Aaron Back

speaker

279 appearances 6 recordings 1 series first heard Jul 2018 last heard Jul 2019

Aaron Back’s voice in public audio — every appearance, attributed to the second.

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What tends to be a strong indicator of a recession is when the yield curve inverts, i.e. matched

when short-term rates go higher than long-term rates. matched

It's unusual, but it's something we saw, for example, before the financial crisis. matched

That hasn't happened yet. matched

So far, we've just seen the yield curve flatten, meaning short-term rates are rising, but not quite at the level of long-term rates yet. matched

And conventional wisdom is that's very bad for banks. matched

But Bank of America and Citigroup both said on their conference calls the last few days, Monday and Friday, that matched

that actually that's overrated. matched

It doesn't mean that their results are bad. matched

And in fact, they benefit from higher short-term rates because most of their loans are tied to short-term rates. matched

Things like people's credit card loans are tied to overnight interest rates. matched

So for now, banks are in fact still benefiting from higher rates. matched

I mean, absolutely. matched

You know, the economic cycle will turn eventually. matched

And when it does, that's never good for banks. matched

But I just don't see any evidence in the numbers right now that that is happening. matched

And at the moment, certain bank stocks are actually rather cheap after this decline. matched

So I think that there could be a near-term opportunity here, maybe the next six months or so, where these banks could do very well. matched

And I think people who are worried about a recession coming may be getting ahead of themselves a little bit. matched

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