Good morning, readers. Markets reporter George Glover here, writing to you from London while my colleague Phil Rosen is off on a well-deserved vacation.
You've probably already clocked that the biggest story in markets right now is happening on this side of the Atlantic, with investors still mulling over UBS's $3 billion rescue of its old foe Credit Suisse.
Today, I'm unpacking the biggest winners and losers from the takeover.
UBS itself looks set to benefit as it's now "the world's safest bank" for depositors, according to one analyst. But there's a bunch of losers from the historic deal as well — including the Saudi National Bank, the Federal Reserve, and investors who hold a little-known type of high-risk Credit Suisse bonds.
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1. There's one big winner — and lots of losers — from the Credit Suisse rescue deal.
UBS stands out as the biggest beneficiary from the takeover. It's managed to snap up a longtime rival at a fraction of its market value, with backing from its own government and the Swiss central bank.
"Under normal circumstances, I would say it is an absolutely fantastic deal for UBS," Morningstar equity analyst Johann Scholtz said Monday, per Reuters. "In the current environment, it is a bit more complicated as there is a lot of uncertainty generally in the markets."
Some of the world's biggest investors are suffering, including the Saudi National Bank, which loaded up on Credit Suisse stock for 3.82 Swiss francs ($4.12) a share back in November. The deal announced Sunday afternoon valued Credit Suisse shares at just 0.76 Swiss francs, one-fifth of the price the Saudi National Bank paid.
Other losers include holders of Credit Suisse's Additional Tier 1 bonds, which are special bonds that can be converted into shares if a bank's financial health falls below a certain level. The Swiss regulator said Sunday that it'd mark 16 billion francs ($17 billion) worth of Credit Suisse AT1s down to zero — and that's weighed on other European bank stocks that issue similar bonds.
Lastly, the merger between UBS and Credit Suisse could be bad news for the Fed. As my colleague Theron Mohamed points out, the central bank is now caught between a rock and a hard place. If it pauses its interest-rate hiking campaign to shore up the banking system, inflation could start spiraling again — but if it raises borrowing costs, embattled banks like First Republic could start feeling the heat.
In other news:
Jemal Countess/Getty Images
2. US stock futures edge higher Tuesday morning as hopes grow that the worst of the banking crisis is over. Eyes are turning to the Fed meeting later today, as investors wait to see whether the turmoil will prompt a shift on interest-rate hikes. Here are the latest market moves.
3. Earnings on deck: Nike, HealthEquity, and more, all reporting.
4. Bank of America says to load up on these stocks with a recession looming. US equity strategist Jill Carey Hall said an economic downturn will boost pizza restaurants, low price gyms like Planet Fitness, and value-for-money retailers. Here are 22 recession-proof stocks that the bank has given a "buy" rating.
5. Investors don't know what Jerome Powell is going to do next. Traders have started scaling back their rate-hike bets ahead of Wednesday's big announcement — but they're divided on whether the Fed will raise borrowing costs by 25 basis points or "pause" its tightening campaign. Here's how the Credit Suisse rescue deal impacts the central bank.
6. Warren Buffett might swoop in to save the banks once again. The Berkshire Hathaway CEO made vital investments in Goldman Sachs and General Electric in late 2008 – and is reportedly in talks with senior White House officials to provide similar support to struggling regional banks. Buffett might not make as much money this time round, though.
7. Bitcoin soared to a nine-month high after the takeover deal was announced. Analysts including Fundstrat's Sean Farrell see the cryptocurrency as a hedge against the embattled banking system. Bitcoin hit its highest level since June 2022 Monday and was trading just below $28,000 at last check.
8. Two real-estate investors who've "flipped" 91 properties shared their top tips. Aria Khosravi and Alan Blue lost $9,000 on their second deal over a decade ago – but they've since built a seven-figure business. Here are three lessons they've learnt buying and selling houses over the past 14 years.
9. These stocks are rapidly boosting their market share thanks to AI and other disruptive tech. Portfolio manager Jason Tauber runs Neuberger Berman's Disrupters ETF. Here are his fund's top 10 weighted holdings right now.
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10. First Republic shares fell 47% to hit a record low Monday. The San Francisco-based lender's share price has plunged during the ongoing banking crisis – and S&P Global just slashed its credit rating for the second time in the space of a week despite it crafting a $30 billion rescue plan. Read more.
Curated by George Glover in London. Feedback or tips? Tweet @GTAGlover or email gglover@insider.com.
Edited by Anil Varma (@AnilVarma7717) and Hallam Bullock (@hallam_bullock) in London.