Squawk Box Europe Express

The U.S. Federal Reserve raises interest rates by 25bps and hints that the hiking cycle may be close to ending. A cautious Jerome Powell says that recent banking sector turmoil could trigger a credit crunch. U.S. Treasury Secretary Janet Yellen back-tracks on deposit backstops causing equities to plunge and banks to sell off. We also preview upcoming central bank moves at the Bank of England as the UK struggles to bring down inflation as well as at the SNB following the Credit Suisse collapse. In crypto news, the U.S. SEC accuses Coinbase of potential security violations. Bitcoin, however is touching on nine-month highs.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

U.S. markets receive a boost as bank stocks rally with Californian lender First Republic and others leading gains following a promise of protective measures from U.S. Treasury Secretary Janet Yellen. Investors now await today’s Fed rate decision as well as more assurances a potential wider banking crisis will be contained with markets pricing in a 25bps hike. S&P urge investors to reassess their risk tolerance to AT1 bonds following Credit Suisse’s $17bn bond wipeout. Meanwhile, UBS is reportedly moving to unwind Michael Klein’s majority share in First Boston. And in tech news, TikTok CEO Shou Zi Chew is to testify on Capitol Hill, insisting it is not a CCP agent.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Global banks enjoy a relief rally after UBS’s $30bn takeover of beleaguered Swiss rival Credit Suisse. We are live in Zurich for the latest. However, First Republic Bank sees shares plunge once more as news emerges that JP Morgan CEO Jamie Dimon is reportedly leading efforts to stabilise the Californian lender. Credit Suisse bondholders consider legal action against the Swiss state after the government wiped out all bondholders of AT1 debt. UBS’s sees its credit rating revised to ‘negative’ by Moody’s and S&P. In Paris, the government narrowly wins a vote of no-confidence which allows it to push through unpopular pension reforms. Prime minister Elisabeth Borne says the move will secure France’s economic health. In retail news, Amazon is to cut a further 9,000 jobs on fears of economic uncertainty.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

UBS agrees to buy Credit Suisse for CHF 3.2bn in a historic deal that Swiss authorities say was desperately needed to prevent the collapse of the country’s second largest lender. Additional Tier 1 bondholders will be wiped out and UBS will take on more than $5bn of losses. Some of the largest central banks have announced fresh liquidity measures to stem any further fallout. Asian equities are in the red while futures are mixed both in Europe and the U.S. First Republic Bank has its status cut to ‘junk’ by S&P and warns that a recent $30bn emergency deal may fall short.   See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

U.S. banks band together, propping up First Republic with a $30 billion rescue deal. Meanwhile, UBS and Credit Suisse reportedly oppose a government-orchestrated tie-up, as the Swiss lender insists its capital position hasn't changed. Wall Street rallies, with banking stocks posting their best day of the year - putting the S&P500 on track for its best weekly performance since January. Investor attention now turns to the Fed and its response to the banking sector turmoil, after the ECB hikes rates by 50 basis points. And protests erupt across France, as Emmanuel Macron exercises his presidential powers to push through his controversial pension reform plan - potentially opening himself up to an immediate vote of no confidence.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Credit Suisse takes a 50 billion franc lifeline from the Swiss National Bank as it looks to restore confidence in the lender, after shares plummet 24 percent. The Chairman of the Saudi National Bank tells CNBC there have been no talks about providing additional financial assistance to Credit Suisse, as he tries to firm up confidence in the embattled lender. European banks brace themselves after a bruising session - that saw the sector plunge 7%, the worst day since Russia invaded Ukraine. Oil recovers some ground after hitting its lowest level since December 2021, amid fears the banking crisis could dent global economic growth. Cracks in the global banking system cast doubt over the ECB's resolve, with market bets clouded on the likelihood of a 50 basis point hike today.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Contagion fears ease, sending global equity markets higher while U.S. core CPI tops estimates, putting more pressure on the Fed in the wake of the SVB collapse. China reports a rebound in consumer spending while real estate investment continues to lag as Beijing's post-covid year gets off to a mixed start. Meta continues its "year of efficiency" announcing another 10,000 layoffs, cancelling thousands of open positions, and stopping low priority projects. And the UK gears up for Chancellor Jeremy Hunt's first budget - expected to unveil key pension and childcare reforms, and push ahead with a controversial rise in corporation tax - which critics say will hit the recovery.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Japanese banks lead losses in Asian trade - as global financial stocks lose almost half a trillion dollars in market value in the wake of Silicon Valley Bank's collapse. U.S. banks post their worst day in three years as ratings agency Moody's places First Republic Bank and five other lenders on downgrade watch. Turmoil in the banking sector sparks a furious rally in U.S. government bonds with the 2-year Treasury yield seeing its biggest three-day decline since 1987. And U.S. measures to prop up the financial system drive bitcoin and other crypto assets higher, easing fears of the sector's exposure to SVB.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

U.S. regulators have promised to fully shield Silicon Valley Bank deposits in a bid to shore up the banking sector and calm contagion concerns after a second lender, Signature Bank, is shut down. U.S. futures spike on the news and Goldman Sachs predicts that the Federal Reserve will refrain from raising interest rates next week as a result. In the UK, potential bidders for SVB’s British arm are circling while Chancellor Jeremy Hunt says the government will work to minimise damage from the fallout. Saudi Aramco posts record full-year profits for 2022 of $161bn and announces it will be hiking its dividend.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wall Street’s top banks suffer a $50bn market cap wipeout following Silicon Valley Bank’s $2bn loss while shedding assets to cover deposit outflows. The rout has triggered contagion fears among those holding bond portfolios and has dragged U.S. indices firmly lower. The Dow is now on track to post its worst week in almost half a year. Asian equities are also down as a result. President Joe Biden unveils his $6.8tn budget blueprint but faces strong opposition from the GOP. Biden is due to hold talks with European Commission President Ursula Von Der Leyen in D.C. where European concerns about the IRA impact will be top of the agenda. In Beijing, President Xi Jinping is re-confirmed as leader for a historic third term. Former Shanghai party boss Li Qiang is expected to be named Premier later this weekend. And in Japan, the BoJ keeps interest rates and yield control policies in place as Haruhiko Kuroda bids farewell as governor. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at

U.S. Federal Reserve Chairman Jerome Powell reiterates his message that the central bank will speed up the pace of rate hikes should it deem it necessary. The jobs market data remains stubborn but Powell insists that March’s rate decision is not yet a foregone conclusion. In China, inflation has slowed to its slowest pace since last February on weaker consumer activity while factory deflation continues to a fifth consecutive month. Kazuo Ueda is approved as the new BoJ governor by the country’s parliament as the central bank attempts to end decades of ultra-loose monetary policy. In crypto news, lender Silvergate has announced it is closing down and returning deposits. And JP Morgan is to sue its former executive and ex-Barclays CEO Jes Staley for failing to disclose his ties with deceased convicted sex offender Jeffrey Epstein. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

U.S. Federal Reserve Chairman Jerome Powell warns of a return to a 50bps interest rate hike this month as the jobs market and inflation show little signs of cooling. U.S. indices plunge on Powell’s Senate warning with the Dow lower year-to-date while the 2- and 10-year yield inversion reaches its steepest rate in four decades. The White House has endorsed a bill proposed by a bipartisan group of senators which would allow the Biden administration to block foreign technology applications such as China’s Tik Tok which it could pose a potential national security threat. And on International Women’s Day, IMF Managing Director Kristalina Georgieva tells CNBC that female input is vital to solving today’s global economic problems. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

President Xi Jinping accuses the U.S. of hampering China’s development while Foreign Minister Qin Gang says the two nations could be on course for confrontation. January and February import and export data out of Beijing comes in weak as China’s exit from zero-Covid restrictions is hobbled by supply chain bottlenecks and slowdown concerns. BofA CEO Brian Moynihan and JP Morgan boss Jamie Dimon are both cautious about the U.S. economic forecast ahead of this week’s Congress testimonies by Federal Reserve Chair Jerome Powell. And Down Under, the RBA increases rates by 25bps but softens its forward guidance.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

China forecasts a more modest 5 per cent growth as it opens its annual National People’s Congress. Premier Li Keqiang praised the economy’s resilience amid a challenging global environment. Chinese stocks, however, are down but the rest of Asia is in the green following last week’s positive close on Wall Street. Harris Associates offloads its remaining Credit Suisse stake citing a lack of confidence in the lender’s new strategy, accusing it of burning through capital. And in tech news, UK chip maker ARM hopes to raise $8bn to reach a valuation of $50bn after opting to list in New York rather than London.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Chinese services activity in February surges to its fastest pace in six months ahead of the National People’s Congress where the CCP is set to tighten control over several key institutions. Atlanta Fed President Raphael Bostic supports a 25bps rate hike which bumps up U.S. indices while the 2-year Treasury bill to its highest level in a decade. At the G20 in New Delhi, India, U.S. Secretary of State Antony Blinken slams Moscow’s aggression following a brief meeting with his Russian counterpart Sergei Lavrov. It’s the first time the two have met in person since the invasion of Ukraine. Oil is on track for weekly gains but Saudi Aramco CEO Amin Nasser tells CNBC he is concerned about under-investment as Chinese demand returns.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Tesla held its annual investor day but Elon Musk’s Master Plan 3 fails to deliver specific details despite a pledge to halve assembly line costs. The EV maker’s shares fell in extended trading. The U.S. 10-year Treasury yield hits 4 per cent for the same time since November. Equities plunge as investors struggle to accept a persistently higher rate environment. Minneapolis Fed President Neel Kashkari says he is likely to keep pushing rates higher this spring. In Europe, markets are down and bond yields climb to multi-year high as Germany warns of rising inflation. We hear from Bundesbank President Joachim Nagel who says he expects the ECB to keep hiking rates over the coming months. In the UK, however, BoE Governor Andrew Bailey says further rate hikes are not a given. And in banking news, activist investors are demanding a vote at the HSBC AGM in May as they seek to spin off the lender’s successful Asian business units.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice

Chinese PMI data rises at its fastest pace in more than a decade, pushing Asian indices into positive territory. However, Wall Street finishes February in the red, its second negative month in three. The 10-year Treasury bill briefly nudges its highest rate since November on the back of stickier inflation concerns. Goldman Sachs’ investor day flops with CEO David Solomon suggesting a potential sale of parts of its consumer banking arm after mistakes were made. Spanish lender Santander is to return half of its profits to shareholders as it targets ROTE of up to 17 per cent as part of its new three-year strategy. Executive chairman Ana Botin tells CNBC higher rates have pushed the bank to deliver record FY profits. And we are live in Barcelona at Mobile World Congress where Cisco CEO Chuck Robbins tells us A.I. opportunities for telcos are limitless.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

UK Prime Minister Rishi Sunak seeks support for the new Northern Ireland Brexit trade agreement with the EU. We are live in Westminster for the latest. U.S. indices are up but still on track to record February in the red. Europe’s STOXX 600, however, surges, more than doubling the S&P 500’s return so far for 2023. Recruitment firm Adecco posts rising Q4 revenue but net profit is down 65 per cent. And in telco news, as Huawei spin-off Honor moves into the foldable smartphone market, we hear from EY CEO Carmine Di Sibio at Barcelona’s Mobile World Congress who says U.S. relations with China will continue deteriorating as firms seeks to move supply chains out of the country.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

U.S. indices suffered their worst week of the year so far following disappointing inflation data. Cleveland Federal Reserve President Loretta Mester tells CNBC that she will maintain her rate stance to help rein in price stability. Billionaire investor Warren Buffett defends share buybacks following criticism of the practice as Berkshire Hathaway posts a $23bn annual net loss. UK Prime Minister Rishi Sunak is to hold talks with European Commission President Ursula Von Der Leyen today in a final bid to secure a new Brexit deal for Northern Ireland. German lender Commerzbank is due to relist on the DAX after a four-year absence to make way for then-rising star Wirecard.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Today marks the sombre one-year anniversary of Russia’s invasion of Ukraine. Leaders of G-7 nations and many others around the world pledge further support to Kyiv, condemning Moscow’s invasion. The S&P 500 is finally in the green following a four-day losing streak – its worst week of 2023 so far. JP Morgan CEO Jamie Dimon tells our colleagues Stateside that the Federal Reserve has lost some control over inflation and that interest rates could still hit 6 per cent. In Japan, inflation hits a 41-year high but incoming BoJ governor Kazuo Ueda believes it to be “appropriate” to maintain the country’s ultra-loose monetary policy. And in crypto news, former FTX CEO Sam Bankman-Fried faces several new federal charges including conspiring to make illegal political donations and banking fraud.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.