Chart o’ the Day: European Banks vs the German 10-Year

European bank stocks are the big equity wreck that everyone has their eyes on. And rightfully so – these securities are now trading back to levels not seen since the late 1980’s!

Here’s Eric Peters, writing in his excellent weekend notes piece:

Europe slumbered, greatness slipping its grasp, its lofty ambition – the power of union – now weighted down by the everyday. “I will only note once more the critical need to restore clarity and confidence on the institutional setup of the euro area,” slurred Draghi, punch drunk. European banking stocks returned to 20yr lows, the ECB buying corporate bonds, the latest sniff of smelling salts…

“Someone told me the ECB’s buying corporate bonds,” said Lithium, hands-free on Highway 1. “I don’t even pay attention anymore, I tune it out, they have no idea what they’re doing,” he said, working into a rant. “No one is serious about getting growth up, or boosting populations. No one’s willing to do what it takes.” Buying corporate bonds doesn’t put money into people’s pockets. “You’re taking yield out of the market that savers could have earned.” Pension plans, retirees. “So now they’re all panicking, chasing yields to zero everywhere.”

I had a similar conversation with Tim Duy this morning, one of the first economics bloggers and the original Fed Watcher. He agrees that the Fed (and other central banks) have been asked to do too much in the absence of coordinated fiscal policy, but that buying up the last remaining high-quality assets may be part of the problem rather than the solution.

I personally don’t understand how Japan buying REITs and ETFs while the US hoards its own Treasurys and the ECB starts buying investment grade corporate debt does anything for the economy. I know what it does for the asset markets – it makes people chase blue chip dividend-paying stocks (non-financials) up to absurd multiples. It also depresses (crushes) bank stocks. And nowhere is this phenomenon more on display than among the European bank stocks. They’ve been hammered as yields across the continent hurtle toward the zero-bound and below.

Here’s a great representation of this via Credit Suisse’s technical analysts David Sneddon, Chris Hine and James Lim:

Screen Shot 2016-06-13 at 11.39.01 AM


The bad news – CS’s technicians see the German yield as heading toward negative territory. One wonders exactly what business these banks will be in at that point?


Under pressure – Key levels to watch 
Credit Suisse – June 13th 2016

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Who can destroy value the fastest? commented on Jun 14

    […] we took a look at European bank stocks versus the yield on the German 10-year, to give you a sense of the why. Now tell me again how ZIRP, NIRP, helicopter money, QE, etc […]

  2. click here commented on Sep 14

    … [Trackback]

    […] Read More Information here on that Topic: […]

  3. facebook old version commented on Sep 25

    … [Trackback]

    […] Find More Information here on that Topic: […]

  4. bitcoin era review 2020 commented on Sep 28

    … [Trackback]

    […] Find More here to that Topic: […]

  5. bitcoin era commented on Oct 01

    … [Trackback]

    […] Info to that Topic: […]

  6. site to buy dumps with pin commented on Nov 16

    … [Trackback]

    […] Find More Information here to that Topic: […]

  7. commented on Nov 20

    … [Trackback]

    […] Read More to that Topic: […]

  8. rbc online commented on Nov 29

    … [Trackback]

    […] Read More here to that Topic: […]

  9. carpet cleaning near hertford commented on Nov 30

    … [Trackback]

    […] Here you will find 17728 additional Information to that Topic: […]

  10. CI/CD commented on Dec 20

    … [Trackback]

    […] Find More Info here to that Topic: […]

  11. black highhelels lubotimi replica commented on Dec 30

    … [Trackback]

    […] Information on that Topic: […]

  12. DevSecOps Services commented on Jan 17

    … [Trackback]

    […] There you will find 41088 more Information to that Topic: […]