What's going on with European bank stocks? As you may know, the leading European banks are now trading below their 2009 lows -- not a healthy sign for global stock markets. Leading financials like as Deutsche Bank (N:DB), Credit Suisse (N:CS), Banco Santander (N:SAN) and UBS Group (N:UBS) are just a handful of stocks that remain under steady selling pressure nearly everyday. The talk of negative interest rates seems to add to the weakness in these stocks. The flattening yield curve is also very negative for these stocks. The derivative markets are rarely talked about these days, but they are possibly the biggest problem with all of the global financial stocks.
These problems in the European bank stocks are now spilling over to the U.S. banks. Leading U.S. financial stocks have been plunging recently. Just look at a chart of JPMorgan Chase (N:JPM), Bank of America Corporation (N:BAC), Citigroup (N:C) and Wells Fargo & Company (N:WFC) and you will see how quickly these stocks have fallen since December 2015. Despite the decline in the large bank stocks, the Federal Reserve continues to stand firm that the economy remains fairly strong. Has the Federal Reserve ever gotten a crisis correct?
This time around there are financial problems in China, Japan and Europe. All of these enormous economies are printing money in one form or another. Yet the major stock market indexes are all plunging. This problem is not going to be easily fixed by the central bankers anytime soon, so stay on guard as 2016 is going to be a very volatile year. Traders and investors should continue to watch the leading European financial stocks for clues to the future action in the markets.
