Precious Metals talking points 020124: quick comment: banking stresses re-emerging

StonexHero
Precious Metals Talking Points:  banking stresses re-emerging; it was only a question of time

 

We have been warning for some months that despite the swift action of the Federal Reserve and the Swiss National Bank in containing the issues with Signature Bank, Silicon Valley Bank and Credit Suisse last March-May, this could well have been heralding problems further down the line.

Now the cracks are starting to appear.  Last night (31st January), New York Community Bancorp, which acquired part of Signature Bank last year, cut its dividend from 17 cents to five, and raised its provision for loan losses to $552M, an order of magnitude larger than analyst expectations.  The company has said that it wants to build up its reserves in order both to align with its peer group and to be prepared for any further weakness in commercial and multi-home developments.  Independent observers are suggesting that the worst is now past for this lender, but nonetheless the move caught the market well and truly by surprise and the stock price dropped by 46% intraday, before closing with losses of 38%.

KBW Regional Banking Index and inverted gold price

image 89108

Source: Bloomberg, StoneX

Meanwhile the contagion has spread across the Pacific, with Japanese Bank Aozora reporting that it expects to post a loss of $191M for this fiscal year; the previous forecast had been for a profit of  $164M.  The reversal comes from a hefty increase in loan-loss provisions against U.S. commercial real estate (CRE) and will be the first loss that the bank has posted since fiscal 2009,  in the midst of the Global Financial Crisis and the bank has said that it expects the US CRE to take another "year or two" to stabilise.

Gold has not responded as both of these banks are taking pre-emptive action rather than going under, but this is a shot across the bows, nonetheless.

Related tags: Precious Metals

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI . StoneX is a trading name of StoneX Financial Ltd (“SFL”). SFL is registered in England and Wales, Company No. 5616586. SFL is authorized and regulated by the Financial Conduct Authority [FRN 446717] to provide to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorised to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorised & regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorised by the Financial Conduct Authority. StoneX Group Inc. acts as agent for SFL in New York with respect to its payments services business. StoneX APAC Pte. Ltd. acts as agent for SFL in Singapore with respect to its payments services business. ‘StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries.

 

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

 

© 2024 StoneX Group Inc. All Rights Reserved.



Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
See why StoneX is a partner of choice

Let’s get connected

To learn more about how our customized financial solutions can help you stay one step ahead in the global markets, contact our team today.

Select your Location

Contact us

+
!

By submitting this form, you are sending StoneX Group Inc. and its subsidiaries your personal information to be used for marketing purposes. View our  Privacy policy  to learn more.