ALPMF - Wall Street Breakfast Podcast: JPMorgan To Acquire First Republic Bank

2023-05-01 07:16:39 ET

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify First Republic Bank ( FRC ) is seized, will be sold to JPMorgan. Nornickel ( NILSY ) board recommends no dividend for first time since 2009. Astellas Pharma ( ALPMF ) agrees to buy Iveric Bio ( ISEE ) for $5.9 billion. Learn more about these stocks with Seeking Alpha Premium .

This is an abridged transcript of the podcast.

• Regulators have seized First Republic Bank. FRC will be sold to JPMorgan.

• The U.S. commercial property market is in trouble. That’s the word from Berkshire Hathaway's Charlie Munger.

• No dividend for Nornickel. The board recommends not to pay a dividend for the first time since 2009.

OUR TOP STORY

Regulators have taken possession of First Republic Bank (NYSE: FRC ).

This is the third failure of an American regional bank in recent months. Of course, we all know about the collapse of Silicon Valley Bank ( OTC:SIVBQ ) and Signature Bank ( OTC:SBNY ) in March.

The Federal Deposit Insurance Corporation has been appointed as receiver and accepted a bid from JPMorgan (NYSE: JPM ) to assume all deposits, including all uninsured deposits, and substantially all assets of First Republic Bank. That includes $173B in loans and about $30B of securities, though it will not assume First Republic's corporate debt or preferred stock.

As of April 13, 2023, First Republic Bank had approximately $229.1 billion in total assets and $103.9 billion in total deposits.

First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank today during normal business hours. All depositors of First Republic Bank will have full access to all of their deposits.

According to a press release, the FDIC estimates that the cost to the Deposit Insurance Fund will be about $13 billion.

It notes that this is an estimate and the final cost will be determined when the FDIC terminates the receivership.

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Today is catalyst watch Monday. In addition to the major news we just talked about, there’s more going on this week.

We’re hearing from Seeking Alpha Senior Managing News Editor Kim Khan. He says the big story is the 2-day FOMC meeting.

*audio from Kim Khan*

But I also asked him if higher was an option.

*audio from Kim Khan*

And earnings are still in focus.

*audio from Kevin Curran*

That was Seeking Alpha Associate News Editor Kevin Curran.

Two big names that Kevin mentioned include Apple and AMD. I’d like to point you to an article on Seeking Alpha entitled “Will Apple, AMD earnings continue tech's 'so far, so good' results?”

I’ll leave a link in show notes.

NOW MORE ON THE MARKET

Wall Street finished in the green again on Friday, adding to a sharp upswing seen the previous session. The Dow, Nasdaq and S&P 500 all posted modest gains.

The Nasdaq ( COMP.IND ) closed +0.7%, the S&P 500 ( SP500 ) finished +0.8% and Dow ( DJI ) ended +0.8%.

Nine of the 11 S&P sectors finished higher, with Energy, Financials, Tech, Materials and Real Estate each climbing more than 1%. Utilities and Consumer Discretionary posted fractional losses.

Alex King is with Cestrian Capital, he’s a market expert and tells Seeking Alpha that they “remain bullish for 2023 and 2024” but he says that they believe “an equity market correction is the next significant move,"

He said their call is “down, then up-up."

Looking at the economic front, the core personal consumption expenditure index, or PCE, a key inflation gauge monitored by the Federal Reserve, climbed 0.3% in March compared to the previous month. This matched the rate seen in February.

The same report showed no month-over-month growth in personal spending for March. This met what economists had projected. Personal income rose 0.3% compared to the previous month.

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MORE OF OUR TOP STORIES

The board of Norilsk Nickel ( OTC:NILSY ) has recommended not paying dividends on its 2022 results for the first time in 14 years.

But the Russian miner said Friday it may consider paying interim dividends.

Nornickel ( OTC:NILSY ), the world's biggest producer of palladium and refined nickel, said increased geopolitical risks have hurt its financial results and created new challenges for its operational and sales activities, as well as for the implementation of strategic projects.

However, the company did not directly refer to the war in Ukraine.

The miner noted the "possible increase in sanctions pressure and a drop in prices for a basket of metals due to a global economic slowdown" as other potential risks.

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Storm clouds are brewing for the U.S. commercial property market, according to Berkshire Hathaway (NYSE: BRK.A ) (NYSE: BRK.B ) Vice Chairman Charlie Munger.

He warned of a potential crash amid trouble in the U.S. financial system.

Munger told the Financial Times, "It's not nearly as bad as it was in 2008. But trouble happens to banking just like trouble happens everywhere else. In the good times you get into bad habits. When bad times come they lose too much."

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Astellas Pharma Inc. ( OTCPK:ALPMF ) has agreed to acquire Iveric Bio (NASDAQ: ISEE ) for $5.9 billion.

This adds ophthalmology capabilities to the Japanese pharmaceutical giant.

Under the agreement, Astellas ( OTCPK:ALPMF ) agreed to purchase Iveric Bio ( ISEE ) for $40 a share, representing a 22% premium to Iveric's closing price on Friday. The deal is expected to be completed in the second quarter of Astellas' fiscal year 2023 (third calendar quarter of 2023).

If you look at the dedicated stock page for Iveric Bio on Seeking Alpha, you’ll see how the market is responding to this news.

ISEE, that’s I–S-E-E- is up nearly 18 percent premarket.

The most recent article is by Capital connoisseur on Seeking Alpha. In the article they rate the stock a buy saying, “the industry trends of an aging population and increasing prevalence of retinal diseases highlight the potential for growing market demand for Iveric Bio's products.”

I’ll leave a link to the article in show notes.

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Chip designer Arm ( ARMHF ) said it confidentially submitted a draft registration statement with the U.S. Securities and Exchange Commission for an initial public offering.

The size and price range for the proposed offering have yet to be determined.

According to Reuters , ARM which is owned by Japanese conglomerate Softbank ( OTCPK:SFTBY ), is looking to raise at least $8 to $10 billion through the IPO, which will be listed on the Nasdaq .

The IPO could be held as soon as this fall, with Arm valued between $30B and $70B.

Arm ( ARMHF ) reportedly last month determined it won't sell shares on the London exchange and will instead only list the chip designer in New York this year.

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Finally, you can find an abridged version of the transcript for the podcast on Seeking Alpha.com . There’s a link in show notes that says Wall Street Breakfast. Just click on the podcast for today and that’s where you’ll find the transcript.

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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is up less than 0.1%. The S&P 500 is also up less than 0.1% and the Nasdaq is down a small fraction. Crude oil is down 2.1% at more than $75 a barrel. Bitcoin is down 2.4% at $28,534.

May 1st is a holiday in some areas so the markets in China, India, Hong Kong, the U.K. and European markets are closed for a holiday.

On today’s economic calendar, at 10am construction spending.

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