What leaders are saying about the economy in the SVB aftermath: Morning Brief
This is The Takeaway from today's Morning Brief, which you can receive in your inbox every Monday to Friday by 6:30 a.m. ET along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
Remember the banking crisis in March?
Mr. Market doesn't.
The S&P 500 and Nasdaq Composite are up each about 5% since March 1. The Dow Jones Industrial Average — aka the 'People's Index' — has tacked on 3.6% over that stretch. Bellwether stock Apple has charged ahead to the tune 15%.
While the market's typically short memory has reared its ugly head, I can tell you that C-suite leaders haven't forgotten the trying moments in March. The bank runs outside Silicon Valley Bank remain vivid images amongst leaders, as do quick efforts by regulators to stem the crisis.
Execs I have talked to in recent weeks have discussed the banking turmoil generally from three vantage points.
First, many have used the opportunity to fine tune how they approach leading, employee, and investor communication.
Along this line of thinking, American Express CEO Stephen Squeri tells me his business hasn't been super impacted by the events in March. That's a key message he is trying to get across to investors and other stakeholders.
"The economy is definitely bifurcated, and I think at the lower end of the economy you are seeing some stress but we just don't have that," Squeri said, adding he is seeing strong demand for travel this spring and summer.
Squeri also said Amex has seen increased deposit inflows post SVB.
I suspect this business as usual vibe is something I will hear from Procter & Gamble CEO Jon Moeller when we chat post earnings this morning (full interview airing on Yahoo Finance Live around 9 a.m.!).
Meanwhile, management teams have re-combed through their financials to ensure they don't have any (or many...) skeletons buried that may blow up in financial system issues flare up again.
And lastly, execs have begun to put in place action items to run a little more efficiently given the economic quakes the turmoil created.
I got that latter sense, at least, from AT&T CFO Pascal Desroches (video above).
"Look, it's a reminder that the last decade we have been living on abnormally low interest rates and probably broader credit availability than has been the historical norm. And when that happens, invariably you see the repercussions in things like Silicon Valley Bank. For us fortunately, we are in a position where we have taken significant actions over the last several years to de-lever our balance sheet," Desroches said on Yahoo Finance Live.
Either way you slice it, while the banking mess in March may appear gone in the eyes of the market...it's really not.
One major player on Wall Street told me this week he has his portfolio managers building out models that profit if we get at least three more rate hikes this year. It's plausible given where inflation is, and a factor the market isn't even thinking about if you look at the very low VIX Index or the push higher in tech stocks.
The C-suite...and markets should stay on high alert.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
