GregTheAnalyst
Independent Investor, Macro/Micro & Technical Analysis
Big banks' negative earnings reactions leave regional banks looking likely to continue lower. Regionals were a leading bear sector in many previous negative markets, including the 2025 bear market and the early-2023 regional banking crisis. x.comÂ
Regional banks are next in line as commercial real estate cracks, because they hold a massive share of CRE loans that go bad as property values crater. Private credit cracked first: Apollo, Ares, Barings, Morgan Stanley and Cliffwater capped redemptions, and Apollo's co-president said some private-market marks are wrong. Now buildings sell for up to 90% off; a Chicago office bought for $68.1M fetched $4M. As loans mature and refinancing bites, every forced sale resets prices for everyone. x.com … Show more
US regional banks are among the underowned, lower-volatility areas now ripping, driven partly by earnings and an overall rotation. Alongside transports, medical devices and homebuilders, they are drawing money as overcrowded, highly margined, growth-at-any-cost areas such as semiconductors are unwound. x.comÂ
Hyperscaler credit stress and weak financials-versus-staples leadership warn of downside risk in the S&P 500 consolidation. Spreads have broken July wides, though an upside breakout is probable if financials stabilize. So far, tech weakness has lowered yields as Fed hikes are priced out, letting defensives rally and the S&P chop. If the Fed signals Nasdaq weakness won't stop tightening without better data, the tech-yield link could break in an uncomfortable, 2018-like direction. x.com x.com … Show more
High Treasury yields keep US real-estate stocks from being a buy yet, despite a record low against the S&P 500. Each hike pushes the sector lower; the 10-year yield above 5% argues for waiting rather than assuming rotation is inevitable. A turn likely needs falling rates, perhaps a first cut or the 10-year back below 4%. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
US regional banks look like a long as yields should be near a peak, with bonds and regional banks both halting their slide today. The trade rests mostly on a five-step long signal: price closed a gap, held the 50-day line, and indicators look similar to the March bottom. x.comÂ
US large-cap stocks are at risk because credit markets move before equities, with junk bonds leading the S&P 500. Elliott Wave International notes CCC-rated junk-bond spreads have widened sharply to their widest level in nearly three years, and that widening junk spreads have often preceded weakness in stocks. x.comÂ
Bank stocks look buyable if systematic selling is reacting to a flatter yield curve: the front end that drives earnings has barely moved. JPMorgan and Citi card spending rose 10% and 13%, and Citi and Wells Fargo reported lower credit losses. Wells expects steady margins and improving interest income as loans grow and old fixed-rate assets roll into higher yields. Funds crowded into banks before results, limiting near-term buyers. x.comÂ
Regional bank stocks will turn when bonds turn, with a target of 110 for the SPDR S&P Regional Banking ETF from around 68. The turn could happen any day, but the move to 110 should play out over several months, and focusing on day-to-day moves misses that. x.com x.comÂ
Regional banks' CRE refinancing wall did less damage than models projected because banks had been quietly de-risking for two years beforehand. CRE as a share of total bank loans fell about 400bp from 2022 to 2024. Extend-and-pretend needed a forced refinancing event, but sponsors found their own exits as rates peaked earlier than projected. x.comÂ