Silicon Valley Financial institution’s collapse was the second-biggest financial institution failure in U.S. historical past when it comes to property. Deposits on the tech-focused lender’s dad or mum,
SVB Monetary Group,
SIVB -60.41%
had declined in three consecutive quarters and the state of affairs worsened on March 9 when shoppers tried to withdraw $42 billion.
SVB Monetary deposits, quarterly web change
Inflows turned
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to outflows within the
previous 12 months as shoppers
burned money amid
the tech slowdown.
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$42 billion
in tried
withdrawals
on March 9
Advertisement
Inflows turned
to outflows within the
previous 12 months as shoppers
burned money amid
Advertisement
the tech slowdown.
$42 billion
in tried
withdrawals
Advertisement
on March 9
Inflows turned
to outflows within the
Advertisement
previous 12 months as shoppers
burned money amid
the tech slowdown.
$42 billion
Advertisement
in tried
withdrawals
on March 9
Advertisement
Inflows turned
to outflows as
shoppers burned
money amid the
tech slowdown.
Advertisement
$42 billion
in tried
withdrawals
on March 9
Advertisement
Inflows turned
to outflows as
shoppers burned
Advertisement
money amid the
tech slowdown.
$42 billion
in tried
Advertisement
withdrawals
on March 9
Advertisement
The Federal Deposit Insurance coverage Corp. took management of the financial institution, creating a brand new entity it referred to as the Deposit Insurance coverage Nationwide Financial institution of Santa Clara. The entire financial institution’s deposits have been transferred to the brand new financial institution, the regulator mentioned.
Insured depositors could have entry to their funds, the FDIC mentioned. Depositors with funds exceeding insurance coverage caps will get receivership certificates for his or her uninsured balances. The vast majority of SVB’s deposits are uninsured.
SVB was flooded with money through the pandemic tech increase—startups and their buyers had been taking in enormous sums, which swelled SVB’s coffers. SVB in flip used a variety of that cash to purchase Treasury bonds and mortgage-backed bonds.
However as rates of interest rose, these securities declined in worth.
That wasn’t an issue at first—SVB mentioned it could by no means promote the lion’s share of these bonds—a designation that meant it might ignore any losses from the declining worth. However in early March, it needed to resist the losses—the flood of withdrawal requests was greater than it might fulfill by promoting the bonds.
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Write to Peter Santilli at peter.santilli@wsj.com and James Benedict at james.benedict@wsj.com
Linda Chapman is about to close a chapter on her life as Finance Director in the city of Florence, a position she has held for the last 21 years.
She finished her last week, and though she is a little sad about leaving, a part of her is looking forward to the freedom that comes with not having to report to work at a certain time of the morning.
“This is the first time in years that I haven’t had to plan anything,” she said, looking over her desk full of papers, and computers with three screens. “From January to August things are really busy with taxes and the budget, then we have the property taxes in October, so I always took my vacation in November or December. I felt like this was the best time to retire, too.”
Chapman is from the west side of Cincinnati and she said the roots are strong there — “you never leave the west side.”
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Linda Chapman is finished with the city’s paperwork — she has retired after 21 years a Finance Director.
She attended McCauley high school and the University of Cincinnati and then became an accountant.
“I didn’t know what I wanted to do until my senior year in high school,” she said. “I always thought I would go into a dental or nursing field and I took classes that would help with those fields, but there were things I didn’t like about those fields. So I decided to go with numbers.”
She eventually found her way to Rankin and Rankin, where she worked for ten years, doing audits for different cities in the Northern Kentucky area.
It was while she was doing the June 30, 2002 audit for the city of Florence that she discovered a problem on the books.
“Things just didn’t add up,” she explained. “The numbers weren’t right.”
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Ron Epling had been the Finance Director for ten years at Florence, and Chapman knew him, so she worked the numbers over and over before she turned the evidence over to her boss at Rankin and Rankin, and the police brought charges against Epling for embezzling $4.9 million from the city.
Linda Chapman was hired as Finance Director in March of 2003.
“The embezzlement meant I started with a big mess,” she said. “The city was able to recover everything. It was bad, but it was up to me to come up with programs to install so that it never happened again. I put several safeguards in, and had to change all the systems over. It took about two years. So even though it was a big mess, it was a challenge for me, and I really like challenges.”
She said that the embezzlement was definitely the worst thing she had to deal with, but the result was the greatest satisfaction of her job, because she met the challenge and she fixed it. Governmental accounting is a special niche, she commented. Chapman said the people who work with her are very great to work with, the five ladies who work up front and her right hand man, Jason Cobb.
Through the years, she said she has had ups and downs, but her attitude is equanimical— most things ‘are what they are’ and she handles them with ease. Her philosophy is ‘one day at a time’, and she said she would come into work each day with the expectation of something good happening, something different, to make her smile.
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Without the job to come into, what does she want to do as the next step in her life?
“I have no clue,” Chapman said with a smile.
Her first idea is that she has yard work to do, as well as some gardening chores to take care of.
Gardening is one of her passions. Chapman has a large garden, the length of the side of her house, and garden boxes in the back of her house.
“I grow green beans, tomatoes, zucchini, peppers, cucumbers, and a lot more,” she said. “Gardening is my stress relief.”
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She is not a person who travels a lot. She likes to take her annual vacation to Pigeon Forge, an area she loves, but she has no sites she wants to see, like Mount Rushmore, or Hawaii.
“I don’t want to spend that much time in the air,” she explained about visiting Hawaii. “And I don’t want to go on a cruise. I can just picture me on a boat that becomes Titanic number two.”
Chapman has plans to go to Opryland for their Christmas extravaganza. Another passion she enjoys is Christmas.
“I am a big Christmas person,” she said, pointing to pictures of her decorated yard. “My yard isn’t that big, but I squeeze it all in.”
The lights and inflatables cover every available inch of yard, and she said it is such a glorious site people stop in front of the house to take it all in. It does take awhile to put it all up and take it all down, but she doesn’t mind.
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“Inside, I put up my tree at Halloween, and during the time while I hand out candy, I also decorate the tree,” she said, laughing. “I love my Christmas decorations!”
She also decorates her office, and her co-workers like to decorate, so that tradition will continue.
Chapman loves to do jigsaw puzzles, and she said her minimum puzzle is 1000 pieces. She showed pictures of her special setup for puzzles so she can concentrate on them and not lose any of the tiny pieces.
“I do a lot of puzzles, and one of the worst ones I have done was candy canes,” she pointed to a picture that showed a massive amount of striped candy canes. “Another one that was challenging was one with pictures of rolls of toilet paper. I finished it, though, even though it took about a month, and I had to get new lighting. I haven’t met a puzzle I haven’t finished yet.”
Chapman feels she has enough to keep her busy through the end of the year, but she understands that when January gets here, she might reach a point where she looks around and there is nothing to do.
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“I will still take it one day at a time, but I will be looking for different challenges, different things to fulfill me,” she said. “I have no doubt I will find things. I would like to get a better exercise regimen, to add to my walking.”
Chapman said her mom and dad live in the same area, and she has two brothers and a sister who live relatively close, so she knows she will be getting together with family a lot.
She always thought she might like to have a dog, but she hasn’t had one since she was a child, largely because she didn’t feel that she had the time that a dog requires, but she is now thinking about pet ownership.
“I figure I will take a breather, and then keep on keeping on, stay busy and keep my mind fresh,” she ventured. “I think it’s kind of exciting to see what’s going to develop out there. If something comes up, I can take advantage of being spontaneous. I am looking forward to it.”
Stocks traded mixed on Friday but closed the week on a high as investors embraced an inflation report seen as crucial to the Federal Reserve’s next decision on interest rate cuts.
The Dow Jones Industrial Average (^DJI) gained 0.3% and finished with a fresh record. The S&P 500 (^GSPC) lost 0.1%, but is coming off a record-high close from the prior session. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) sank about 0.4%.
Despite the mixed trading on Friday, the stock gauges all recorded wins for the week after confidence in the economy returned to the market. The Dow and the S&P added about 0.7%, while the Nasdaq rose 1%.
A solid GDP reading, combined with continued cooling in inflation, has cemented growing conviction that the Fed can nail a “soft landing” as it embarks on a rate-cutting campaign.
The August reading of the Personal Consumption Expenditures (PCE) index, the inflation metric favored by the Fed, showed continued cooling in price pressures. The “core” PCE index, which is most closely watched by policymakers, rose 0.1% month over month, lower than Wall Street forecasts.
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The PCE reading appeared to goose up bets on another jumbo-sized rate cut from the Fed next month. More than half of traders — around 52% — now expect a 50 basis point cut.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Elsewhere, China added to its stream of stimulus measures, boosting markets once again. Mainland stocks scored their biggest weekly win since 2008, and luxury stocks are set for their best week in years as hopes for Chinese demand rise. Meanwhile, shares of Alibaba (BABA, 9988.HK), JD.com (JD, 9618.HK), and Meituan (3690.HK, MPNGY) surged amid the buying spree.
Live13 updates
Dow closes with new record
Mixed trading on Friday still came with weekly wins as all three major gauges were in the green for the week. Investors appeared to welcome the latest inflation report that showed price pressures continuing to sink towards the Federal Reserve’s 2% target.
The Dow Jones Industrial Average (^DJI) gained 0.3% or more than 100 points to clinch a record close. The S&P 500 (^GSPC) lost 0.1%, but is only coming down from a fresh record of its own. The tech-heavy Nasdaq Composite (^IXIC) sank about 0.4%, but led the weekly wins overall, gaining 1%, compared to the S&P and the Dow’s 0.6%.
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Chip stocks close lower despite earlier gains
US chip stocks fell Friday after a week of ups and downs. The PHLX Semiconductor Index (^SOX) dropped nearly 1.8%, but remains up 4.3% from last week.
Micron (MU) fell down around 2.2% after skyrocketing Wednesday on its raised outlook for the upcoming quarter, fueled by AI demand. Micron was the first chipmaker to report financial results this earnings season, and its positive report raised fellow chip stocks such as Advanced Micro Devices (AMD).
Some negative news for Nvidia (NVDA) came when AI server maker Super Micro Computer (SMCI), one of Nvidia’s biggest customers, saw shares plummet Thursday after reports of a DOJ probe into alleged accounting violations. Bloomberg also reported Friday that the Chinese government is pressuring companies to buy AI chips within its borders rather than from Nvidia. Nvidia fell 2.2%, though analysts said there was no singular reason for the stock’s drop.
Daniel Newman, CEO of the Futurum Group, noted that semiconductors are a volatile industry. Nvidia stock has also been more volatile since its 10-for-1 stock split in June, Newman noted.
Bob O’Donnell, founder of TECHnalysis Research, said Nvidia and other chip companies still display strong fundamentals and will likely continue to perform at high levels. Newman noted that there is “strong optimism right now from the top leaders across the industry.”
A look at the week ahead
As a momentous September gives way to October, new jobs numbers will play a huge role in setting expectations for the days ahead.
The September jobs report, which is scheduled to arrive on Friday, will offer the latest snapshot of the labor market. Should unemployment come in line with expectations, that will likely paint the Fed in a favorable light, as central bankers decided to cut interest rates by 50 basis points. Their efforts to ease back a restrictive monetary policy were designed in part to protect a labor market that has cooled somewhat. If, however, jobs numbers come in worse than expected, the data will offer fuel to critics who have argued that the Fed acted too slowly in cutting rates.
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Fed Chair Jerome Powell is set to offer remarks ahead of the jobs report, on Monday, as investors look for signals on the central bank’s next move
On the corporate front, major names scheduled to report include Nike (NKE), Carnival (CCL) and Constellation Brands (STZ).
Yahoo Finance’s Brent Sanchez has a graphical breakdown of what to watch next week:
Zuckerberg faces deposition in AI copyright lawsuit from Sarah Silverman and other authors
One of the most important debates sparked over the sudden rise of generative AI tools is whether the process of training large language models using existing artistic works is a new form of copyright infringement.
An array of authors, media outlets and other creative professionals have sued to stop AI companies from using their content on the internet, arguing that their works are being used without compensation in order to advance a new technology and market opportunities.
Meta CEO Mark Zuckerberg will soon play a direct role in one of the most important lawsuits tackling this subject. Earlier this week a US District Court judge overseeing a suit brought by authors including Sarah Silverman and Ta-Nehisi Coates rejected Meta’s bid to prevent the deposition of Zuckerberg, the Associated Press reported Friday.
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Meta had tried to block Zuckerberg’s deposition by arguing that he does not have unique knowledge of the company’s AI operations and other Meta employees could provide the same information. Zuckerberg’s participation will likely draw even more attention to the legal matter, similar to his high-profile appearances on Capitol Hill during Congressional hearings on the role of social media in society.
New PCE reading supports case for smaller Fed rate cut in November
Change in core PCE since 2018
A fresh reading on inflation Friday keeps the Federal Reserve on track to continue cutting interest rates this fall, likely in 25 basis point increments, reports Yahoo Finance’s Jennifer Schonberger.
The result means that a bigger 50 basis point cut may be hard to justify at the Fed’s next meeting in November, according to some Fed watchers.
The fact that core inflation year-over-year is holding the level of the last two months, and not dropping, lines up more with a scenario for a smaller cut — lest the job market substantially weaken between now and November.
“The core year-over-year at 2.7% suggests that another round of 50 basis points needs to come under careful scrutiny unless the labor market suggests weakness,” said Quincy Krosby, chief global strategist for LPL Financial.
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The consensus among Fed officials outlined last week is for two more 25 basis point rate cuts in 2024.
Read more here
Proposed Biden Chinese car tech ban could cut US auto sales
Escalating economic tensions between the US and China could have further ramifications for the domestic auto industry.
On Friday the Commerce Department said a new proposal from the Biden administration to ban connected vehicles from China and key Chinese software in American cars could eat into US auto sales by more than 250,000 vehicles per year, as well as put pressure on prices to rise, Reuters reported.
US automakers and other companies selling to American consumers others “may be less competitive in the global market because of the relatively higher prices of their vehicles,” the department said.
As many as 25,841 fewer vehicles would be sold annually if the rule takes effect, the Commerce Department said, adding that $1.5 billion to $2.3 billion in vehicle inputs from Chinese or Russian companies would also be impacted by the proposal.
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The proposal would also require that American automakers eventually remove certain Chinese software and hardware from vehicles in the US.
Dow rises 250 points in afternoon trading
Stocks traded mixed on Friday after investors were greeted with a fresh inflation report that showed prices continue to cool. In another economics update, consumer sentiment slightly beat expectations in September, with a reading of 70.1 surpassing the 69.4 that economists had projected.
The S&P 500 (^GSPC) ticked just above the flatline after eking out a third record-high close this week. The Dow Jones Industrial Average (^DJI) gained 0.7%, or more than 250 points while the tech-heavy Nasdaq Composite (^IXIC) sank about 0.3%.
Stocks trending on Friday
Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Friday:
Costco (COST): Shares of the warehouse retailer sank more than 1% Friday morning after the company posted a mixed fourth-quarter earnings report. Revenue came in at $79.70 billion, falling slightly below the expected $79.96 billion. Meanwhile, US comparable sales, ex-gasoline and currency impacts, were better than analysts were expecting.
Cassava Sciences (SAVA): Shares of the biopharmaceutical company fell more than 10% after reaching a settlement with the US Securities and Exchange Commission over allegations that it advanced misleading claims about an Alzheimer’s clinical trial. The settlement amounts to over over $40 million
Bristol Myers Squibb (BMY): The pharmaceutical company rose 3% following news that the FDA approved its schizophrenia drug, making it the first new drug-related approach for patients of the disease in 30 years.
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Acadia (ACHC): Shares of the behavioral health facilities chain fell roughly 18% Friday after settling with the US Justice Department to resolve allegations it knowingly billed patients for medically unnecessary inpatient behavioral health services. The agreed to pay nearly $20 million.
Market bets rise for another jumbo rate cut
The latest encouraging reading of the Fed’s preferred inflation gauge has shifted market forecasts for the likelihood of another 50-basis-point interest-rate cut.
On Friday, the Personal Consumption Expenditures (PCE) index showed that prices in August increased at a slower pace than expected on a monthly basis. That impacted the debate over the Fed’s next policy rate decision, as central bankers move forward on winding down their tightening cycle.
After Friday’s inflation release, investors were pricing in a 54% chance of a 50-basis-point rate cut at the Fed’s November policy meeting. That compares with the 50% chance seen a week ago, per the CME FedWatch Tool.
If inflation continues to show signs of easing, that will likely pressure Fed officials to accelerate their plans to bring interest rates down, since elevated rates threaten the labor market and may lead to an economic slowdown that officials have thus far avoided.
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Costco’s stock slips, but its gold bars are selling like hot cakes
Costco (COST) is slinging a lot of gold bars as prices for the precious metal continue to surge, report Yahoo Finance’s Brooke DiPalma and Brian Sozzi.
Sales of gold were up “double digits” in the most recent quarter, the wholesale giant’s CFO Gary Millerchip told analysts on an earnings call Thursday evening. Millerchip added that gold was a “meaningful tailwind” to e-commerce sales in the quarter.
Costco began selling gold bars in the fall of 2023. Wells Fargo analysts have estimated the company is moving bars worth $100 million to $200 million each month.
On its website, Costco sells its 1 oz gold bar for $2,679.99. You have to be a member to buy the bullion. It’s also non-refundable, and there’s a limit of five total units per membership.
Despite the hefty sales of gold, Costco’s bread and butter is still hawking products like, well, bread and butter to cost-conscious shoppers.
Its fiscal fourth quarter, same-store sales growth came in at 6.9%, compared with estimates of 6.4% on Wall Street. E-commerce sales jumped 19.5%, slightly lower than the 19.63% growth rate analysts projected.
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Read more here
Stocks open higher as inflation measure shows more cooling
Stocks continued to build positive momentum on Friday morning as investors welcomed another update that showed price pressures easing. The encouraging inflation report spurred market expectations that the Federal Reserve may make another jumbo rate cut at its next policy meeting in November.
The S&P 500 (^GSPC) rose 0.1% after eking out a third record-high close this week. The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) each gained around 0.2%.
Intel stock edges up on news of CHIPS Act funding talks, reports of Arm offer
Intel (INTC) stock rose 1.8% in early trading Friday after the Financial Times reported that the chipmaker and the US government are on track to finalize $8.5 billion in CHIPS Act funding for the company by the end of the year.
Separately, Bloomberg reported that Arm Holdings (ARM) expressed interest in buying Intel’s product business.
The potential offer from Arm, the British chip designer with high-profile partners including Google (GOOG) and Apple (APPL), was rebuked by Intel, unnamed sources told Bloomberg.
Intel has also reportedly been approached by Qualcomm (QCOM) and investment manager Apollo to buy the company in its entirety. Intel shares have climbed on the news over the past week, but are still down more than 50% from the beginning of the year. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
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Rival Qualcomm floated a friendly takeover, according to the Wall Street Journal, but such a deal could face blowback from antitrust regulators. Analysts have also cast doubt on whether a Qualcomm takeover would make sense for Qualcomm or Intel financially.
Fed’s preferred inflation gauge shows prices increased less than Wall Street expected in August
The latest reading of the Fed’s preferred inflation gauge showed prices increased at a slower pace than expected on a monthly basis in August.
The “core” Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy, rose 0.1% from the prior month during August. The reading, which is closely watched by the Federal Reserve, came in below the 0.2% expected by Wall Street and the 0.2% seen in July.
Over the prior year, prices rose 2.7% in August, matching Wall Street’s expectations and topping the 2.6% rate seen in July.
Wall Street is digesting this morning’s release of the latest Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred measure of inflation. Meanwhile, Costco (COST) shares are under pressure following the wholesale retail giant’s latest quarterly results. Despite recent increases in membership fees, the company fell short of sales expectations. Yahoo Finance’s trending tickers include BlackBerry Limited (BB), SuperMicro Computer (SMCI), and Coinbase (COIN).
Key guests include: 9:05 a.m. ET : Tiffany Wilding, PIMCO Managing Director and Economist 9:30 a.m. ET Angelo Kourkafas, Edward Jones Senior Investment Strategist 10:15 a.m. ET Rich Lesser, BCG Global Chair 10:45 a.m. ET Stuart Kaiser, Citi Head of U.S. Equity Trading Strategy 11:30 a.m. ET Ed Hallen, Klaviyo Chief Product Officer & Co-Founder
/cdn.vox-cdn.com/uploads/chorus_asset/file/25637464/247282_Meta_Ray_Ban_ltd_edition_VPavic_0005.jpg "Welcome to Meta’s future, where everyone wears cameras")
