From a broad perspective, equities performed well on Monday. Much better than I would have expected to be honest, with the banking crisis anything but “fixed” and with an FOMC policy decision on the docket for tomorrow (Wednesday).
As for the banking crisis, it seemed that sectors far from the epicenter of the crisis saw some improvement as the Swiss government and Swiss National Bank sort of forced UBS Group ( UBS) and Credit Suisse ( CS) into a union, and as New York Community Bancorp ( NYBC) agreed to acquire a sizable chunk of Signature Bank ( SBNY) .
While those items are general positives, another quite important item has not worked according to plan. Shares of First Republic Bank ( FRC) took a 47% beating on Monday after S&P Global on Sunday downgraded the bank’s (already junk) credit rating from BB plus- to B plus.
This occurred despite, or in spite of last week’s $30B deposit made by 11 of First Republic’s competitors (including the large money-centers) in a failed attempt to shore up confidence in First Republic after the bank had seen some $70B in deposits withdrawn by customers year to date. First Republic had $176.4B in deposits on the books at year’s end. The Financial Times reported on Monday evening that First Republic bonds maturing in 2046 were trading at a rough $0.55 on the dollar.