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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FINANCIALS
Final Friday thoughts: US regional banks (BKX Index} are being seen as the nexus of credit events in the US right now. HSBC and Barclays are key banks to watch in Europe.
- BKX has underperformed the SPX by near-40% since the failures of last Spring (Silicon Valley et al.) and still sits well over 10% lower in absolute terms. European banks (SX7P Index} have recovered their equity value over the same period.
- If we recast the same chart with forward PE estimates (vs. equity prices) we can see SPX has had a 20% re-rating, BKX is back above its pre-SVB rating and European banks have seen a mid-teens derating. Why the harsh treatment of the European issuers?
- Put simply, the regionals have seen earnings expectations trimmed, whereas, in Europe, the sell-side has taken a more sanguine view on forward profitability which the market hasn’t shown much faith in. Why? Likely an expectation that falling Euro rates will negatively impact revenues in FY24 and onwards.
- If today’s move in US rate cut expectations is valid, the regionals would appear to simply be discounting credit issues – logical after some of the idiosyncratic news we’ve seen today. European banks are largely out of US banking (HSBC, Barclays being the obvious exceptions) so those appear the two with the most to lose right now.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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