Big banks got hammered on Thursday — but Goldman says there’s opportunity lurking

Silicon Valley Bank headquarters and branch location in Santa Clara, Calif. Does this mean traders think the funk is U.S.-centric and should thus damage the dollar? Or does it imply we are not anywhere near George Clinton levels of planetary funkiness and so a rush to the greenback is not required? Goldman Sachs thinks the latter and is playing the easy-listening music. In a note published late Thursday, the bank said problems illustrated by SVB are “idiosyncratic, not systemic.” Goldman’s credit-strategy research team, led by Lotfi Karoui, recognizes there is, of course, a problem for SVB and others caused by the sharp inversion of the bond curve, a move triggered by the Federal Reserve’s rapid hiking of interest rates to suppress inflation. Advertisement “To put things in context, and leaving aside the global financial crisis, [Thursday’s] move lower in the equity bank sector index is the third largest of the last 25 years, after the 2020 COVID period and August 2011 in the wake of the U.S. government rating downgrade ,” said Goldman. Source: Goldman Sachs Smaller, regional banks were particularly badly hit. But shares of big U.S. banks and those of foreign banks with large U.S. operations, known […]

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