Here's what we are reading this morning:
From No Landing to Hard Landing – Apollo: A financial accident has happened, and we are going from no landing to a hard landing driven by tighter credit conditions, see chart below. Small banks account for 30% of all loans in the US economy, and regional and community banks are likely to now spend several quarters repairing their balance sheets. This likely means much tighter lending standards for firms and households even if the Fed would start cutting rates later this year.
Larry Fink CEO Letter | BlackRock: It does seem inevitable that some banks will now need to pull back on lending to shore up their balance sheets, and we’re likely to see stricter capital standards for banks.
Economy Shows Signs of Cooling After Hot Start to the Year - WSJ: A drop in retail sales and an easing of inflation pressures last month shows the economy may be cooling after a hot start to the year.
Silicon Valley Bank Collapse: A Timeline of the Panic - The New York Times: Silicon Valley Bank’s collapse led to the failure of a second bank and prompted regulators to move to contain the fallout in the U.S. banking system.
First Republic Hit With Four-Notch Credit Downgrade: S&P Global Ratings downgraded the bank’s rating by four notches to BB+ on Wednesday
Albany Catholic Diocese Files Bankruptcy to Address Abuse Claims: The Roman Catholic Diocese of Albany, which oversees church operations across parts of upstate New York, filed for Chapter 11 bankruptcy, saying it has been overwhelmed by hundreds of clergy abuse lawsuits.
SVB Financial explores bankruptcy as option for asset sales | Reuters: SVB Financial Group (SIVB.O), the company whose former subsidiary Silicon Valley Bank was taken over by U.S. banking regulators last week, is exploring seeking bankruptcy protection as one option for selling assets that include its investment bank and venture capital business, people familiar with the matter said.
Credit Suisse Default Swaps Reach Levels Near 2008 Financial Panic - Bloomberg: Banks that trade with Credit Suisse Group AG rushed to safeguard their exposure with the lender on Wednesday, snapping up contracts that will compensate them if the crisis rocking the Swiss lender deepens.
SEC Chairman Gensler Suggests Again That Proof-of-Stake Tokens Are Securities: Report: Speaking to reporters after a commission vote on Wednesday, Gensler said securities laws could be triggered because investors anticipate a return when they purchase tokens underpinned by a proof-of-stake consensus mechanism.
FTX Debtors File Schedules and Statements of Financial Affairs with Bankruptcy Court: The Schedules and SOFAs filed describe $3.2 billion in payments and loans to founders, chiefly from Alameda Research
First Republic Bank Weighs Options, Sale After Cut to Junk by S&P, Fitch - Bloomberg: First Republic Bank, the San Francisco-based lender that was cut to junk by S&P Global Ratings and Fitch Ratings on Wednesday, is exploring strategic options including a sale, according to people with knowledge of the matter.
Catholic Diocese of Albany Files for Bankruptcy to Resolve Sex-Abuse Lawsuits: Bishop says the diocese doesn’t have resources to compensate all survivors
Distressed Banks Resource Center - Gibson Dunn:
FTX Administrators Say Bankman-Fried Got $2.2 Billion Mainly From Alameda - Bloomberg: Founders and key employees of the collapsed FTX group of crypto firms received $3.2 billion in payments and loans, mainly from trading house Alameda Research, according to court filings.