Bloomberg - Evening Briefing - Hunting for weakness

The hunt for weakness among midsize US banks continued Thursday as turmoil and recriminations roiled both markets and the financial industry. Trading halts hit Western Alliance Bancorp and PacWest Bancorp amid losses that topped 60%. Western Alliance denied a report that it’s exploring strategic options including a possible sale. Goldman Sachs’s role in the beginning of the crisis—Silicon Valley Bank’s attempt to raise funds in March—is under review by the federal government, which is looking into the failed transaction and how it helped kill SVB. Rival banks and investors have pointed fingers at Goldman for failing to line up capital in advance and spooking the market. Also on Thursday, Toronto-Dominion Bank and First Horizon scrapped their $13.4 billion deal after the Canadian lender said it couldn’t see a clear path to getting regulatory approval. The move ended weeks of speculation about the fate of a deal that was announced right before the world’s major central banks began a historic campaign of interest rate increases. TD will make a $200 million cash payment on top of a $25 million reimbursement that was part of the merger agreement. Here’s your markets wrap. —David E. Rovella

Emergency borrowing from the US Federal Reserve plunged last week, partly reflecting the seizure of First Republic Bank, which accounted for a large share of outstanding loans. Meanwhile, one regional bank that largely dodged the banking calamity has triggered a wildfire among short-sellers, burning them to the tune of $64 million.

US unemployment benefit applications rose by the most in six weeks while continuing claims fell, flagging some softening in a labor market that remains relatively resilient. Even as the labor market starts showing some weakness, though, it’s still cooling at a much slower pace than other economic indicators in the wake of a rate-hike campaign the Fed may be looking to pause.

Microsoft is said to be working with Advanced Micro Devices on the chipmaker’s expansion into artificial intelligence processors, part of a multipronged strategy to secure more of the highly coveted components. The companies are teaming up to offer an alternative to Nvidia Corp., which dominates the market for AI-capable chips called graphics processing units.

A US-based think tank alleged Vladimir Putin likely staged a drone attack on the Kremlin—for which he now blames the US—to “set conditions for a wider societal mobilization.” This after NATO’s intelligence chief said Russia is mapping critical undersea systems and warned of a significant risk that Moscow could target infrastructure in Europe and North America. “There are heightened concerns that Russia may target undersea cables and other critical infrastructure in an effort to disrupt western life and gain leverage against those nations that are providing support to Ukraine,” said David Cattler, the military alliance’s Assistant Secretary General for intelligence and security.

Ukrainian servicemen dig a trench in Chasiv Yar near the frontline city of Bakhmut on May 3. Spring mud may be delaying an expected Ukrainian counteroffensive. Photographer: Dimitar Dilkoff/AFP

Texas Billionaire Harlan Crow paid private-school tuition for Associate Supreme Court Justice Clarence Thomas’s grandnephew, ProPublica reported, adding to a string of revelations about benefits received by Thomas, one of the court’s most conservative members, from the GOP megadonor.

Four members of the violent, far-right “Proud Boys” group, including its former leader, were convicted on charges including the Civil War era seditious conspiracy for their role in the Jan. 6, 2021 insurrection. The men, among hundreds already convicted, plotted to block the transfer of power to Joe Biden in what the Jan. 6 committee called the first attempted coup in American history. The group, along with thousands of other followers of Donald Trump, sought to keep the Republican in power despite his having lost the 2020 presidential election. At least five people died as a result of the attack on the Capitol. The men face up to 20 years in prison on the most serious charges.

Two moderate Democrats who run New York State and its largest city have come under intense criticism for their muted reaction to the killing of an unarmed Black man on a subway train. The White assailant, who the New York Police Department has not identified, choked Jordan Neely to death as he was suffering a mental health episode. Police released Neely’s assailant without charges, triggering protests in which several demonstrators were arrested. Asked for their reactions to his death, Governor Kathy Hochul said “there’s consequences for behavior” while Mayor Eric Adams, formerly of the NYPD, criticized other officials for condemning the killing. Despite Neely’s death having been ruled a homicide, and some effort by Hochul to expand on her initial comments, neither she nor Adams have called for an arrest.

Kathy Hochul, left, and Eric Adams Photographer: Stephanie Keith/Bloomberg

• FDIC to hit big banks with fees to replenish its insurance fund.
• Taiwan spy chief reveals Five Eyes is helping keep an eye on China.
• Apple beats sales estimates in a sign iPhone is weathering the slump.
• Heavy marijuana use increases schizophrenia in men, study finds.
• How a dishwasher engineer challenged Elon Musk’s grip on space.
• Peter Thiel says moving to Florida from Silicon Valley is too expensive.
• Ron DeSantis-hat trick at Disney’s expense could trigger a court battle.

A wave of chefs and hoteliers have moved to the state’s coastal region in recent years, chasing a way of life that’s always been there. And they’re just a small part of a significant migration and tourism boom. One former Mainer heads Down East to see what all the fuss is about.

Biddeford, Maine’s historic buildings are increasingly occupied by new hospitality ventures. Photographer: DenisTangneyJr/E+

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