“We have to stop this now.” Supporting the First Republic is spreading financial contagion, Ackman says.

And so we are nearing the end of another hectic week in the markets.

The CBOE VIX index

IX

,
the measure of stock volatility, rose twice to 30 before falling back down.

The ICE BoAML MOVE index, a VIX for the Treasury market, jumped to its highest level since the Great Financial Crisis of 2008, at one point more than 80% since early February.

These moves illustrate the whiplash in stock and bond yields as traders attempted to flesh out the severity of the unfolding banking crisis and how much it would affect central banks’ ability to maintain their anti-inflationary strategies.

Fears that shocks in the financial sector could negatively impact the global economy – and some overly long positions – also caused oil prices to collapse.

Still, the stock market rallied on Thursday and the tone on Friday is at least superficially calm as investors appear bailed out by the authorities arranging support for Credit Suisse

CS

,
and First Republic

FRC

in the USA.

But hold on.

The Federal Reserve has yet to expand its balance sheet after reporting late Thursday that banks used its new Bank Term Funding Program to borrow $11.9 billion this week. It also raised $153 billion through the Fed’s discount window and $142.8 billion in bridge loans.

The market doesn’t know who or how desperate these borrowers are.

And others are concerned that recent measures to support the banking sector will not only paint over the cracks but potentially make things worse.

Hedge fund manager Bill Ackman isn’t happy that systemically important banks (SIBs) have been tricked into recycling deposits they received from First Republic Bank (FRB) back to the troubled lender.

“The result is that FRB default risk is now spread across our largest banks. Spreading the risk of financial contagion to create false confidence in the FRB is bad policy. SIBs would never have made this low-yield investment in deposits unless they were pushed to do so and had no assurances that FRB deposits would be protected in the event of failure,” Ackman wrote in a tweet late Thursday.

“The press release announcing the $30 billion inflows raised more questions than it answered. A lack of transparency makes market participants assume the worst. I’ve said before that hours matter. We let days go by. Half measures don’t work when there is a crisis of confidence,” he added.

Ackman, who runs Pershing Square Capital Management and is not averse to an apocalyptic outbreak, said the banking sector needs temporary deposit insurance immediately until an expanded federal insurance system is widely available.

“We have to stop this now. We’re past the point where the private sector can solve the problem and we’re in the hands of our government and regulators. tick tock.”

markets

S&P 500 futures

ES00

rose 0.1% as 10-year Treasury yields

TMUBMUSD10Y

fell 4.2 basis points to 3.542%. The Dollar Index

DXY

lost 0.3%, which helped lift gold

GC00

down 0.7% to $1,936 an ounce.

Try your hand at Barron’s Crossword and Sudoku games, now running daily, along with a weekly digital puzzle based on the week’s cover story. To see all puzzles click here.

The Buzz

US economic data due today includes February’s industrial production and capacity utilization to be released at 9:15 am, followed by February’s leading economic indicators and March’s consumer sentiment report at 10 am. All times Easter.

It’s another quadruple Witching Friday that will see $2.8 trillion worth of options contracts expire.

Anyone who buys First Republic stock

FRC

Thursday’s open and close selling could have returned about 60% for the day. The recovery came after a consortium of major banks pledged $30 billion in deposits to the lender. However, shares are down 5% by Friday’s opening bell after First Republic announced it was suspending its dividend to conserve cash.

FedEx shares

FDX

are up 11% in premarket action after the parcel delivery company delivered results showing cost reductions and the opportunity to raise prices contributed to its bottom line.

Shares in Sarepta Therapeutics

SRPT

fall 20% after the FDA announced it would convene an advisory committee on the treatment of the company’s Duchenne muscular dystrophy.

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The graphic

Here’s CNN’s Fear & Greed Index. It is a compilation of seven indicators: market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand.

Eagle-eyed readers might notice that it fell into Extreme Fear – below the 25 line – before bouncing back into Fear this week. The last time the chart fell this low was in October 2022, marking a recent bottom for the S&P 500.

top ticker

Here were the most active stock tickers on MarketWatch as of 6 a.m. Eastern.

ticker	security name
TSLA	Tesla
FRC	Bank of the First Republic
BBBY	bed bath beyond
GME	GameStop
AMC	AMC entertainment
HUBC	Hub Cybersecurity
NVDA	NVIDIA
CS	Credit Suisse ADR
AAPL	Apple
TRKA	Troika Media

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