Banks stocks have been through a tough patch since March 2023 after the collapse of #svb. Their balance sheets, with few exceptions, are full of low yielding assets (loans and bonds) that forbid them to be competitive in deposits, threatening their liquidity and solvency. Banks have been able to get by thanks to the #btfp orchestrated by the Fed, which matures in 2 months. With this information, you would expect uncertainty to be high, and therefore bank stocks to be under pressure; and yet, as you can see below, they’re having a very strong start of the year. Perhaps because investors see #ratehikes as the root of the problem, and now with the expectation of #ratecuts, they think banks will outperform, but the reality is that there needs to be a solution for liquidy before March, and then, if rate cuts finally occur, banks may get some tailwinds, but it’s not clear why this sudden enthusiasm for banks is happening now, particularly when the Fed wants to increase banks capital ratios again, making them less profitable.
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