more value-oriented. The author of this article favors the underdogs as they appear to be cheaper and likely to rebound. More on his reasonings are available in the article.

Treasury ETFs Spike as Investors Brace for Rate Cuts (3 min read)
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Despite Fed Chair Jerome Powell's statement of not cutting interest rates this year, data suggests that the central bank could begin lowering rates as early as June. The market is pricing in a sharp shift in Fed monetary policy and is anticipating a fourth bank to fall, which could finally convince the Fed to cut rates. This, in turn, has led to rate cut expectations boosting investors in Treasury ETFs, with the iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) being the top asset gatherers in March. 

Passive Funds’ Ownership of US Stocks Soars (3 min read)
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A recent report from Bloomberg shows that passive funds now own an average of 19% of shares in publicly traded US companies. The new figure is an increase from the 6% ownership a decade ago, reflecting the strong growth and performance of index-based strategies relative to active ones. The report also found that small and mid-caps dividend stocks have the largest ownership in passive funds. Despite the surge in passive funds ownership, individual stock share prices don’t appear to be affected most of the time.

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Thanks,
Thomas

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