Friday's Markets Update (March 24, 2023)
On Friday, European traders were jittery about the stability of the banking sector, with Deutsche Bank AG taking most of the heat (12.47, c: 9.35, -25 percent). However, this panic did not spill over to the other side of the Atlantic Ocean, as the NASDAQ remained inside the bullish triangle (o: 11747, c: 11823) and BTC decreased by a meager 1.8 percent during the daily session (o: 28079, c: 27584).
FYI: Deutsche Bank AG is Germany's largest lender, with total assets of approximately USD 1.448 trillion. The bank employs nearly 85,000 staff across 58 countries and is one of 30 "systemic banks" closely monitored by regulators. Despite the recent downfall in its share prices, the bank's balance sheet appears strong on the surface. In 2023, the bank earned a profit of EUR 5.66 billion, with a 9.4 percent return on tangible equity and a robust core equity ratio of 13.4 percent. Many analysts attribute the recent episode to traders' nervousness. However, with the Federal Reserve stubbornly continuing their "scorched-earth" rate policy, I am not so sure about the future of even the largest banking institutions.
On the macroeconomic side, the picture is still unclear, with durable goods dropping by 1.0 percent in February (defense aircraft contributed -11.1 percent to this decline), following a 5.0 percent plunge in January (market forecasts were predicting a 0.6 percent increase). At the same time, the S&P Global US Composite PMI jumped to 53.3 in March - the fastest pace of expansion since May 2022. It appears that expectations are again overshooting fundamentals.