Bloomberg - Evening Briefing - Maybe it’s over now

After another tense spring weekend for American banking, JPMorgan agreed to acquire troubled First Republic in a US government-led deal. The transaction, revealed in the wee hours of Monday morning after First Republic was seized by regulators, makes the biggest US bank even bigger while minimizing further damage to the Federal Deposit Insurance Corp.’s guarantee fund. For those keeping score, it means First Republic becomes the fourth regional US lender to collapse since early March and the second-biggest bank failure in US history. Maybe—just maybe—this mini-financial conflagration is finally burning itself out. “Hopefully this helps stabilize everything,” JPMorgan Chief Executive Officer Jamie Dimon said, pointing out how some regional banks “had some pretty good results” in the first quarter. One of his rivals agreed with the sentiment, though with a dollop of blame. Citigroup CEO Jane Fraser said the US banking system is the “envy of the world.” But as for banks that failed over the past two months, she concluded they just weren’t well managed. Still, others are less sanguine about the near-term prospects for stability. “This is another one-off solution to the liquidity crisis,” James Fotheringham, an analyst at BMO Capital Markets, told clients this morning.  “We worry the market will find another target for funding concerns.”  —David E. Rovella

With all sighs of relief having been breathed, assessments of the JPMorgan deal started rolling in. Mohamed A. El-Erian writes in Bloomberg Opinion that what emerged Monday morning was far from perfect. US government institutions are caught up in the policy implications of a “second best” world, he writes—the repeated inability to come up with an optimal solution. What’s emerged will come with collateral damage and unintended consequences, he warns.

And if the short, sharp, shock of the March-to-May banking madness is at its denouement, what if anything could be next to waver under the weight of the Fed’s inflation war? Marc Rowan, co-founder of Apollo Global Management, says commercial real estate. The stresses won’t be systemic, he says, but they’ll be concentrated: “We are going to see losses.” 

Marc Rowan, chief executive officer of Apollo Global Management Photographer: Benjamin Girette/Bloomberg

Lordstown Motors may be forced to cease operations and file for bankruptcy after manufacturing giant Foxconn told the electric-vehicle company it’s prepared to pull out of a production partnership.

Meanwhile, the relentless erosion of Rivian’s share price has revealed an ugly truth: Investors have little faith left in the ability of the Amazon-backed company to compete in a crowded electric-vehicle market. A market cap that exceeded $150 billion days after its public trading debut in late 2021 now stands at less than $12 billion, reflecting almost no value beyond the company’s cash hoard.

Rivian pickup trucks on the assembly line at the company's plant in Normal, Illinois last year. Faith in the company’s ability to stand on its own may be waning. Photographer: Jamie Kelter Davis/Bloomberg

Singapore’s top diplomat expressed “grave concern” over altercations in the South China Sea following a near collision between Chinese and Philippine vessels in the highly-contested region. Foreign Minister Vivian Balakrishnan said his government wants all nations, including superpowers, to work together to ensure “free access and opportunities” in Southeast Asia and its sea lanes. 

A crucial economic lifeline for Ukraine is being jeopardized by eastern European governments contending with the limits of public support for Kyiv.  Nowhere is the shift more vivid than in Poland, a stalwart ally of Ukraine that has led the European Union in denouncing the Russian invasion. Warsaw issued a surprise ban on Ukrainian grain imports last month after weeks of street protests by Polish farmers over a grain glut. Restrictions quickly followed in Hungary, Slovakia and Bulgaria. 

US aviation regulators are rerouting how jets traverse the East Coast in an attempt to shave thousands of miles off trips annually. The Federal Aviation Administration on Monday announced it has created 169 new high-altitude flight routes that minimize the zig-zag pathways that have been used for decades.

• Bloomberg Opinion: If the banking crisis offers one lesson, this is it.
• Recession-fearing investors are betting on Warren Buffett.
• Bloomberg Opinion: America’s spies are losing their edge.
• Wall Street drives C-suite emphasis on cost-cuts and mass firings.
• Rates for I bonds drop to 4.3% thanks to cooling US inflation. 
• White House probes how companies use AI to surveil workers.
• Bloomberg Opinion: Blame America’s pitiful vacation policy for burnout.

Chinese tourists and loyal customers to Wynn Resorts will be key to filling rooms at its new gaming resort in the United Arab Emirates, local officials contend. Both are expected to be important drivers of business at the planned $3.9 billion, 1,500-room resort, which would be one of the largest hotels in the country, located in the emirate of Ras Al Khaimah, an hour north of Dubai. “China has never been a big focus of ours,” Raki Phillips, chief executive officer of the Ras Al Khaimah Tourism Development Authority, said. “It is a big focus of ours right now.”

Rendering of Wynn Al Marjan Island Source: Wynn Resorts

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