FT News Briefing Another rough day for US regional banks
May 5, 2023
Apple experiences shrinking revenues for a second quarter in a row, raising eyebrows. Meanwhile, the European Central Bank hikes interest rates again amidst inflation concerns. U.S. regional banks are reeling, with stock prices plummeting as investors grow wary. In lighter news, Ed Sheeran triumphs in a copyright case related to his hit song. The financial landscape is shifting rapidly, making it crucial to stay informed about these developments.
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Regional Bank Instability
- U.S. regional bank stocks continued to slide due to investor concern, despite assurances about deposit stability.
- The market's hope for more intervention from the Fed or FDIC hasn't materialized, adding to the uncertainty.
Investor Fear
- The FDIC's reactive approach, while protecting depositors, has repeatedly wiped out shareholders in failing banks.
- This creates fear among investors, leading to further sell-offs, even if depositor concerns are easing.
Self-Fulfilling Prophecy
- Investors selling off shares create a self-fulfilling prophecy, worsening the situation for everyone.
- While individually rational, this collective behavior can lead to systemic instability.