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Feb 17
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$71.53
$71.38
-0.2%
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LONG
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Julie Biel
Portfolio Manager, Kayne Anderson Rudnick
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Biel notes that regional banks did not participate in the rally last year but now have an opportunity to improve due to "deregulation" and the ability to "do more with the balance sheets." If regulatory pressure eases and consolidation occurs (which Biel expects), regional banks can regain profitability and market share, trading at attractive multiples compared to large caps. Long Regional Banks as a deregulation/catch-up trade. Continued commercial real estate exposure and high interest rates. |
Bloomberg Markets
Stocks Gain as Tech Holds Up; Bonds Steady | ...
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Feb 13
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$71.28
$71.38
+0.1%
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LONG
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Scott Bessent
Treasury Secretary
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Bessent states, "If you look at the broad indices, whether it's the equal weighted S&P... or the small cap indices, they're doing fantastic... Regional banks are doing well." He explicitly uses the performance of Regional Banks and Equal Weight indices (Main Street proxies) as his primary indicator that the "real economy" is taking off, contrasting them with the volatility of Big Tech. If the Treasury Secretary views these as the leaders of the "2026 banquet," policy will likely support their continued rotation. LONG US Domestic Cyclicals and Regional Banks. A resurgence of inflation or a bond market revolt (yields spiking) would disproportionately hurt regional banks and small caps. |
CNBC
Squawk Pod: AT&T CEO John Stankey & Treasury ...
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Feb 13
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$71.28
$71.38
+0.1%
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LONG
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Scott Bessent
Treasury Secretary
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"The private sector numbers were more than 170,000, and government jobs were reduced... We're at the lowest ratio of government jobs to total jobs since 1966... If you look at the broad indices, whether it's the equal weighted S&P... or the small cap indices, they're doing fantastic... Regional banks are doing well." Bessent argues that the "reprivatization" of the economy and deregulation directly benefit domestic-focused companies over global mega-caps. He explicitly points to Equal Weight S&P (RSP) and Regional Banks (KRE) as the true barometers of this "Main Street" recovery, suggesting a rotation out of market-cap weighted concentration into broader cyclical breadth. Long domestic cyclicals and equal-weight indices to capture the "broadening out" trade. Re-acceleration of inflation could force the Fed to keep rates high, hurting small caps and regional bank balance sheets. |
CNBC
Watch CNBC's full interview with Treasury Sec...
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Feb 13
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$71.28
$71.38
+0.1%
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LONG
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Thomas Michaud
CEO, KBW
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KBW CEO Michaud notes that fundamentals (loan growth, credit quality) are green lights and the "moratorium on bank mergers" for banks over $200B is effectively over. Wells Fargo's Willis advises rotating into Financials as a way to play AI trends through incumbents. The combination of strong fundamentals, a regulatory environment conducive to M&A (creating takeover premiums), and a rotation out of expensive tech makes financials attractive. LONG Regional Banks and Financials for M&A upside and valuation rotation. Commercial real estate credit deterioration; interest rate volatility. |
Bloomberg Markets
Stocks Lower as Tech Selloff Deepens Ahead of...
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Feb 12
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$70.70
$71.38
+1.0%
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LONG
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Nancy Tengler
CEO & CIO, Laffer Tengler Investments
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The new administration is pushing for deregulation. Regional banks (KRE) benefit disproportionately from regulatory relief (lower compliance costs, easier M&A). Large banks (GS/JPM) benefit from increased deal flow and capital markets activity. LONG Financials. Resurgence of inflation forces Fed to keep rates high, pressuring bank balance sheets. |
Bloomberg Markets
Old Economy Stocks Surge Again | Open Interes...
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Feb 10
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$72.64
$71.38
-1.7%
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AVOID
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Scott Rechler
Chairman & CEO, RXR (Real Estate Developer / Fed Board Director)
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"They can't afford to compete with the big banks... they don't have the capacity to be able to be lenders there." Rechler, a board director at the NY Fed, is explicitly stating that the business model for regional banks is currently broken regarding commercial and construction lending. If they cannot lend, they cannot generate yield, and they lose their primary utility in the economy compared to "Too Big To Fail" banks. Avoid the sector until the yield curve normalizes or consolidation occurs. A sudden, aggressive Fed rate cut could rapidly repair regional bank balance sheets. |
CNBC
Squawk Pod: Kalshi CEO on Super Bowl wins & N...
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