OPEC+ CUTS OIL PRODUCTION TO FOIL SPECULATORS
Oil prices are up after the Organization of the Petroleum Exporting Countries (OPEC+) decided to reduce oil production to ruin plans of speculators who bet that oil prices would fall. Oil prices have increased by about 20% from the low point in mid-March. OPEC+ hopes to drive short-sellers out of the market by increasing oil prices. Furthermore, some experts worry that the production cuts may increase inflation rates, but President Biden said the impact is likely not as bad as it seems.
CALM BEFORE THE STORM
JPMorgan strategist Marko Kolanovic believes that stocks will likely fall in the coming months due to the recent problems with banks, the rise in oil prices, and the decrease in economic growth. Despite no indication from the Fed that it will cut interest rates this year, risk assets have had an unprecedented rally, leading Kolanovic to believe that the market is soon to reverse its sentiment.
VIRGIN ORBIT FILES FOR BANKRUPTCY PROTECTION
Virgin Orbit, the space launch company, has filed for Chapter 11 bankruptcy protection after it failed to secure adequate funding to continue operating. This decision was expected as the company’s CEO, Dan Hart, had already informed employees that operations would cease indefinitely. The company stated that it will work on finding a buyer during the bankruptcy process in order to maximize its value.
CREDIT SUISSE CHAIRMAN APOLOGIZES
The Chairman of Credit Suisse, Axel Lehmann, apologized to stockholders for the bank’s inability to regain the public’s trust and for being unable to fix the bank’s issues. He expressed regret over their inability to address negative publicity and turn it around with positive news. Lehmann stated that the bank could not be saved despite efforts to manage the situation. The Swiss central bank affirmed that Credit Suisse could have failed if UBS had not bought it out in an emergency rescue last month. Before the meeting, shareholders and proxy advisors expressed their intention to vote against various board members, including Lehmann, indicating their dissatisfaction with the management of the bank.
ECB’S HOLZMANN PREDICTS HIGHER BORROWING COSTS
Robert Holzmann, member of the European Central Bank’s Governing Council, has stated that if the current problems in the banking system do not worsen, there may be another 0.5% increase in borrowing costs. Although the recent banking crisis, triggered by the collapse of Silicon Valley Bank, could make it harder for people to borrow money, Holzmann believes they should stick to their original plan. Moreover, Holzmann has commented that the sudden production cut announced by OPEC+ is unlikely to affect the future path. He thinks that if the situation remains stable, another 0.5% increase in borrowing costs can be expected in May.