Banks can be a tell on everything from the overall economy to credit markets to equities.
From MarketWatch, February 27:
Problem loans in the financial-services sector imply mounting risks for markets
A previous version of this report provided an inaccurate name for the exchange-traded fund “SRLN.” It is the State Street Blackstone Senior Loan ETF. The story has been corrected.
An alarm bell has been rung by one of Wall Street’s most prominent strategists. Investors ought to be wary of developments in the financial sector, with problem loans increasingly a concern that could trigger a “proper flush in risk assets” next month.
This stark warning emanates from one of Wall Street’s most respected commentators, Bank of America chief equity strategist Michael Hartnett. His weekly flow note alerts investors to watch closely the performance of exchange-traded funds that specialize in bank loans. The panic generated by Jamie Dimon’s “cockroaches” forewarning last October has never fully dissipated.
When bank-loan funds break below the 200-day moving average? “Bad events.” BofA Global Investment Strategy Hartnett highlights two funds in particular that warrant special attention: the State Street Blackstone Senior Loan ETF and the State Street Financial Select Sector ETF. So far this year, the former is down just a few percentage points, with the latter dropping about 5%, but Hartnett and team suggest that if respective key support levels for the funds‘ 200-day moving average at $40 and $52 are broken, that signals “bad events” are looming. He cites comparisons with pandemic-era markets and the U.K. pension-fund crisis.
If the worst comes to pass, Hartnett predicts a big increase in risk aversion in March, a spike in the dollar with its index hitting 100, and a surge in demand for U.S Treasurys....
....MUCH MORE
Also at MarketWatch:
Will the bank get suspicious if I deposit $150,000 in cash into my checking account?
