![]() ![]() ![]() Since banks are likely to pay higher rates for deposits because of sky-high money market and Treasury yields, banks may face a reckoning as revenue and profit shrink.”īy Thursday’s close individual banks fell with their respective ETFs, as Bank of America, ( BAC) Wells Fargo ( WFC) and Citizens Financial ( CFG) all plummeted by around 6%. “If a dip in economic activity causes layoffs, cash-strapped borrowers will likely mean fewer loans and higher default rates. And so did the TheStreet Smarts’ Todd Campbell. “The risk GDP falls again because of rising interest rates is increasing,” wrote Campbell. Hedge fund manager Doug Kass, author of Real Money Pros Daily Diary, and Stephen Sarge Guilfoyle, who writes the popular Market Recon column on Real Money. Hedge fund manager Doug Kass, author of Real Money Pro's Daily Diary, and Stephen Sarge Guilfoyle, who writes the popular Market Recon column on Real Money, for example, earlier in the week gave warnings about the looming risks. “I did not exit my bank stocks on Tuesday, but I did reduce my exposure to the space by close to 50%,” said Guilfoyle the day before the bloodletting.Ĭampbell on Wednesday noted in his TheStreet Smarts column, presciently titled “ Is It Time To Sell Bank Stocks?" that higher interest rates could drag on banks, as could lowering demand for loans as the economy putters. The Financial Select Sector SPDR Fund ( XLF), meanwhile, was down more than 4% on the close.īanks, explained Guilfoyle early Wednesday morning, “don't do so well during periods of economic recession as demand for credit dries up as business and households cut back on spending plans.” He also noted that as the mortgage business ebbs, banks also feel the crunch. The ETF for regional banks, the SPDR S&P Regional Banking ETF ( KRE), was down nearly 4.7%. It was down more than 10% from just five days earlier. And he listed numerous reasons to be wary of the financial-services sector: deposits data, higher rates lasting longer than expected, commercial real estate woes, the lack of monetary and fiscal policy relief that were seen during the Great Recession, and “zombie companies” he sees as a “disaster about to happen.”īy Thursday’s close, the SPDR S&P Bank ETF ( KBE) had fallen 7.28% to $42.66. Kass also warned of the “ bearish” messages coming out of JPMorgan and others in the financial-services sector in conferences earlier in the week. My journey was made possible by the tens of thousands of subscribers to TheStreet, Real Money, and Real Money Pro. “Late last week we essentially sold out of our long bank holdings - based on our growing concerns regarding the commercial real estate space and other credit fears, rising deposit (funding) betas and the likely economic consequences of the Fed's problems associated with taming inflation,” Kass wrote in his Daily Diary post, “ Banks Bust,” at 7:30 a.m. ![]() ![]() Get actionable advice from Doug Kass and 30+ Wall Street pros with a Real Money Pro subscription Join me and my team of professional traders for unique perspectives and breakthrough investment opportunities.Hedge fund manager Doug Kass, author of Real Money Pro's Daily Diary, and Stephen “Sarge” Guilfoyle, who writes the popular Market Recon column on Real Money, for example, earlier in the week gave warnings about the looming risks. Click here to learn about this dynamic market information service for active traders and. From sudden sell-offs to sudden spikes, Real Money Pro arms you with crucial analysis - at a rapid fire, professional pace - to help you make sound trading decisions - every day, every hour, and every minute. (This commentary originally appeared on Doug Kasss Daily Diary on Real Money Pro on May 12. He co-authored a book with Ralph Nader and the Center for the Study of Responsive Law called “Citibank: The Ralph Nader Report” and can be found as a guest host on CNBC's "Squawk Box." A Note from Doug: Current strategies and actionable trade ideas - all on one dynamic platform built exclusively for active trades. Previously, he served as a senior manager at Omega Advisors, a $6 billion investment partnership. He also serves as president of Seabreeze Partners Management Inc. In TheStreet’s Real Money Pro service, Kass provides frequent market commentary and, and investing ideas for active investors throughout each trading day in Doug’s Daily Diary. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality. So writes Real Moneys Doug Kass, the well-known hedge fund manager who for decades has penned. Doug Kass is a world-renowned hedge fund manager that brings decades of experience and success navigating through some of the most turbulent periods in market history. Indeed, as we say goodbye to 2022, one thing is clear: It was a year of boundless surprises. ![]()
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