Black Swan Street Weekly Stock Market Summary (June 3-June 7 2024)

Welcome to Black Swan Street!

Welcome back to another edition of the best dang newsletter, Black Swan Street.

Let’s jump right in:

• 63 Banks and $517B Unrealized Losses🏦

• The Swan’s Selections🦢

• In Other News🗞️

• Next Week In The Stock Market🔮

Read time: 5 minutes

63 Banks and $517B Unrealized Losses🏦

The background: The economy might be growing, but the US banking system is certainly feeling the pressure.

A year after the downfall of Silicon Valley Bank, the FDIC reports that the country is sitting on a collective $517 billion in unrealized losses and 63 “problem banks” that are in serious trouble with the potential to default. 

If the situation remains unchanged, we might see some disastrous outcomes in the banking industry. 

What happened: The main contributor to these gigantic losses? The surge in interest rates.

These surges are driving down the price of fixed-income securities held by banks, not to mention the upward pressure on mortgage rates. 

The bad news doesn’t stop there, as unrealized losses are still increasing, over $39 billion in the first quarter relative to the fourth quarter of 2023. 

It doesn’t seem like the situation is planning to slow down anytime soon. Mortgage rates have also been rising by over 0.4% since the start of the year.

In fact, this is the ninth straight quarter of high unrealized losses since the Federal Reserve began to raise interest rates during the first quarter of 2022. 

The commercial real estate market is in trouble, and it’s unclear what can be done to save it as interest rates don’t look to be falling anytime soon.

63 problem banks only make up 1.4% of total banks in the US, which is a normal number of problem banks during a non-crisis period.

However, the number grew by 11 from the fourth quarter of last year. Things are starting to heat up and banks need to watch how much they have allocated in commercial real estate and even residential as well.

The Swan’s Selections🦢

🥤Dr Pepper ties Pepsi as America's No. 2 soda: Both drinks still trail far behind Coca-Cola, which holds 19.2% of the market share. Pepsi still outsells Dr. Pepper in terms of its entire portfolio. However, the two are neck and neck for retail outlets and soda fountain sales.

🤖Nvidia tops Apple: The technology company surpassed the $3 trillion market cap milestone, overtaking Apple as the second most valuable public company in the world. Nvidia is not far off from Microsoft, which holds the lead at $3.15 trillion in market cap.

🎮Roaring Kitty’s $166 million bet on GameStop: Shares slide amid Keith Gill’s return to Youtube. Earlier in the week, an image surfaced showing Gill’s position of over 5 million shares in GameStop at the time, which was worth $115.7 million. Now, that position is valued at $232 million as of yesterday.

💰Robinhood buys Bitstamp: The popular stock trading app announced its $200 million strategic acquisition on Thursday. Bitstamp is one of the most globally established cryptocurrency exchanges. The all-cash deal will give Robinhood an unprecedented advantage in accessing over 4 million retail and institutional investors, mostly in Europe.

In Other News🗞

• Stock buybacks in May was the fifth-most ever - BBG

• Tesla shareholder sues Musk for alleged $7.5B insider trading - RT

• US O&G M&A hit ~$200B in the past year - FT

• OPEC+ agreed to extend production cuts in bid to boost oil prices - WSJ

• Fed-favorite PCE index rose 2.7% YoY in April - RT

• Carl Icahn built a sizable stake in Caesars Entertainment - BBG

• Technical glitch caused ~50 stocks including Berkshire to show 99% loss - CNBC

• Nvidia led global large caps in May with 25% MoM gain - RT

• Spotify increased US prices again as demand proves inelastic - TV

• $8.9B media giant Paramount Global and Skydance Media agreed to merger terms - CNBC

• Waste recycling giant Waste Management will acquire medical-waste disposal company Stericycle for ~$5.8B in cash - BBG

• Bill Ackman sold a 10% stake in is hedge fund Pershing Square for $1.05B - MSN

• BlackRock and Citadel Securities-backed group plan new national stock exchange in Texas - WSJ

• Global central banks plan to increase dollar reserves - FT

• Tesla will likely spend ~$4B on Nvidia chips this year - RT

• Apollo Global will acquire a 49% stake in an Irish factory from chipmaker Intel for $11B - BBG

• TD money-laundering fines may reach $4B - BBG

• ECB cut rates for first time since 2019 - WSJ

• BoC cut rates in first among G7 nations - RT

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

Economic Calendar Next Week:

The Wrap-Up🔄

🎊🎉 That’s it for this week 🎉🎊

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