🍋 New "Too Big to Fail" Bank Dropped

US govt steps in to save the day.

Together With

“Does this mean I don't have to pay back Silicon Valley Bank?"— Ryan Cohen

Good Morning! It’s been a sleepy week for the finance world… just kidding. Silicon Valley Bank failed on Friday and the US government stepped in yesterday to prevent a banking contagion.

The Oscars were a welcome distraction, A24's science comedy "Everything Everywhere All at Once" swept the Academy Awards, taking home seven wins, including the best picture prize.

Americans are feeling even more sleep deprived this week after losing an hour to Daylight Saving - Congress is considering putting an end to the clock-changing tradition for good. Jobs growth climbed more than expected in February, but wage growth cooled. A new study found that many younger workers are hesitant to post about their job loss on professional platforms like LinkedIn due to the negative stigma that can come with layoffs.

And the once-coveted status symbol of having a personal assistant is becoming less common in the corporate world, as companies cut costs and technology automates mundane tasks.

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1. Story of the Day: New "Too Big to Fail" Bank Dropped

Silicon Valley Bank went from one of the top 20 commercial banks in the United States to defunct in a two-day span last week.

Over the weekend, Bill Ackman (and all of Twitter) rallied the US government to step in to prevent a nationwide run across the banking system.

And step in they did… on Sunday, federal banking regulators took aggressive new actions to prevent SVB depositors from losing money.

The actions, using tools last deployed in the early days of the pandemic and during the 2008 global financial crisis, are an attempt to avert a broad banking crisis triggered by a run on the bank.

Depositors will have access to all of their money starting today. In contrast to the 2008 bailout, no losses will be borne by the taxpayer, instead the bank-funded FDIC insurance fund will absorb any costs.

Meanwhile, President Biden has said that he is "firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again."

Takeaway: Silicon Valley Bank's troubles and ultimate failure sparked concern that other similarly-sized banks, including San Francisco-based First Republic Bank, could face the same fate. The actions taken to protect all deposits in two non-systemically important failed banks will likely have tremendous long-term implications for the US economy.

2. Markets Rundown

Stocks closed lower last week over SVB fallout concerns.

Movers & Shakers

  • (–) Charles Schwab ($SCHW) -12% after a broader investor selloff in financial companies with weaker deposit bases.

  • (–) Western Alliance ($WAL) -21% after SVB contagion concerns spooked the banks’ investors.

  • (–) Allbirds ($BIRD) -47% after the company missed Wall Street’s Q4 expectations and posted year-over-year sales decline

Private Dealmaking

  • Anthropic, a rival to OpenAI, is raising another $300 million 

  • Noema Pharma, a drug developer for nervous system disorders, raised $112 million

  • Macro, an entertainment production and agency firm, raised $90 million 

  • Ring Therapeutics, a gene therapy startup, raised $86.5 million

  • Homz, a developer of multi family rental housing, raised $50 million

  • Really, a wireless phone service startup, raised $18 million

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3. Top Reads

  • Newbie investors shying away from own research (YF)

  • HSBC pays £1 to rescue UK arm of Silicon Valley Bank (CNBC)

  • Why credit needs a golden anchor (ZH)

  • Workers worried about looming recession picking up more side gigs (YF)

  • How Silicon Valley turned on Silicon Valley Bank (YT)

  • US jobs growth remains strong despite rate hikes (BBC)

  • Regulators are auctioning off SVB (CNBC)

  • Why the SVB collapse will give consumers anxiety (Fox)

  • Behind SVB’s sudden rush for cash (Axios)

  • The investments that defied inflation in 2022 (ZH)

4. Shortform Book of the Day: The Price of Time

Read More Books, Faster - Shortform offers super-detailed guides to 1000+ books in categories like finance, careers, self-improvement, and more. Their comprehensive coverage and deep insights will give you the world's greatest ideas without the fluff.

There’s a secret in Silicon Valley. A discovery. An invention. One so startling and surprisingly sinister that it needs to be concealed—at any price.

Tim Tigner takes a step back from his bestselling Kyle Achilles series to introduce Zachary Chase and Skylar Fawkes in a fresh standalone novel that’s bound to keep you glued and guessing.

With secluded meetings, sudden disappearances and strange murders; secret agents, skillful assassins and sexy locations; The Price of Time is packed with fast-paced action and first-class intellectual intrigue.

Propelling the thrills and perched at the middle of the mystery is one of humanity’s great questions: Would finding the Fountain of Youth be a blessing?

Prepare for sleep-deprived nights and skipped chores while repeating the phrase: "Just one more page."

“Would your character change ... if you had all the money in the world? And all the time? Would you become a better person? Or worse?”

5. Short Squeez Picks

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6. Daily Visual: Median Duration of Unemployment

# of weeks

Source: Axios

7. Daily Acumen

At a recent event, the CEO of JP Morgan Chase, Jaime Dimon, offered three ideas worth thinking about.

1. "A lot of people are inefficient with E-mail, phone calls, reading. They are always hurried. They should be thoughtful about their calendar. They need to take care of themselves."

2. "Don't get into this binary thing where you're looking at Fox or CNN. Read the other side. Some of your fellow citizens have good reasons to believe something different than you do. I try to think sometimes about where are they right? Not are they wrong. You'll become a better thinker. And you earn peoples' respect. By telling the truth, being a team player. Team player doesn't mean you don't complain. It means you complain if we are doing something stupid."

3. "We have mentoring. Doesn't always mean the mentor will give you the best advice. I think people should seek out other people to learn from so you have a network of people that will give you feedback."

8. Memes of the Day

 

 

 

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