Block Shares Plunge Amid Fraud Allegations

Market Movers

• Block shares plunge after Hindenburg says it facilitates fraud. Hindenburg Research announced that the payment company was in its latest short position, alleging that Block allowed criminal activity to operate with lax controls and “highly” inflates Cash App’s transacting user base, a key metric of performance. The report alleges those unbanked customers were involved in criminal or illicit activity.

• Oil falls as U.S. holds off refilling strategic reserve. There is a sell-off from the view that the United States will not refill oil reserves even if the WTI prices are at $67-$72 a barrel. Investors are worried about potential oversupply after U.S. Energy Secretary Jennifer Granholm said refilling the country’s Strategic Petroleum Reserve or SPR may take several years.*

• Banks still drawing on the Fed for $164 billion of emergency cash. Banks reduced their borrowings only slightly from two Federal Reserve backstop facilities in the most recent week, a sign that institutions are taking advantage* of the central bank’s liquidity in the wake of turmoil. US institutions had a combined $163.9 billion in outstanding borrowings in the week through March 22.

• New home sales at 640,000 annual rate in February. Sales of new single‐family houses in February 2023 were at a seasonally adjusted annual rate of 640,000, according to estimates. This is 1.1 percent above the revised January rate of 633,000 but is 19.0 percent below the February 2022 estimate of 790,000.

• More than 1 million customers have signed up for Netflix's ad-supported tier. Perhaps equally importantly, Netflix also surpassed the milestones it set with advertisers, delivering the requisite number of viewers necessary to fulfill its contractual obligations. Its ad-supported plan user base grew by more than 500% in the first month after its launch and another 50% in the second month.
  

What to Watch

• Ford says it will lose $3 billion on EVs this year. Ford finance chief John Lawler described the EV division as a startup inside the 119-year-old company and said it is normal for a fledgling business to rack up losses.* It’s a reminder of how far traditional automakers have to go in turning their EV portfolios profitable.

• Deutsche Bank shares plunge in renewed bout of stress. The bank, which has staged a recovery in recent years after a series of crises, said Friday it will redeem a tier 2 subordinated bond early. Such moves are usually intended to give investors confidence* in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through.

• TikTok fight rocks U.S.-China relations. The hearing, peppered with withering attacks on TikTok from both Democrats and Republicans, ran more than five hours and underscored growing concern about Beijing’s potential influence over the app.* U.S. This comes as Beijing said it would fight any U.S. attempt to force the company’s sale by its Chinese owners.

• British regulator softens stance on Microsoft-Activision deal. The U.K.’s competition regulator on Friday said it has narrowed the scope of its investigation into Microsoft’s takeover of Activision, saying it no longer believes the deal will lead to a substantial lessening of competition in the console gaming market.

• FTC wants to make ending subscriptions a lot easier. The proposed rule would require companies to make canceling subscriptions just as easy as it is to sign up for one -- crucially, ending phone calls for services customers signed up for online. Failure to comply would result in a $50,000 fine per violation.