Nearly 200 U.S. Banks Are on Shaky Ground
Some observers of the banking sector say that contagion is unlikely in the wake of those recent bank failures which have been so widely reported (Business Insider, March 11):
Buy the dip in banks as the Silicon Valley Bank crisis is unlikely to spread, Goldman Sachs says
However, there may be a greater risk of more banks going under than some people expect.
Here’s news from Fox Business (March 18):
Study finds 186 banks vulnerable to SVB-like collapse
The study created a scenario where half of 186 banks’ depositors withdrew their funds
Relatedly, the following is from a section titled “Safe Banking” in the recently published March Elliott Wave Theorist:
In Last Chance to Conquer the Crash, there is an entire chapter titled “How to Find a Safe Bank.” Numerous issues of The Elliott Wave Theorist and The Elliott Wave Financial Forecast have warned that banks are vulnerable and that a bear market would reveal that fact. ….
Have we been paranoid, or is everyone else whistling show tunes on the deck of the Titanic? I think the shock and surprise expressed over the collapse of the 16th-largest bank in the U.S., Silicon Valley Bank (SVB), answer that question:
SVB’s Lightning Collapse Stuns Banking Industry
The rapid unraveling of SVB Financial Group has blindsided the banking industry after years of stability
The speed of the SVB crash blindsided observers and stunned markets, wiping out more than $100 billion in market value for U.S. banks in two days.
And yet (of course),
“We do not believe there is contagion risk for the rest of the banking sector,” said [the] CEO of an investment research firm. “The deposit base from the major banks is much more diversified than SVB and the big banks are in good financial health.”
Observe that all these people were caught off guard because they were too optimistic, yet they feel compelled to reiterate that they remain optimistic!
Nothing is going to get better in the stock market until the headlines and comments flip 180 degrees to express widespread pessimism. When that happens, you can start making your buy list.