And there is nothing but more bad news coming in the future for the US banking sector.
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The New Declaration of Independence
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6 responses to “Do You Understand What this Means?”
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It means I’m gonna buy a fuckton of FAZ calls!
Seriously, watch QQQ and SPY. Popping sounds are being heard on wall street. Things are not healthy under the hood.-
I don’t know Joe, with algorithms front running us mere human traders orders a X 3 Leveraged ETF on banks could go VERY South as a small UPTICK can wipe your position out.
If a joke, it’s a good trader joke.
I’m trying to research why this pretty massive move in so many banks occured.
David, could you ask GROK about this?
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The decline in major US bank stocks (and the KBW Nasdaq Bank Index, down roughly 13–14% from its mid-August 2026 peak) is driven mainly by a sharp rise in long-term Treasury yields, not by reported deterioration in current earnings or credit quality.The 10-year Treasury yield recently reached about 5.36–5.37% and the 30-year about 5.73%, levels not seen since 2002. While moderately higher rates can widen banks’ net interest margins, a rapid spike of this size raises several specific concerns: higher deposit and wholesale funding costs that can reprice faster than many loans; mark-to-market pressure on banks’ bond portfolios; weaker loan demand and slower dealmaking; and potential strain on borrowers if rates stay elevated. The yield curve has also flattened, compressing the spread banks earn by borrowing short and lending longer. Reuters and analysts (including UBS) have directly linked the stock weakness to this yield surge. The Federal Reserve’s mid-September rate hike—the first since 2023—and signals that another increase could come by year-end reinforced the move, partly amid sticky inflation and higher oil prices.A secondary factor has been softer guidance on capital-markets activity. Bank of America CEO Brian Moynihan said third-quarter investment-banking fees would fall at least 10% year-over-year with trading roughly flat, which triggered selling across the group; Goldman Sachs has also noted relatively softer fixed-income trading. Additional headwinds cited by analysts include worries that AI tools (such as Meta’s Muse agent) could eventually pressure deposit pricing or wealth-management fees, plus residual caution after earlier regional-bank and private-credit episodes. Large-bank credit portfolios are still described as clean, and third-quarter profits are expected to rise as much as about 20% year-over-year for the biggest lenders. Earnings reports begin October 13–14, which markets are watching for confirmation that funding costs, loan growth, and the deal pipeline remain intact.
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One thing it means is that big banks will start increasing junk fees, and the circumstances under which they are imposed, as if they weren’t already doing so to an outrageous extent. Anything they can extort, they will.
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Worse Big Ruckus if it’s a structural issue the stock market is a LATE indicator (historically) of troubles.
Many too big to fail banks here. A serious shudder could shut down most credit card systems and as truckers REQUIRED Credit Cards to refuel (and grocery stores, Amazon etc. require constant credit card action) that could create UGLY SUPPLY CHAIN ISSUES.
THAT was the argument for MASSIVE Bank Bailouts last time.
Might be the printer goes burrrrr action that creates Weimar Germany 2.0 American edition.
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Thanks, David, for your information about how rising rates are driving part of the stock fall.
I saw some information about that in my research. A Bond is generally issued in 1000-dollar units and given a fixed interest rate.
All bonds held to maturity return the 1000 dollars plus interest.
However, in the mark to market situation like banking reserves a lower interest bond is deemed less valuable to a higher interest bond just issued of same bond grade. I.E. Treasuries vs Treasuries not Treasuries vs a Junk Grade Bond.
A structural issue given that Buying Treasurys are a requirement by the Fed as a Class A asset.
That a large amount of their required reserves are now mark to market worth less than they were (some 1.5% bonds there vs current 5% bonds OWWWWW…)
SNIP Class A in such schemes often refers to the highest quality, most liquid, and lowest risk assets — typically cash, central bank reserves, and high‑grade government securities
Meanwhile Burning Platform dropped a good report on how the money dies on a weekend:
More than a fair chance that the Fed will step in with some scheme to make the banks “Whole” by agreeing to keep those bonds to maturity and all that.
Paid for by the Taxpayer as a Banking bailout.
Or maybe the Cypress option of a Bail-IN by using a % of customer assets to restore the bank. AKA a Haircut for you and I for a National Emergency.
A Banking run is something to fear in the age of social media as it can go from a rumor (like the COVID toilet paper shortage rumors) to FACT as folks rush to grab their money out before it’s gone.
Interesting times indeed. A possible nice distraction from other less acceptable issues from our not so benevolent overlords AKA Gov.com
Or a 911 for the Central Bank E-Dollar scheme, with all the Orville’s 1984 issues of Big Brother controls.
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