U.S. Banks

KEY POINTS:

  • In this report we examine historical relationship between the Fed Fund Rate and XLF and KRE to determine when we may see banks bottom. In the past cycles, banks do not bottom until we see the Fed cutting rates to stave off a economic hard landing.
  • Valuation-wise, Southern regional banks have more downside risk given that the group is currently trading at 1.03x PBV vs. its historical low of 0.53x.
  • Bank stocks that appear technically vulnerable are: BOKF, CFR, PB, TCBI, USBI.