🏦 Big Banks Just Caught A Break As...?

Good morning. US stock futures fell in Wednesday morning trading as investors looked toward the latest consumer inflation report.

💸 Fed walks back bank capital requirements proposal

📝 Our report: The Federal Reserve is pulling back on its proposal to raise bank capital requirements after lawmakers and the banking industry warned it could stunt lending and slow down the economy. The new proposal would increase capital levels for big banks like JPMorgan Chase and Bank of America by 9% in aggregate, down by half from the original plan from more than a year ago, which set the capital increase to around 19% for those institutions.

 🔑 Key points:

• Banks with assets between $100 billion and $250 billion, which were initially subject to the stricter standards of the largest banks, would also no longer be subject to the increases — other than the requirement to recognize unrealized gains and losses of their securities portfolios in regulatory capital.

• When it was first released more than a year ago, the capital plan was met with immediate disagreement and division among Fed officials, who questioned whether the plan could actually do more harm than good in its initial form.

• The new version of this plan, known as Basel III endgame, comes after months of anticipation after Fed Chair Jerome Powell said as far back as March that the central bank sought "broad material changes" to the initial proposal and was looking to secure a consensus from the Federal Reserve board.

💡 So what: If the Federal Reserve scales back plans to raise bank capital requirements, banks stand to gain several advantages. They’ll have more funds available for lending, which boosts profitability, and can focus on rewarding shareholders through dividends or stock buybacks. This also reduces compliance costs, easing the regulatory burden and allowing banks to operate more efficiently, which enhances their market competitiveness while supporting broader economic growth.

Wednesday - US Consumer Price Index

Thursday - Monthly US Federal Budget

Friday - Consumer Sentiment (prelim)

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📱 Apple’s tax headache…

WHAT: Apple just lost a decade-long legal scuffle with Europe’s top court over taxes in Ireland. Back in 2016, the European Commission asked Ireland to claw back 13 billion euros ($14.4 billion) from the tech giant in unpaid taxes.

WHY: In 2014, the European Commission, the European Union’s executive arm, opened an investigation into Apple’s tax payments in Ireland, the tech giant’s headquarters in the EU. The commission in 2016 ordered Dublin to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple, at the time saying that the tech company had received “illegal” tax benefits from Ireland over the course of two decades.

⚖️ Multiple weight loss drugs coming in years ahead

WHAT: Looks like the race for that “magic pill” is heating up! The weight-loss market is about to get a lot more crowded, with 16 new drugs set to challenge Novo Nordisk and Eli Lilly’s reign, according to Morningstar and Pitchbook analysts. The 16 drugs could launch by 2029, with roughly $70 billion of the GLP-1 market coming from these new challengers the jointly published report said.

WHY: Analysts last year had forecast the obesity market would be $170 billion by 2031, but have recently raised their estimates, partly due to anticipated higher diabetes market penetration.

🚀 SpaceX launches mission for first private space walk

WHAT: SpaceX just launched its Polaris Dawn mission, the first of three missions that billionaire and Shift4 founder Jared Isaacman purchased from SpaceX in 2022 for his human spaceflight effort known as the Polaris Program. The multiday trip is not headed to a destination like the International Space Station, but instead is a free-flying mission tracing orbits that the crew hopes will go far from Earth.

WHY: As a centerpiece to the mission, the crew will attempt to perform the first-ever SpaceX spacewalk. Extravehicular activities, or EVAs, have been a regular part of government astronauts’ missions, but no private venture has attempted an EVA before. The EVA is expected to last two hours from start to finish.

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