The massive 6 banks are over capitalized honest now, says Hightower Advisors’ Stephanie Link


Stephanie Link of Hightower advisors Steph what's your take on what's happening in the market today you know we haven't talked about small caps you know nearly enough probably relative to other areas of the market but that seems to be the most acute point of pain certainly over the last couple of days well it's also been an.

A couple of days right and it trades along with value it trains along with cyclicals and those sectors have actually done pretty well this year and actually all of last year right so this is a give back stock because there's a lot of nervousness for sure right Powell the comments this week very hawkish data dependent but maybe less willing to wait.

And see right in terms of we're going to go and we got to go more and I don't know if it's 50 next time or 25 but we it probably has 75 more basis points of tightening and the Market's nervous about that because we don't know what the outcome is going to be and they're focused on as Richard Fisher just said they're focused on inflation and.

Inflation is still stubbornly high but it is coming down from the peak so we have to watch that but he the FED can go this aggressively because the job market is so healthy now I will say tomorrow yes is important but it's one number Scott I'm keeping an eye on initial claims which are starting to inch higher I did not like that challenge or gray.

Number which if you add off the layoffs from from January and February it's the worst number since 2009 so you know you're starting to see a little bit of cracks and then of course the Silicon Valley Bank this is absolutely a catalyst to have the market sell off uh I mean the fact that the company backed half of the U.S venture capital in.

Technology and Life Sciences I mean that is so incredibly speculative and the fact that the company is just now figuring out higher rates are going to hurt their business this stock deserves to be down even more in my opinion and I do not think the large six banks are in anywhere near this kind of shape they're very very much Diversified into wealth.

Management Asset Management Capital markets trading yes we know net interest income is a big part of their books however numbers are coming down for netii after the last quarter everybody lowered their nii numbers for the entire year because we saw what was happening I understand but why are we fixated on on the large.

Banks where when it's the it's the smaller ones where you know maybe some of the the more important issues lie you you just said and this goes to the heart of our conversation the FED can continue to go because the job market is so strong well as I asked at the outset maybe we're looking in the wrong place and that's not the decider of whether.

The FED is breaking anything it's what we're talking about today it's below the surface start right okay well the cracks can start at some of these speculative bangs that are involved in crypto that should be no surprise Silicon Valley Bank even though this is very disappointing and it's kind.

Of like what where is management what are they even thinking kind of a thing they do have a PE backer right they did they are raising Capital they are reorganic look at these losses though right I'm sorry to interrupt you Steph but look at the losses in the other parts of the Regional Bank complex four five six seven percent declines surely.

Silicon Valley Bank isn't the only one sitting on unrealized losses that may be at some point forced to take those losses if not raise capital and isn't that a concerning point to you well my well of course this whole thing is a concerning point to me for sure but my whole point is the big six banks are the biggest ones right and they actually.

Are over capitalized right now they have had years and years and years of regulators on top of them making sure that they raise enough capital and by the way the 22 other Banks largest banks in the country had to do the same thing so the capital levels are better and I do think that Silicon Valley is the was the one of the most risky I don't even.

Talk about the crypto exposed Banks I just don't because they don't even mean anything they're so small but I think that Silicon Valley Bank was at of the bigger names of the bigger companies they were the one that really were much more exposed it's not that I'm not troubled by it I just don't think it's a contagion at this point in time because.

Again you have these other Banks the big the biggest banks in the world that are so over capitalized I don't think this is a great financial crisis kind of a situation I want to say this is a one or two off kind a thing does that mean that banks are going to be good Investments for the near term probably not because everyone is going to be nervous but I'll.

Bet you anything when the company's report earnings people will feel better about the underlying situation by the way the big six they have very little mortgage exposure too that's also something that they have changed over the last many many years

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