empty
18.02.2022 08:16 PM
US banks fear inflation, asset price deflation and recession

Wall Street's biggest banks sounded a warning over the year ahead on Thursday, citing high inflation, credit concerns, asset price depreciation and companies postponing deals due to market uncertainty.

This image is no longer relevant

Notably, US banks reported mixed profits in the fourth quarter last month as trading revenues fell after the Federal Reserve cut its asset purchases. Morgan Stanley performed best, outperforming investment leader Goldman Sachs.

US banks are now grappling with high inflation and the likelihood of multiple rate hikes. Several top executives commented on market conditions at the Credit Suisse Financial Services Forum in Florida.

Bank of America is concerned enough about inflation to stress test its portfolio for the possibility that Fed policymakers are unable to control it and prevent the country going into recession, Chief Executive Brian Moynihan said. This indicates a redistribution of assets in portfolio investments.

"We have to run those scenarios," he said. "What will hurt the industry generally will be if they have to create a recession. And that's not their goal for sure. They'll hopefully do a great job handling it. We stress test that and we're fine."

Goldman Sachs' Chief Executive David Solomon warned that rampant inflation could be a headwind to growth.

"We're moving from an environment of very easy money and below trend inflation to an environment of tighter money and above trend inflation. The economic environment is different and there will be consequences to that," he said.

Solomon added that "everybody is used to asset appreciation and we might have a period of time where there's less asset appreciation."

Mike Santomassimo, chief financial officer at Wells Fargo & Co, the fourth-largest U.S. bank, noted that credit spreads had been widening and "that's an area to watch to see if there are any cracks that start to emerge".

Indeed, despite the expected rate hike in March, margins have not decreased and borrowers are happily taking out their last loans. For some, it may not be feasible to pay interest or provide additional collateral in the event of property depreciation, which is already in full swing. The crack that Mike is talking about may well prove to be the chasm in which all the market's achievements of the last 14 years disappear.

High inflation and expectations of more aggressive rate hikes from the Fed have whipsawed markets this year, sending the S&P 500 down 7% year-to-date while bond yields have jumped and the yield curve flattened.

Bank shares declined Thursday with the S&P500 banking index down 3%. The S&P 500 was down 2%.

Morgan Stanley Chief Financial Officer Sharon Yeshaya said the bank had seen "a lot of uncertainty in the marketplace over the past couple of weeks" leading to companies putting off transactions. "At this point it doesn't feel like the first quarter of 2022 is going to be the same as the first quarter of 2021," she said.

Trading and investment banking activity had slowed since 2021 but was still healthy, Solomon said.

Bank of America's Moynihan took a similar tone, saying the bank's capital markets business "is down" so far in 2022, even though it continues to see a strong pipeline of customer activity.

Wells' Santomassimo noted that while the bank's consumer and real estate portfolios continue to perform, there had been "a little bit of noise" in auto loans.

However, he said that rising rates would help the bank's ultimate goal to reach a 15% return on tangible equity. When interest rates are higher, banks make more money by taking advantage of the difference between the interest banks pay to customers and the interest they can earn by investing.

"The question will be where rates go and then what impact that has on the economy and the environment we're in," Santomassimo said.

I will say, however, that this situation will upset the delicate equilibrium. At least the banks are certainly not expecting the market surge that we saw a year ago. Indeed, borrowers cannot only borrow. It is probably time to pay the bills.

Egor Danilov,
Especialista em análise na InstaForex
© 2007-2025
Selecionar intervalo de tempo
5
min
15
min
30
min
1
hora
4
horas
1
dia
1
s.
Ganhe com as variações das taxas das criptomoedas com a InstaForex.
Baixe o MetaTrader 4 e abra a sua primeira operação.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    PARTICIPE DO CONCURSO

Recommended Stories

Resumo das notícias do mercado americano de 13 de junho

Mesmo com o S&P 500 continuando sua recuperação constante, os investidores mantêm seu apetite por ações, ignorando os riscos crescentes e a instabilidade econômica global. Esse otimismo é sustentado pelas

Ekaterina Kiseleva 17:56 2025-06-13 UTC+2

Resumo das notícias do mercado americano de 12 de junho: Mercado de ações dos EUA fecha em baixa devido ao acordo comercial entre os EUA e a China

Os mercados de ações dos EUA fecharam em baixa após o acordo comercial entre os EUA e a China ter sido alcançado. Apesar do fluxo de notícias positivas, os investidores

Ekaterina Kiseleva 16:56 2025-06-12 UTC+2

Resumo de notícias do mercado dos EUA para 11 de junho

O mercado acionário dos EUA atingiu os níveis projetados e agora entra em uma "fase de observação silenciosa", já que os investidores aguardam a divulgação dos principais números da inflação

Ekaterina Kiseleva 18:45 2025-06-11 UTC+2

Contrastes diários: Nikkei sobe, euro cai, mercados globais aguardam ansiosamente as negociações entre EUA e China

J.M. Smucker recua. O Banco Mundial reduz sua previsão de crescimento global para 2025. O Nikkei avança, enquanto os futuros de Wall Street e o euro enfraquecem. O dólar mostra

16:14 2025-06-11 UTC+2

Robinhood sai do S&P 500 — efeito dominó atinge os mercados globais

As ações da Robinhood caíram depois que a plataforma de negociação foi excluída do S&P 500. As ações da Warner Bros. caíram após o anúncio da empresa de planos para

15:26 2025-06-11 UTC+2

Contrastes do dia: Nikkei em alta, euro em baixa, mundo aguarda ansiosamente pelas negociações entre EUA e China

J.M. Smucker cai após previsão pessimista Banco Mundial reduz previsão de crescimento global para 2025 Nikkei sobe, futuros de Wall Street e euro caem Dólar pouco alterado, títulos aguardam

Thomas Frank 14:45 2025-06-11 UTC+2

Taxas sobem: mercados aguardam o IPC, Trump entra em conflito com Musk, Qualcomm adquire a Alphawave

O relatório do IPC de maio está previsto para ser divulgado na quarta-feira. Um projeto de lei orçamentária ocupa o centro do palco em meio a um desentendimento público entre

18:54 2025-06-10 UTC+2

Resumo de notícias do mercado dos EUA para 10 de junho

Os índices S&P 500 e Nasdaq 100 registraram ganhos notáveis, impulsionados por expectativas otimistas em relação às próximas negociações comerciais entre os EUA e a China. Os investidores estão apostando

Ekaterina Kiseleva 18:48 2025-06-10 UTC+2

Robinhood cai do S&P 500 - Efeito dominó atinge todo o mercado

Robinhood cai depois que a plataforma foi excluída do S&P 500 Ações da Warner Bros. caem depois que a empresa diz que planeja dividir seus negócios Ações europeias caem

Thomas Frank 18:33 2025-06-10 UTC+2

Taxas sobem enquanto os mercados aguardam o IPC, Trump discute com Musk, Qualcomm adquire a Alphawave

O relatório do IPC de maio será divulgado na quarta-feira Projeto de lei orçamentária em destaque em meio à divergência entre Trump e Musk Alphawave salta com os planos

Thomas Frank 16:53 2025-06-09 UTC+2
Não pode falar agora?
Faça sua pergunta no chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.