For those investors who own US bank stocks, the past few days have not been pleasant by any means. Both Bank of America and Morgan Stanley dropped by 13% in value, Goldman Sachs, one of the big opposers of Bitcoin, is down 22% throughout 2016 so far. Diversification is essential for investors, and anything tied to US banks is not worth one’s time and effort.
Everyone with a basic understanding of the stock markets will have noticed how US bank shares have not been doing well over the past few years. In fact, many people expected these stocks to far off far worse than they are right now. The Brexit has sent stocks of Bank of America and Morgan Stanley down the deep end.
But they are not the only ones who are facing negative pressure right now. The KBW Bank Index has seen its biggest 48-hour decline since August of 2011. Keeping in mind how this group monitors 24 different US banks, things are looking not good, to say the least. Selling financial stocks is the best course of action for any serious investor right now.
Things will only get worse from here on out, by the look of things. Looming negative interest rates are putting a lot of pressure on US bank stocks right now. Whereas some experts expected the Fed to increase interest rates later this year, that scenario is looking more and more unlikely every day.
The Brexit referendum is only making matters worse as well. Throughout all of the stock market turbulence, investors are desperately looking for new safe havens. Government bonds seemed to be an attractive option, but eventually, they will face similar results to what is happening to US banks right now. Business leaders have lost confidence in traditional big deals linked to investment banks.
To make matters even worse, there is a growing amount of regulation banks have to deal with. These rules were put in place to prevent a new financial crisis, albeit it is doubtful these pieces of paper will stave off the inevitable. While it has been confirmed by the Fed all of the 33 US banks will survive during a deep recession; investors will be looking for alternative opportunities during these volatile periods.
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