Bloomberg - Evening Briefing - ‘Irrational’ investors

The lightning-fast banking crisis has in two weeks claimed three mid-sized US banks, took a chunk out of a fourth and sent Credit Suisse into the arms of its neighbor, UBS. Right before that Swiss pairing, at least one analyst said the crisis was at an end. So is it over now? Investors don’t think so, and on Friday they went looking for the next victim. The wheel stopped in Germany, where Deutsche Bank fell by the most in three years and the cost of insuring its debt against default rose. The bank, which has staged a recovery in recent years after a series of crises, was the biggest loser among large European bank stocks after announcing a plan to repurchase debt, a move normally seen as a sign of strength. Citigroup analysts called the whole thing “irrational.” Here’s your markets wrap. —David E. Rovella

UBS wealth boss Iqbal Khan is working the phones and crisscrossing the globe to thwart the potential loss of top Credit Suisse bankers and clients as competitors in Europe and New York seek to exploit the turmoil. He was said to have told staff in Asia that he’s working on retention measures including compensation.

Investors are fleeing to cash in the biggest rush since the onset of the pandemic, according to Bank of America strategists. They predict equity and credit markets will slump in the coming months. 

Traditionally called the “world’s largest democracy,” India is at risk of losing that label—at least according to the country’s opposition party. Its members contend that under Prime Minister Narendra Modi, the title is no longer appropriate and that events like those of the past two days illustrate their point. On Thursday, Rahul Gandhi, the senior leader of India’s main opposition Congress party and Modi’s arch-rival, was convicted by a court in Modi’s home state of defaming Modi. Gandhi was sentenced to two years in prison. Under Indian law, a lawmaker convicted and sentenced to two or more years can be disqualified from parliament and barred from running for office. The Indian Parliament, controlled by Modi’s party, disqualified Gandhi on Friday. Elections are to be held next year.

Congress party leader Rahul Gandhi, center, arrives to address a rally against inflation in New Delhi last September. Photographer: Sajjad Hussain/AFP

With its troops, freed convicts and mercenaries being killed by the hundreds daily according to Ukraine, Russia may be retreating from its attempt to gain ground on the eastern front. At the same time, Kyiv has alluded to its long-expected spring offensive starting soon. But Vladimir Putin isn’t giving up: the Kremlin is said to be planning to assemble another 400,000 contract soldiers in its so-far failed effort to subdue its neighbor. Last year, Russia said it completed the activation of several hundred thousand reservists and conscripts.

The US buy-to-rent premium hasn’t been this big since 2006, at the peak of the housing bubble. With mortgage rates high and home prices still elevated, the monthly payment for a newly purchased home—assuming a 10% down payment and a 30-year fixed rate mortgage—was $1,176 more than renting an apartment.

US tech companies have been firing their workers by the tens of thousands, but unemployment hasn’t been this low since Richard Nixon was in the White House. And even after those 300,000 terminations, Silicon Valley companies are still hiring in areas they see as mission-critical. Contract positions are still commanding $120-an-hour wages. 

The Biden administration has been accelerating its campaign to rebuild American influence in Africa, where its lost ground to soft influence via Chinese investment and hard influence via Russian mercenaries. Vice President Kamala Harris next week becomes the latest top official to visit, with stops scheduled in Ghana, Tanzania and Zambia. She’s following Treasury Secretary Janet Yellen and Secretary of State Antony Blinken. At a December summit with the continent’s leaders, Biden pledged a $55 billion support package for Africa. But that’s a drop in the bucket.

Bloomberg continues to track the global coronavirus pandemic. Click here for daily updates.

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• Greenland has solved the Daylight Saving Time debate.
• Miami Beach’s mayor wants to end one of America’s wildest parties.

Gwen Adora said it was 2018 when she started uploading videos of herself to Pornhub, one of the Internet’s biggest sites for adult content, using the money she earned to pay bills while going to college. But in the five years since then, the industry has come under legal and financial pressure. Bloomberg Digital spoke with several adult content creators who said fallout from efforts to stop child exploitation and sex trafficking is hurting untold thousands of Americans who make a living online. They argue that a 2018 federal law, a pending lawsuit and efforts by right-wing groups to roll back access to all adult content have combined to threaten their livelihoods. And First Amendment lawyers say free speech and expression is under threat as well.

Illustration: Cathryn Virginia

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