More Banks Could Collapse — A Lot More
This ETF “continues to make lower lows”
It’s sobering to reflect on the fact that the second, third and fourth largest bank failures in U.S. history have all occurred in just the past few months.
They are First Republic, Silicon Valley Bank and Signature Bank of New York. The failure of Washington Mutual in 2008 still ranks first.
And here’s an interesting factoid from the New York Post (May 1):
This year’s 3 bank failures held $532B in assets — more than all lenders that collapsed in 2008 crisis
The current banking crisis may be far from over, as another headline suggests (USA Today, May 4):
US banking crisis: Close to 190 banks could collapse, according to study
As the article notes, that study found that 186 more banks could teeter on collapse if only half of their depositors withdrew their money.
The Financial Times in Britain also piped in on this topic and expressed concerns about way more than 186 banks (May 2):
Half of America’s banks are potentially insolvent — this is how a credit crunch begins
The bottom line with these banks is that they are suffering losses from bonds and debt securities. The downturn in commercial real estate has hit banks hard.
Curiously, back on March 21, U.S. Treasury Secretary Janet Yellen was giving assurances about the banking system (US News & World Report):
Yellen Tells Nation’s Bankers That the Crisis Is ‘Stabilizing’
The May Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets, differed from the Treasury Secretary’s view on U.S. banking as the publication showed this chart and said:
The SPDR S&P Regional Banking ETF (KRE) continues to make lower lows since Secretary Yellen’s pronouncements. The ETF is down 48% since peaking on January 14, 2022, several days after the top in the Dow and S&P 500.
Since that chart and commentary published, San Francisco-based PacWest Bancorp is another bank which has seen its shares crater in price.
Are there viable alternatives to banks?
Elliott Wave International has created a special report titled “Your 5 Top Alternatives to Banks,” and there’s a way you can access it for free.
This special report is excerpted from Robert Prechter’s Last Chance to Conquer the Crash. The book was published in 2021 and warned of the banking scenario we’re experiencing now.