Banking & Capital Markets

Trial Balance: Silicon Valley Bank, Consumer Sentiment, and a CFO Family

SVB's failure will drive the news cycle, but key economic data points, including consumer expectations, still map out the economic climate.
March 13, 2023

Welcome to The Trial Balance, CFO’s new Monday column which aims to prepare you with what is to come this week.

Part 1: The Silicon Valley Bank Fallout

SVB’s story unfolded in real-time on Friday, but the fallout is only just beginning. Senior reporter Vincent Ryan, along with CFO and contributing editor Wayne Spivak, began by assessing what finance chiefs should be asking themselves and their organizations to hedge against the unfolding risk. 

The Federal Reserve making additional funding available to depository institutions may prevent some businesses from moving their deposits out of smaller banks. But the closure of Signature Bank in New York on Sunday suggests the crisis may continue. Watch for CFO‘s continuing coverage.

Part 2: This Week’s U.S. Economic Updates 

If an extra cup of coffee doesn’t cure your daylight savings time drowsiness, banking turmoil, the VIX topping 30, and this week’s economic data may reanimate you.

Monday — New York Fed’s Survey of Consumer Expectations.

The first data point in a week full of them. Consumers expected 1-year inflation of 5% in January, so the Fed will be looking for a drop. Household income growth expectations is the other important number — it dropped to 3.3% in January from 4.6% in December 2022.

Tuesday — Consumer price index (CPI) day. Economists are expecting moderate to tiny moves downward in headline CPI and core CPI. The NFIB Small Business Optimism Index for February will also be released. Watch for readings on SMB plans for capital outlays, hiring, and real sales.

Federal Reserve Governor Michelle Bowman to give a talk on the U.S. banking system at the Community Bankers Association’s ICBA Live conference. She may address the failure of Silicon Valley Bank.

Wednesday — Retail sales and the producer price index (PPI) highlight the day. Inflation at the wholesale level rose a more-than-expected 0.7% in January, but once again economists project it will fall to 0.3%. After robust retail sales in January, the median forecast is barely flat at -0.4%.

The SEC holds an open meeting, mostly focused on proposed rule changes from the division of trading and markets.

Thursday — The governing council of the European Central Bank announces its latest interest-rate decision. It has signaled another half-point rate increase.

Friday — The University of Michigan releases preliminary readings on March consumer sentiment. Consumer sentiment rose slightly last month but shows no firm signs of an upward trend. The Conference Board posts the results of its Leading Economic Index, whose inputs include payroll, manufacturing trade and sales, industrial production, building permits, and interest rates.

Earning reports due during the week from BuzzFeed, Lennar, Guess, Adobe, FedEx, Dollar General, and Blue Apron.

Part 3: Family First

From Finance Chief to Fintech Entrepreneur

This week CFO kicks off our three-part series that explores how Canadian finance veteran Greg Kautz used his extensive finance career and network to co-found a fintech company with his accountant son, Derek Kautz. The father-son duo founded lease accounting software provider Black Owl Systems over two years ago to help small- and medium-sized businesses stay competitive.

“I saw Derek’s vision. I saw his passion for it. And I saw the opportunity,” Kautz said about the decision to start the company with his son.

Quote of the Day (Or Maybe 2023)

“At this time, the company does not know to what extent the company will be able to recover its cash on deposit at SVB.” — Roku (but it could be any number of companies Monday morning)