First Republic Bank Officially Enters Receivership as Crucial Week Kicks Off

Good morning contrarians! It is Monday, May 1. Welcome to the first trading day of May. It’s a huge week with one quarter of S&P 500 companies reporting earnings, the Federal Reserve meeting, and non-farm payrolls on Friday.

State of Play

Overnight we finally got some resolution to this First Republic Bank (FRC 0.00%↑) drama, with regulators taking over the troubled lender and agreeing to sell most of its operations to JPMorgan (JPM 0.00%↑). JPM will assume all of FRC’s deposited — insured and otherwise — and shareholders will presumably get wiped out.

For whatever reason this does not appear to have affected asset prices much. As of 0640:

• Stock futures are unchanged. Only small caps are moving at all from the break-even point and those barely with the Russell 2000 down just 0.3%. FRC continues to trade freely, now dropping below $2/share at the time of this writing;

• Commodities are dropping with WTI crude oil down 2% to $75/barrel. This is the only real movement that could be discerned so far and it may not even be due to FRC. Copper is down just 0.2%;

• Bonds aren’t doing anything. The 2-year yield is up 2 basis points to 4.08% and the 10-year unchanged at 3.46%;

• Cryptos are dropping, with Bitcoin down 2.5% to trade around $28,500.