It’s the Banks Again



Posted by Ed 6 mths ago
US bank stock index down 17% from January. EU bank stocks crushed, crushed, crushed since Financial Crisis.
Monday early afternoon, the US KBW Bank index, which tracks large US banks and serves as a benchmark for the banking sector, is down 2.5% at the moment. It has dropped 17% from its post-Financial Crisis high on January 29. If the index closes at this level, it would be the lowest close since September 18, 2017:



Ed 6 mths ago
Global economy is running out of momentum

LONDON (Reuters) - The global economic outlook is deteriorating, with a broad range of asset prices and real-time economic indicators pointing to either a slowdown in growth or an outright recession occurring in 2019.

South Korea’s KOSPI-100 equity index has now fallen by almost 19 percent over the last year, the fastest rate of decline since the financial crisis of 2008/09, in a warning sign for investors and commodity traders.

The KOSPI-100 has correlated closely with the growth in international trade, given the South Korean economy’s strong export orientation, so the sharp decline suggests trade growth will slow sharply in the months ahead.

Germany’s DAX index, another share market heavily exposed to international trade, has also fallen by more than 14 percent over the last year, its worst performance since early 2016, and before that 2011.

Even in the United States, which is much more closed to international trade and has reported the strongest economy and stock market in 2017/18, there are signs the bull run is running out of momentum.

The broad S&P 500 equity index is up just 7 percent compared with the end of October 2017, the smallest year-on-year increase for almost two years, and far below its peak of 24 percent at the start of 2018.

The stimulus of corporate tax reductions which went into effect at the start of the year is beginning to fade and more U.S. businesses are struggling with a rising exchange rate, tariffs and slower revenue growth.

Revenue growth at U.S. corporations is slowing, with a significant number of S&P500 firms reporting disappointing sales in the third quarter (“Bull market’s latest hurdle: slowing sales growth”, WSJ, Oct. 21).

The U.S. Treasury yield curve remains close to inversion, with rates on 10-year paper just 26 basis points above 2-year notes, a signal that has often preceded a slowdown in growth or recession in the past.

The U.S. dollar remains close to its highest value for a quarter of a century against a trade-weighted basket of the currencies of U.S. trading partners.


The combination of a rising interest rates, a flattening yield curve, falling share prices and a strengthening dollar represents a significant tightening of financial conditions, not just in the United States but around the world.

The OECD’s composite leading indicator has fallen to its lowest in almost two years and is at a level that is consistent with a slowdown in economic momentum.

Rising oil prices, especially for consuming countries outside the United States, have added to the pressure on many emerging markets.


Ed 6 mths ago
“Global stocks are falling precipitously once again, and banking stocks are leading the way. If this reminds you of 2008, it should, because that is precisely what we witnessed back then. Banking stocks collapsed as fear gripped the marketplace, and ultimately, many large global banks had to be bailed out either directly or indirectly by their national governments as they failed one after another.”

< Back to main category


Login now