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Gingerbread Town

Gingerbread Town



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Thursday, May 04, 2023

Selling Spreads Across U.S. Regional Banks

* See UPDATES below...

Further to numerous articles that I've recently posted describing the collapse of several Regional Banks, the number of shareholders divesting themselves of shares in other Regional Banks is accelerating.

The following graphic contains a list of the top 10 holdings of the Regional Banking ETF, KRE. All of them are down, so far, today.

KRE has continued its plunge down to the 2020 COVID-19 pandemic median price zone, as shown on the following monthly chart.

Inasmuch as it represents a snapshot of overall sentiment in the regional banks, I'd say the current state of these banks, in general, is pretty weak.

No one should be surprised that this particular sector of banks is weak, inasmuch as I warned about the state of U.S. banks, in general, in my post of April 10, 2021. As it happens at that time, KRE was close to making its all-time high of 78.81 (set in January of 2022), before it began to drop.

Even though its drop was initially choppy, it's been falling off a cliff since March of this year.

It's trading in a large sideways 'Chaos Zone.' It's had difficulty holding onto and increasing its gains made above 30.00 since January of 2013. It's also trading below its IPO opening price of 48.09 made in June of 2006...right before the 2007/08 Financial Crisis.

I anticipate that KRE will bounce around within that 'Chaos Zone' for some time. However, a drop and hold below 30.00 would signal much more serious consequences for the entire banking system, not only in the U.S., but globally, as well...as occurred in 2007/08/09.

N.B. Given these facts, it's odd that Fed Chairman J. Powell still insists that these banks are secure, when their representative ETF is plainly portraying great weakness...below that leading up to the 07/08 Financial Crisis

Surely one has to wonder if that contagion will spread to the larger banks and the 29 banks deemed too-big-to-fail by the Financial Stability Board of the G20 in 2011. Note that Credit Suisse did, subsequently, fail, as described in my recent posts.

Today's ZeroHedge article has some answers in that regard.

* UPDATE May 5...

And...(lots of) food for thought...(HINT: keep your money safe!)...

(Editor's Note: SATIRE 😏)

* UPDATE May 6...

"It's spooky. Thousands of banks are underwater.

Let's not pretend that this is just about Silicon Valley Bank and First Republic. A lot of the US banking system is potentially insolvent."