Stock Power Daily — Weekly Wrap: The Next Financial Crisis?

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Note: We are doing something special with Stock Power Daily next week. I think it’s going to bring you a ton of value. I’m going to give you all the details Monday morning.

I can’t wait to share it with you.


Weekly Wrap:
The Next Financial Crisis?

By Chad Stone, Managing Editor

Is the next financial crisis upon us?

It’s a question on all our minds, especially this week … what I’d call the “noisiest” week in the market in some time.

There’s no clear answer yet, but we’re about to witness the most anticipated Federal Reserve meeting since Chair Jerome Powell and the gang started raising rates a year ago.

We knew what to expect then: The Fed would keep hiking rates to pump the brakes on the highest inflation in decades.

Last weekend changed all of that.

Silicon Valley Bank (SVB) and Signature Bank collapsed after losing billions trying to resell bonds. The entire banking industry has been hit hard with tremendous headwinds as this situation has everyone on edge.

It creates a situation for the Fed: Raise rates to slow inflation, but risk more banks failing due to low bond prices … or hold rates steady to help banks, but risk inflation going even higher.

Pro tip: Adam O’Dell covered this ground in his most recent piece for The Banyan Edge. Check it out here so you are well-prepared for what’s coming up.

As of Friday afternoon, 73% of bond traders are expecting a modest 25-basis point hike while 27% think the Fed will hold rates where they are.

That was different from a month ago when no one thought the Fed would hold rates steady with a 60-40 split between a 25- and 50-basis point raise.

In terms of regional banks, I used our Stock Power Ratings system to see just how some of these headline-generating regional banks look:

  • SVB Financial Group (Nasdaq: SIVB), the holding company for SVB, rates a “Bearish” 26 out of 100.

  • Signature Bank (Nasdaq: SBNY) scores a 36 out of 100.

  • And First Republic Bank (NYSE: FRC) is a “High-Risk” 19 out of 100.

But the biggest takeaway from this is what Matt pointed out earlier last week … using our ratings system would have steered you clear of banks like SIVB months ago.

The stock has never been rated above “Bearish” over the last six months.

This is why, no matter whether we are on the cusp of another financial crisis or not, we are going to lean into our expertise and the Stock Power Ratings system to help you reduce the “noise” and make sound investing decisions…

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Here are some highlights from the last week in Stock Power Daily:

Until next time,

Chad Stone
Managing Editor, Money & Markets

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