March 22, 2023

The Appetizer

“I can reassure the members of the committee that our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them.”

• U.S. Treasury Secretary Janet Yellen

Now, on to the numbers. Drum roll, please …

• 0.25%: How much the Federal Reserve raised the fed funds rate today.
• 6.7%: How much egg prices fell in February, the first drop in 5 months.
• 48: The number of teams playing in the 2026 World Cup, bringing the match total to 104.
• 83,000: The number of 7-Eleven stores globally, with 2,881 in Tokyo alone.
• $1 billion: The amount Chick-fil-A is planning to spend for international expansion, with plans to be in Europe and Asia by 2030.
• 5,000 by 400 square miles: The size of a massive bloom of seaweed that is currently heading for Florida threatening spring break tourism. It weighs more than 6 million pounds.
• 500: The estimated increase in the number of calories in a typical turkey sandwich during the 1980s versus today.
• 3.96%: The admission rate of MIT, the top-ranked ‘dream school’ for prospective students in a recent survey.

Dig In
Banking in the USA

By now, you may have heard of Silicon Valley Bank (SVB) – it was only the 16th largest bank in the country, and its collapse within 48 hours became the second biggest bank failure in U.S. history. Yeah … that one. So what happened?

As interest rates shot up last year, the value of the bank’s “safe” assets crashed. Remember: When interest rates rise, bond values fall. So when SVB suddenly needed to raise $42 billion to cover withdrawal requests during a bank run, the bank wasn’t able to sell its holdings at prices needed to cover the outflows.

Usually when a bank fails, the Federal Insurance Corporation (FDIC) insures many types of accounts up to $250,000. However, almost 90% of the deposits at SVB were above that limit. Ouch.

To prevent a loss of confidence in the broader banking system, the Federal Reserve, the Treasury Department, and the FDIC stepped in to guarantee all deposits at SVB and Signature, another failing bank. The move appears to have stabilized the situation – no more banks have failed – and we’ll have to wait to see if there’s any fallout.

Times like these present a great opportunity to reach out to your financial advisor to discuss your portfolio and make sure you’re properly diversified and ready to take advantage of the opportunities this market may present.

Weekly Specials

Students across the country will have a new lunch option this fall. After reformulating its recipes to meet federal nutrition guidelines, Kraft Heinz’s pre-packaged Lunchables will be available in school lunch programs. The first products geared for schools appear to be a turkey and cheddar or a pizza option – both recipes differ from current store-bought options. New taste? TBD.

A California appeals court sided with ride share and delivery companies last week, preserving their right under a state law to treat gig workers as independent contractors. Under the arrangement, companies such as Uber and Lyft don’t need to offer benefits like health insurance and paid sick leave to their drivers.

If you had plans to check off the Great Wall from your bucket list before the pandemic, you may finally be able to do so. Last week, China announced that it would allow foreign tourists to visit the country again after shutting out visitors for nearly three years. The move comes as China tries to jumpstart its economy.

Believe it or not, ChatGPT has a 4.0 version already, and it’s smarter than the previous versions – much smarter. When presented with a simulated law school bar exam, GPT-3.5 scored in the bottom 10% of test takes. ChatGPT-4? Top 10%. While the technology is progressing, it still has similar limitations to previous versions.

According to the Census, 44 million households in the U.S. rented their homes in 2021 – of those, more than 3 million earned more than $150,000. While the number of high earners has increased in recent years, higher mortgage rates and rising home prices have put ownership out of reach for many. Other rental reasons include low credit scores, little savings, and a desire for flexibility. With fewer people commuting to offices compared to 2019, most cities have less traffic congestion. Not so for the Sunbelt. Cities such as Nashville and Las Vegas have seen population surges, gumming up roads designed for less vehicles. In Miami, residents lost an average of 105 hours in traffic in 2022, up 30% from 2019. Yikes!

To stick around as long as U2 has, you need the ability to adapt with the times. The group recognized that most people now experience their music through earphones rather than in concert, so they took a more intimate approach to 40 of their classic songs. Whether you like the old versions or the new, U2 just wants you to “keep listening.”

Corporate Lunch

A Chicago man is suing Buffalo Wild Wings, alleging their boneless wings are actually chicken nuggets. Trial of the century folks. Next, can we have a ruling on whether a hotdog is a sandwich?

Saudi Arabia’s wealth fund made a $35 billion deal with Boeing to buy a bunch of jets; at least 3 for that kind of money.

Air Force One is getting a new paint job. President Joe Biden scrapped Trump’s plans to paint Air Force One red, white, and blue and has opted to follow the old white, light blue and yellow scheme. Put politics to the side and decide which pattern you like more RWB | WBY.

Credit Suisse reached an all-time low after the bank’s largest investor said it could not provide more funding. Earlier in the week, the firm said it found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022. Switzerland’s central bank has since thrown Credit Suisse a $54 billion lifeline.

HSBC plans to inject $2 billion of liquidity into its newly purchased (for $1) SBV UK division. CEO Noel Quinn said the buy “makes excellent strategic sense.”