Thursday☕️

04 May 2023 — 4 min read

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Markets/Economies:

Kremlin Drone Strike:

Yesterday, two drone strikes targeted the Kremlin, a historic and heavily fortified complex in the heart of Moscow, Russia (Capital City). It holds significant importance due to its concentration of government buildings, including the presidential palace.
Russia accused Ukraine of attempting to assassinate President Vladimir Putin with these attacks. The attacks highlight potential security vulnerabilities and have escalated tensions between Russia and Ukraine. Russia vowed to retaliate, while Ukraine denied responsibility and blamed Russian rebels instead.
Second Drone strike video link:

Interest Rate Hike:

The Federal Reserve raised interest rates by 0.25 percentage points, impacting various borrowing costs like mortgages, credit cards, auto loans, student debt, etc. This increase also leads to higher earnings on deposits for savers. This is the fastest pace of rate tightening since the early 1980s.
Credit card rates now average over 20%, while the average 30-year fixed-rate mortgage rate is at 6.48%. Adjustable-rate mortgages and home equity lines of credit rates have also risen. Auto loan rates increased, with a five-year new car loan at 6.58%.
Federal student loan rates, which are fixed, rose to 4.99% for the 2022-23 academic year. Savings account and certificate of deposit (CD) rates have also increased, with top online savings account rates reaching 4.5% and one-year online CD rates nearing 5%.
Changes in interest rates affect banks by altering the cost of borrowing and lending, ultimately impacting the overall economy.

PacWest Bank:

California-based PacWest Bancorp's stock fell 47% (after hours) amid reports of the bank considering options such as a sale, capital raise, or break-up.
The bank has struggled to find potential buyers for the entire business, which includes Pacific Western Bank and some commercial and consumer lending businesses. The decline raises concerns about regional bank stability in the U.S., especially as the Federal Reserve hikes interest rates.
Before the stock price drop, PacWest secured a $1.4 billion lending facility from Atlas SP Partners and reported deposit stabilization and growth. However, these measures failed to prevent the sharp decline.
Over three-quarters of PacWest's lending is to real estate, with 8% going to venture capital. The recent bank failures and interest rate hikes by the Fed have intensified concerns about the overall stability of regional banks in the country.

Dark Web Drug Bust:

U.S. and European authorities arrested 300 people, seized $53 million, and shut down the dark web "Monopoly Market" in a large-scale drug trafficking crackdown. Most arrests occurred in the U.S., where synthetic opioids like fentanyl cause a significant overdose crisis.
This operation marks the highest number of arrests and money seized in any international drug trafficking effort led by the Justice Department. One California defendant allegedly bought fentanyl in bulk, combined it with methamphetamine, and sold millions of pills on the dark web.
The dark web is a hidden part of the internet that can only be accessed using specialized tools, such as the Tor browser and specialized software, which provides anonymity to its users. It operates within an encrypted network, making it challenging for authorities to track or monitor activities.

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