2020 market expectations and positioning

[iantao99]

Noob qn here, hope to learn from experts here.

Taking ref from 19Feb2020, the S&P drop abt 10% todate.
However, Citi Bank dropped 17% and Bank of America dropped 24%.

Why does bank stocks drop so much more than S&P?

 

[netzach]

Noob qn here, hope to learn from experts here.

Taking ref from 19Feb2020, the S&P drop abt 10% todate.
However, Citi Bank dropped 17% and Bank of America dropped 24%.

Why does bank stocks drop so much more than S&P?

because of the cut in interest rates by the Fed Reserve.
Cutting of interest rates would eat into the banks' NIM

 

[iantao99]

because of the cut in interest rates by the Fed Reserve.
Cutting of interest rates would eat into the banks' NIM

Thanks! That's a good point. Bank of America tanked significantly right after rate cut.

However, taking the numbers before the rate cut from 19 - 28 Feb,
S&P - -12.7 %
Citi - -18.8 %
BoA- -17.9%.

Still, b4 the rate cut, the bank stock dropped significantly more than S&P.
Any ideas?

Does it mean, assuming all blue chip stocks return to it's pre-Covid value, the bank stocks should give better returns, making it a better buy today?

 

[FrostWurm]

S&P - -12.7 %
Citi - -18.8 %
BoA- -17.9%.

Still, b4 the rate cut, the bank stock dropped significantly more than S&P.
Any ideas?

Does it mean, assuming all blue chip stocks return to it's pre-Covid value, the bank stocks should give better returns, making it a better buy today?

You should direct your question to Jerome Powell

Perhaps a rate cut was already partially priced in before it was actually cut?
Maybe long-term interest rates will stay low and not recover to pre-virus days?
Maybe the rise of fintech players will eat into the bank's profits?

 

[netzach]

Besides the rates cut, with the ongoing coronavirus threat, there are valid concerns that the economy and businesses would slow down and since banking counters are the bell weathers of economic growth and health, they would be naturally the hardest hit.

You might want to hold off going into banking counters for the moment.

There might be another rates cut in the coming FOMC meeting.

For more detailed explanations, got to wait for Duke to reply, he’s more pro and would have more insights.

I’m Edmw troll standard only.

Thanks! That's a good point. Bank of America tanked significantly right after rate cut.

However, taking the numbers before the rate cut from 19 - 28 Feb,
S&P - -12.7 %
Citi - -18.8 %
BoA- -17.9%.

Still, b4 the rate cut, the bank stock dropped significantly more than S&P.
Any ideas?

Does it mean, assuming all blue chip stocks return to it's pre-Covid value, the bank stocks should give better returns, making it a better buy today?

गगनरोमन्थ HardwareZone Forums app

 

[ocs_woodlands]

What’s catharsis

A great release of emotion, in this case I mean fear.... when there is fear in the market, that is the time to buy... and fear is when the market is dropping by 1500 or even 2000 points..

 

[iantao99]

Perhaps a rate cut was already partially priced in before it was actually cut?

OIC. that would be one of the reasons. thanks!

Besides the rates cut, with the ongoing coronavirus threat, there are valid concerns that the economy and businesses would slow down and since banking counters are the bell weathers of economic growth and health, they would be naturally the hardest hit.

You might want to hold off going into banking counters for the moment.

There might be another rates cut in the coming FOMC meeting.

गगनरोमन्थ HardwareZone Forums app

Thanks for advice. noted.

Thanks guys!

 

[NewInvestor]

A great release of emotion, in this case I mean fear.... when there is fear in the market, that is the time to buy... and fear is when the market is dropping by 1500 or even 2000 points..

No extreme fear or capitulation yet. May hv to wait a month or two or more.

 

[ocs_woodlands]

No extreme fear or capitulation yet. May hv to wait a month or two or more.

Ok in the meantime accumulating shorts on SGX...

 

[Trader11]

https://finance.yahoo.com/news/coro...e-veteran-trader-153023026.html?.tsrc=applewf

ya man...i think so too...all the damn freaking rates cut are just short term measures....

when another headline news come out, half or even more of the previous gains would be wiped off...

I already said US is damn complacent. They might become the next China with city shutdown.....

 

[ocs_woodlands]

let's see how SGX reacts.....

am glad added to shorts yesterday...

Rex 200000 @ 189 avg
dbs 500 @ 24.10

if today open high or unchanged, will add to DBS short....

 

[Trader11]

Another crisis is brewing in O&G industry. Opec and Russia are not cooperating to cut production outputs. Oil can potentially collapse to 20-30 dollars.

There are many companies in STI such as the Big 3 banks and Keppel who are exposed to this.

 

[Hello_Kitty]

No extreme fear or capitulation yet. May hv to wait a month or two or more.

i also think 1-2 months will see the real bad downturn

 

[d9_lives]

Just checked,
YTD +6.22%
So....what's with all this fear mongering?

 

[NewInvestor]

Just checked,
YTD +6.22%
So....what's with all this fear mongering?

Fun fact. S&P500 started this year at 3,230. It is about -6% YTD. So u must have been doing something right compared to the investors holding S&P500 ETF. What's the secret to your success?

 

[DukeCS33]

Besides the rates cut, with the ongoing coronavirus threat, there are valid concerns that the economy and businesses would slow down and since banking counters are the bell weathers of economic growth and health, they would be naturally the hardest hit.

You might want to hold off going into banking counters for the moment.

There might be another rates cut in the coming FOMC meeting.

For more detailed explanations, got to wait for Duke to reply, he’s more pro and would have more insights.

I’m Edmw troll standard only.

गगनरोमन्थ HardwareZone Forums app

You have nailed all the points and I could not have added anything more. cheers.

 

[Trader11]

You have nailed all the points and I could not have added anything more. cheers.

Hard Times are coming for DCA and Dividend peeps......

Thise nice looking dividend looks like a trap......

But I believe in three years, things will likely to be better....

 

[coolhead]

Hard Times are coming for DCA and Dividend peeps......

Thise nice looking dividend looks like a trap......

But I believe in three years, things will likely to be better....

but i can hardly believe there is going to be another rate cut this month. I'm not complaining but it'll be interesting.

Posted from PCWX using Redmi K20 Pro

 

[Trader11]

but i can hardly believe there is going to be another rate cut this month. I'm not complaining but it'll be interesting.

Posted from PCWX using Redmi K20 Pro

They have to... Or else they get blamed.... Even though rate cut has no big impact anymore.... This isn't a liquidity crisis

 

[NewInvestor]

but i can hardly believe there is going to be another rate cut this month. I'm not complaining but it'll be interesting.

Posted from PCWX using Redmi K20 Pro

I am with you. I don't see them cutting rates again soon.