Since the Federal Reserve hiked rates, "big" US banks have dramatically underperformed "small" US banks, continuing a trend that has been going on since February...
But it's broader than that this "big" bank blow-up is global.
The stock prices of 16 of the most 'Systemically Important Financial Institutions' (SIFIs) in the world are now in bear market territory (down by 20% or more from their recent highs in dollar terms); and as the Financial Times reports, this has caused Ian Hartnett, chief investment strategist at London-based Absolute Strategy Research, to issue his first "Black Swan" alert since 2009.
Of the 39 SIFIs, these are the 16 in bear market territory: Deutsche Bank, Nordea, ICBC, UniCredit, Crédit Agricole, ING, Santander, Société Générale, BNP Paribas, UBS, Agricultural Bank of China, AXA, Mitsubishi UFJ Financial Group, Bank of China, Credit Suisse and Prudential Financial.
At some point, says Hartnett, central bankers will have to respond to bearish signals from almost half the global SIFIs, rather than continuing to tighten monetary policy:
“The clue is in the name,” he said.
“If these banks are supposed to be systemically important then policymakers ought to be watching them to see what is happening.”
"The synchronised dips were a sign of global financial stress."
At the same time the credit risk of some of the largest banks in the world has risen significantly...