America’s finance economy

Pre credit crunch, many folks acknowledged The United States had what is called a FIRE economy, or one that derives a significant amount of revenue from the FInance and REal estate sectors. Many people have suggested America migrate away a FIRE economy by encouraging economic activity in a more diverse range of sectors. How [...]

The shadow banking system is booming

The Financial Stability Board (FSB) published some interesting research yesterday regarding the overall size of the Shadow banking system. The chart above shows the size of the shadow banking system in absolute terms (blue line) and in terms of % of GDP (red line), over the past decade. The original FSB report is is [...]

Banking blowout

Dow Jones US Banking Index compared to S&P 500, year to date 2012

The Dow Jones US Banking Index ($DJUSBK) is intended to reflect the health of the American banking sector. Consisting of no fewer than 823 banking shares, this broad index (black line) is up almost 29% YTD while the S&P 500 (SPX, [...]

Exposure to Greece by non Greek institutions – what’s wrong?

Exposure to Greece by non Greek Banks, top five insitutions, both EBA and banks own regulatory filings

I’ve constructed an interesting dataset, looking at European Banking Authority (EBA) data and comparing it to the bank’s own regulatory filings. Curious, there are substantial differences between the view of regulators when compared to the banks themselves. [...]

The impact of haircuts

EU Zone bank failures under various haircuts February 2nd 2012

I’ve created a model tracking banking sector exposure, country by country, across the EU. This was created from the EBA Bank Stress Tests, which were conducted Q2 2011.

A key assumption of my model is a 7% Tier 1 ratio; this defines the [...]

US banks trounce S&P 500

Philadephia Bank Index ($BKX) compared to S&P500 ($SPX) January 2012

The chart above shows the performance of the Philadelphia Bank Index ($BKX) compared to the S&P 500 ($SPX) from the start of 2012. The Bank Index has clearly trounced the S&P 500, returning 8.86% YTD compared to the S&P 500′s return of 4.67%.


ECB to the markets: here comes the money!

Capital shortfalls at European banks, 2011 by nation

Its impossible to short sell Spanish or Italian banking stocks, and for good reason. As the chart above shows, Spanish and Italian banks have the largest need for capital, at 262 and 154 Billion Euros respectively.

Part of the reason while ECB is pumping money [...]

So the Spanish need 50B Euro …

EU exposure to Spanish banking sector by country in %

Overnight FT published an interview with Spanish Economic Minister, Luis de Guindos, where he revealed Spanish banks need another 50B Euros to set aside against bad loans.

To put this into perspective, that’s about 4% of total Spanish GDP, and would bring their [...]

Ratings agency actions on EU Banks

After Friday’s downgrade of three French banks by Moody’s, I though I’d conduct a summary of recent ratings agencies activity on EU Zone banks.

The table above is divided into “core” and periperal EU nations. The number in parenthesis is the total number of banks rating by each agency. The number to the [...]

When the TED spread widens past 50 bps

we know we’ve got a problem. Even as US Dollar funding costs soar for European institutions, S&P downgrades 37 financial institutions leaving many Western banks with lower credit ratings than their Chinese competitors.

We haven’t seen market stresses like this since 2008 when Lehman went under. Truly historic times.