Perhaps Treasury Secretary Janet Yellen and Fed chief Jerome Powell have done enough – for now – to cool consumer concerns about the state of the US banking system.
Google Trends search data crunched by Goldman Sachs shows that the large initial increase in public focus on banks perceived to be under stress has cooled over the past week (chart below). Search trends related to bank withdrawals also initially spiked amid busts this month of Silicon Valley Bank (SIVB), Signature Bank (SBNY), and Credit Suisse (CS) but have since normalized. this.
Goldman added that broader economic confidence amid the rolling bank crisis experienced only a modest decline, as indicated by the investment bank’s GS Twitter Economic Sentiment Index.
Goldman chief economist Jan Hatzius said the data was an “encouraging sign.”
As consumer fears eased somewhat, bank stocks took a bid – especially after Yellen promised more support for lenders if needed.
The KBW Bank ETF (KBWB) — which counts JPMorgan (JPM), Citigroup (C), and Bank of America (BAC) as its top three holdings — is up about 5% since Friday’s close. The closely watched bank ETF is down 24% in March year to date, according to Yahoo Finance data.
“Big US banks are cheap to own here, but the Fed’s stress test and CCAR process this June could pose a risk if regulators decide that these firms should strengthen their positions in capital by simply cutting/maintaining dividends and repurchasing stock,” with DataTrek. explained founder Nicholas Colas in pushing higher in bank names this week. “This outcome is not our own base case, but recent bank failures may prompt regulators to be more cautious than they otherwise would have been.”
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