18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,494 Blog Posts

Regional Banks, REITs: Fucked

If you’d just entertain me for a moment I’d like to remind you that the housing market is fucked, as well as the regional banks, and quite possible REITs. The US 10yr is now at session highs above 4.5%, +15bps, with eyes on MOAR. It’s important to remember that the entire western economic scheme is predicted on low interest rates. Now with rates moving higher, eventually, all will collapse.

Meanwhile, we are seeing some bogged pin action in various financials today. In a perfect world, this small start will soon blossom into something much larger.

$RKT -11%, $VLY -8.5%, $FNF -8%, $NYCB -7%, $VNO -7%, $IVZ -7%, $BXP -5.5%, $OZK -5%, $ZION -5%

Bear in mind, the treasuries are still on the books of the balance sheets and the regionals need tier 1 capital to pass stress tests, meaning they’ll either have to sell at heinous losses or raise capital or simply go out of business. Because of this, I have a position in $FAZ and will hold it at least until tomorrow, in the hopes that rates continue to climb and this causes fractures in the banking system — permitting me to profit from its eventual demise.

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One comment

  1. soupbone

    the Fed’s balance sheet is still chock-a-block from QE and they can’t ditch it, even the good stuff like treasuries. So much for Bernanke’s self-correcting asset purchases concept and his Nobel Prize. I guess the generosity was always permanent and we were naive.

    The only story in town is inflation.

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