ECONOMIC UPDATE: Banking Blues Worsening, Worst is Yet to Come
The socioeconomic crisis spreading across the globe was self-inflicted by reckless record low interest rates and cheap monetary policy since the Panic of ’08
NOTE TO READERS: The following is our weekly Economic Update — Market Overview found in this week’s issue of The Trends Journal. Consider subscribing here for in-depth, independent geopolitical and socioeconomic trends and trend forecasts that you won’t find anywhere else.
The banking crisis has just begun.
Last Friday, Moody’s Investors Service downgraded regional lenders, including U.S. Bancorp, Zions Bancorp, Bank of Hawaii Corp., Washington Federal Inc., Western Alliance Bancorp, Associated Banc-Corp., Comerica Inc., UMB Financial Corp., First Hawaiian Inc., Intrust Financial Corp., and First Republic.
After posting its latest quarterly results and reporting that its deposits dropped 40 percent to $104.5 billion, shares of First Republic Bank slumped nearly 50 percent today.
With the banking blues worsening, CNBC reported that the “SPDR S&P Regional Banking ETF (KRE) and SPDR S&P Bank ETF (KBE) lost more than 3 percent as financials weighed on the market. Western Alliance Bancorp and PacWest each slid 4 percent, while Charles Schwab shed almost 3 percent.”
And of course, there is the Credit Suisse debacle, which, according to the Financial Times, suffered $68.6 billion in outflows in the first quarter as clients fled the stricken bank: “In light of the merger announcement, the adverse revenue impact from the previously disclosed exit from non core businesses and exposures, restructuring charges and funding costs, Credit Suisse would also expect the investment bank and the group to report a substantial loss before taxes in [the second quarter] and 2023,” Credit Suisse said.
The Worst is Yet to Come
The socioeconomic crisis spreading across the globe was self-inflicted by reckless record low interest rates and cheap monetary policy since the Panic of ’08.