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MARCH 29, 2023

CALM RETURNS

As the end of the first quarter approaches, there appears to be a sense of stability returning to world markets following the banking crisis resolution. Investors are now turning their attention to a restructuring six-way plan of Chinese e-commerce Alibaba, which is expected to positively impact the company’s share prices. The company’s shares surged by 16.3% in Hong Kong on Wednesday; following a 14.3% rally in its U.S-listed shares yesterday.

UBS’ ACQUISITION LEAD

UBS has appointed Sergio Ermotti as the new CEO to lead the acquisition of Credit Suisse Group. Ermotti had previously led UBS as CEO from 2011 to 2020, where he made some important changes that helped the bank recover after a prior crisis. These changes included reducing the number of risky trades and focusing more on wealth management. In a press conference, UBS Chairman Colm Kelleher said that Ermotti was the preferred leader to handle this important and complex transaction.

FEDERAL RESERVE’S NEW RATE HIKE

The recent collapse of three mid-sized US banks and the UBS and Credit Suisse merger may have prompted a reevaluation of monetary policy. Nonetheless, US Federal Reserve Chair Jerome Powell has reaffirmed the importance of continuing the fight against inflation through a new rate hike. TD Securities and DoubleLine Capital are among the few who argue that the Fed’s decision to raise interest rates is misguided. However, BlackRock, the world’s largest money manager, disagrees with those who believe that the US Federal Reserve will cut rates, as it could increase the risk of a recession.

FLUCTUATING VALUE OF TREASURIES

Silicon Valley Bank incurred losses as the value of their Treasury holdings and mortgage bonds decreased due to the Federal Reserve’s quick increase in interest rates. Although Treasuries are often considered the safest investment due to their credit quality, the bank’s experience highlights the potential for significant fluctuations in value.

FIRST CITIZENS BANCSHARES EXPERIENCES A SURGE IN STOCK PRICES

Shares of First Citizens BancShares continued to rise on Tuesday following their 50% surge the day before when they announced their acquisition of the deposits and loans of the now-collapsed Silicon Valley Bank.

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