WEDNESDAY 3/15/23
(The Consumer Price Index inched down in February to a 6% inflation rate, raising expectations the Federal Reserve will forgo another interest rate hike when it meets next week. Scroll center column for details.)
Two Nuclear Powers Clash Over U.S. Drone – A Russian jet struck a U.S. MQ-9 Reaper drone in international airspace over the Black Sea (per The Washington Post). According to the Pentagon, two Russian war planes, believed to be Su-27 fighter jets seen in the vicinity of the MQ-9 dumped fuel on the drone before one Russian jet collided with the drone’s propeller to force it down. Russia denied responsibility and faulted U.S. military for “breaching” a “temporary” border.
‘Temporary Border’ Means: Russian-occupied Ukraine. Russia’s authoritarian leader Vladimir Putin has accused the U.S. of intervention in its so-called border dispute – that’s “invasion” to the free world -- for much of the past year. Though the Su-27’s collision with the MQ-9 is being described as a clumsy maneuver, the question of Russia’s intention will be an escalating issue in the coming days.
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Credit Suisse Rattles Global Banking – The panic triggered by Silicon Valley Bank and Signature Bank has gone global, with giant Credit Suisse bond and share values dropping like Wile E. Coyote on an anvil. Stock prices around the world plunged pretty quickly Wednesday, when the Dow Jones Industrial Average dropped more than 1.3% at the opening bell.
“Credit Suisse has been the problem child of Europe for years,” The Wall Street Journal notes.
The Swiss bank’s freefall accelerated after Saudi National Bank told other outlets in Europe it no longer would continue its financial help, AP says.
Meanwhile: The Justice Department and the Securities and Exchange Commission have opened an investigation into Silicon Valley Bank’s sudden closure last Friday.
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Abortion Pill Ban? – Trump-appointed U.S. District Judge Matthew Kacsmaryk hears arguments in Texas Wednesday on whether to reverse the FDA’s 2000 approval of Mifepristone, one of two medicines used to medically induce abortion and manage miscarriages. Mifepristone is currently available by mail, telemedicine and pharmacy pickup, Newsweek reports, so the judge’s ruling in Texas could determine whether it is available nationwide, even in states where abortion is allowed.
--TL
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TUESDAY 3/14/23
CPI Eases Slightly to 6.0% -- Consumer prices rose 6.0% year-over-year in February, the Labor Department reported Tuesday, on an increase of 0.4% over January. This compares with a 6.4% annual rate in January from a month-over-month increase of 0.5%. The Labor Department’s Bureau of Labor Statistics says shelter accounted for 70% of last month’s increase. Food was up 0.4% and food at home was up 0.3%, with energy down 0.6% as natural gas and fuel oil prices declined. Used cars and trucks, and medical care prices also declined.
Upshot: The Federal Reserve was expected to continue its aggressive interest rate increases at next week’s regularly scheduled meeting. But after collapse of Silicon Valley Bank and Signature Bank last weekend blamed at least in part on their mishandling of aggressive increases over the last year, the Fed may hold rates at the current level.
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Cohen Testifies Ahead of Possible DJT Indictment – Michael Cohen, former “fixer” for Donald J. Trump appeared before a Manhattan grand jury for a reported three-plus hours Monday ahead of an expected indictment of the former president for his alleged role in paying hush money to porn star Stormy Daniels prior to the 2016 election. Cohen told reporters as he walked into the building where the grand jury met he felt “fine” but “a little twisted, to tell the truth,” The New York Times reports. Prosecutors from Manhattan District Attorney Alvin L. Bragg’s office have questioned at least seven others before the grand jury this year.
Bragg’s office has offered to Trump’s lawyers the chance to appear before the grand jury this week, “should he want to,” signaling potential indictment of the ex-president. Trump reportedly has declined the offer.
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McConnell Released from Hospital – Senate Minority Leader Mitch McConnell (R-KY) Monday afternoon was released from the hospital where he was treated for a concussion from a fall last week, The Guardian reports, and will recover in an inpatient rehabilitation facility according to a spokesperson. McConnell suffered a concussion when he tripped and fell at a private dinner at the Waldorf Astoria hotel in Washington last Wednesday evening. No word on when he is expected to return to the Senate.
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Obituary: Patricia Schroeder – “Feminist trailblazer,” Democratic representative from Colorado from 1973 to 1997, Patricia Schroeder has died. First elected in 1972 as an opponent of the Vietnam War, Schroeder served on the House Armed Services committee for all her 24 years in office, which she persuaded to recommend the military allow women soldiers to fly combat missions, says her NYT obit. Schroeder died in a Celebration, Florida, hospital following a stroke. She was 82.
--TL
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MONDAY 3/13/23
SVB, Signature Deposits Covered
Deposit Insurance Fund Triggered – While the Treasury Department will not bail out Silicon Valley Bank and Signature Bank as Janet Yellen said Sunday, the banks’ customers will be covered by the federal Deposit Insurance Fund, President Biden said Monday morning in a special address to the country (above). Signature Bank fell on Sunday, two days after the Treasury Department took over SVB.
Biden said Monday:
•All customers of both banks “are protected and will have access to their money as of today,” including “small businesses across the country that bank there and need to make payroll, pay their bills” to stay open for business.
•No bank losses will be covered by U.S. taxpayers. These deposits will come from fees by other banks paid into the federal Deposit Insurance Fund.
•SVB and Signature management “will be fired. … If the bank is taken over by the FDIC, they should not work there.”
•Investors in the two banks will not be protected. “They knowingly took a risk and when the investment does not pay off they lose their money. That’s how capitalism works.”
•The government must get to the bottom of these two banks’ collapse. “We must get a full account of what happened and why.”
Finally, Biden said, “we must reduce the risks of this happening again.” He said the “last administration” rolled back some of the protections added to the banking system after the 2008 collapse was addressed early in the Obama administration, including the Dodd-Frank Wall Street Reform and Protection Act of 2010.
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Lehman Brothers Redux? – Treasury Secretary Janet Yellen (above) has ruled out federal bailout of Silicon Valley Bank, taken over by the Federal Deposit Insurance Corporation (FDIC) last Friday after a run on deposits. The bank was the nation’s 16th-largest, and the second-largest to fail, according to NPR.
“During the financial crisis, there were investors and owners of systemic large banks that were bailed out,” Yellen told CBS News Face the Nation Sunday. “And the reforms that have been put in place means that we’re not going to do that again. But we are concerned about deposits and are focused on trying to meet their needs.”
SVB’s customers largely are tech-industry companies and employees, most with deposits exceeding the $250,000 limit covered by the FDIC. Lehman Brothers was generally blamed for triggering the 2007-08 financial crisis and subsequent Great Recession with its September 15, 2008, bankruptcy, largest in U.S. history at the time according to britannica.com.
On Friday the FDIC took control of the ”startup-focused lender” using a new entity called the Deposit Insurance National Bank of Santa Clara, The Wall Street Journal reports. House Speaker Kevin McCarthy (R-CA) told Maria Bartiromo on Fox News’ Sunday Morning Futures the White House “has the tools” to handle SVB’s collapse and that an acquisition by a larger bank may be the “best option” to cool markets.
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Old Industry, on the Other Hand – Saudi Aramco, the oil giant owned mostly by the government of Saudi Arabia, earned a record $161 billion last year, a 47% jump over fiscal 2021, The New York Times reports.
“We anticipate oil and gas will remain essential for the foreseeable future,” chief executive Amin H. Nasser said in a statement.
Take that, Tesla, rapidly electrifying traditional auto industry and solar panel manufacturers.
The 2022 revenues are a record since 2019, when Saudi Aramco began offering shares on the local Tadawuhl stock exchange.
This Week -- The full Senate is in session Tuesday, Wednesday and Thursday. The full House of Representatives is off.
--Compiled and edited by Todd Lassa
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COMMENTS: editors@thehustings.news