🏦 Are Large Banks Close To The Edge Again?

Good morning. US stock futures rose in Monday morning trading as investors kept an eye on the U.S. political landscape after President Joe Biden dropped out of the presidential race and endorsed Vice President Kamala Harris as the Democratic nominee.

🏦 Regulator flags gaps in big banks’ risk management

📝 Our report: A recent report from Bloomberg News said that a top U.S. bank regulator's secret assessments found half of the 22 large banks it oversees have "insufficient" or "weak" management of risks, ranging from cyberattacks to employee blunders. About one-third of the banks secured ratings of 3 or below on a 5-point scale for their overall management of risk in confidential assessments by the Office of the Comptroller of the Currency (OCC), the report said.

 🔑 Key points:

• The OCC told Bloomberg in a statement that Acting Comptroller Michael Hsu has "consistently discussed the need for banks to guard against complacency and actively manage their risks in order to build and maintain trust in the federal banking system."

• The report follows an hours-long global computer systems outage impacting services from airlines to healthcare, shipping and finance in recent days.

• Banks have been increasingly under pressure by regulators to up their risk management approaches since the collapse of Silicon Valley Bank and Signature Bank in 2023.

💡 So what: The implications of banks performing below expectations on risk management, as reviewed by the Office of the Comptroller of Currency (OCC), are significant, potentially leading to increased vulnerability to financial losses, higher operational and compliance costs, and greater regulatory scrutiny. Additionally, poor risk management can erode customer and investor trust, damage the bank's reputation, negatively impact stock performance, and place the bank at a competitive disadvantage. This situation underscores the critical need for robust risk management frameworks to ensure financial stability and maintain trust in the banking system.

Monday - No Major Economic News

Tuesday - Existing Home Sales

Wednesday - No Major Economic News

Thursday - U.S GDP

Friday - Consumer Sentiment

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🐭 Disney workers gear up to hit the picket line

WHAT: Thousands of Disney theme park workers in California have voted to authorize a potential strike, as contract talks over wages, sick leave, and benefits continue to spin in circles. The strike authorization was approved by an overwhelming margin, nearly 99% of the members who cast votes, according to a union statement. The election was held by a coalition of four unions, which represents 14,000 Disney ride operators, store clerks, custodians, candy makers, ticket takers, parking attendants and other employees.

WHY: The vote does not mean a strike will happen, only that union leaders now have the option to call a strike in the event that they are unable to negotiate a new contract deal with Disney.

⛽ Major energy acquisition underway

WHAT: Woodside Energy Group is shelling out $900 million to snap up Tellurian Inc., a US liquefied natural gas export project developer. Australia’s biggest oil and gas producer will make an all-cash payment of about $1 a share for all of Tellurian’s stock, including its owned and operated US Gulf Coast Driftwood LNG project, it said in a statement announcing the acquisition.

WHY: Tellurian had been in discussions to sell its business, after struggling to bring its proposed Louisiana gas-export facility to fruition since its 2016 founding. “The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” Woodside Chief Executive Officer Meg O’Neill said.

✈️ Private jet maker rolls out “flying-taxi”

WHAT: Electric aircraft maker Eve has unveiled its full-scale "flying taxi" prototype, hitting a high note as it aims for certification and service launch by 2026. Eve, controlled by Embraer, rolled out its electric vertical take-off and landing (eVTOL) aircraft prototype at an event with investors and clients at the Brazilian planemaker's plant a few days ago.

WHY: Eve debuted on the New York Stock Exchange in 2022, raising nearly $400 million to develop its eVTOL, a project initially slated to cost $540 million. The company later secured a $92-million loan from Brazilian state development bank BNDES.

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