Sliding Into the Weekend

In this buzz: First Republic (FRC)and the $30 billion package aid; Credit Suisse relief rally; the Fed and, of course, Happy St. Patrick’s Day …

Stocks had their best day in months thanks to
– a rebound in First Republic (FRC) and
– the announcement of $54 billion in aid to Credit Suisse set off a relief rally in bank stocks.
11 banks, led by JPMorgan and Bank of America each injected at least $2.5 billion in deposits to FRC. The ✳$30 billion package, coordinated by ①the Fed, ②the Treasury and ③the FDIC resulted in FRC stock to swing from down 30% on the open to closing up 10% on the day.

Alas, the rally was fleeting as stocks open under pressure on St. Patrick’s Day. It seems investors are skeptical of CS’ strategic overhaul which is focused on restoring credibility and profitability after years of losses and scandals. The bank’s problems were a long time in the making so it’s fair that investors remain dubious that thing will turnaround on a dime, or even on $54 billion dollars’ worth of dimes.

The market is still on course to finish the week higher…
… as investors contemplate what the recent bank crisis means for the Fed’s policy meeting next week. Economists point out that every Fed tightening cycle tends to expose weakness in the economy. Investors are keen to learn ❗what impact the events of the last couple of weeks will have on Fed policy.