USA

Rising interest rates are gaining momentum by the day: KBW CEO Michaud

The CEO of a major financial services company warns that the economy has not fully absorbed the rise in interest rates yet.

Thomas Michaud, who runs Stifel’s KBW, said the market had been slow to react since the last rate hike, saying a 25 basis point gain at 5% was a far cry from a 0.5% fall. .

Related investment news

Investors should watch out for these spoilers as regional bank stock gains momentum

CNBC Pro

“This is becoming a real deal at the moment because of interest rate levels,” he told CNBC.fast money“The impact of these rate hikes is gaining momentum almost every day.”

Mr. Michaud spoke on the phone hours after the Federal Reserve decided to keep interest rates on hold. That’s after 10 straight rate hikes.

Fed hinted at two more rate hikes on Wednesday This year we are ahead. Michaud expects something to happen in July. But he doubts policymakers will raise rates a second time.

“Trying to send a new message in this regard is not something I want to take off my hat, given what is happening in the economy,” he said. “The economy is slowing, so I think we are nearing the end of this rate hike cycle.”

He points to interest rate-sensitive areas of an economy already in recession. urban office space, Mortgage Origination and Investment Banking Income. He sees these issues as contributing to further pain for local banks.

“Banks had already started tightening in the fourth quarter of last year. “Right now, bank stocks have elements of the global financial crisis.”

Michaud said the rally in regional banks is a short-term rebound.of SPDR S&P Regional Banking ETF It has risen nearly 18% over the past month.

“An industry-wide rally with all attendees probably won’t happen until we have conditions where we can expect some level of revenue stability,” Michaud said. “Profit forecasts are not set yet. Downward revisions have not stopped.”

He expects a change in credit quality from adjusting to the new interest rate environment in the second half of the year.

“Before the first quarter, we cut bank forecasts by 11%. After the first quarter, we cut them by 4%,” Michaud said. “My gut feeling is that I’m going to cut it again.”

Disclaimer

Summarize this content to 100 words The CEO of a major financial services company warns that the economy has not fully absorbed the rise in interest rates yet.Thomas Michaud, who runs Stifel’s KBW, said the market had been slow to react since the last rate hike, saying a 25 basis point gain at 5% was a far cry from a 0.5% fall. .Related investment news”This is becoming a real deal at the moment because of interest rate levels,” he told CNBC.fast money“The impact of these rate hikes is gaining momentum almost every day.”Mr. Michaud spoke on the phone hours after the Federal Reserve decided to keep interest rates on hold. That’s after 10 straight rate hikes.Fed hinted at two more rate hikes on Wednesday This year we are ahead. Michaud expects something to happen in July. But he doubts policymakers will raise rates a second time.”Trying to send a new message in this regard is not something I want to take off my hat, given what is happening in the economy,” he said. “The economy is slowing, so I think we are nearing the end of this rate hike cycle.”He points to interest rate-sensitive areas of an economy already in recession. urban office space, Mortgage Origination and Investment Banking Income. He sees these issues as contributing to further pain for local banks.“Banks had already started tightening in the fourth quarter of last year. “Right now, bank stocks have elements of the global financial crisis.”Michaud said the rally in regional banks is a short-term rebound.of SPDR S&P Regional Banking ETF It has risen nearly 18% over the past month.“An industry-wide rally with all attendees probably won’t happen until we have conditions where we can expect some level of revenue stability,” Michaud said. “Profit forecasts are not set yet. Downward revisions have not stopped.”He expects a change in credit quality from adjusting to the new interest rate environment in the second half of the year.”Before the first quarter, we cut bank forecasts by 11%. After the first quarter, we cut them by 4%,” Michaud said. “My gut feeling is that I’m going to cut it again.”Disclaimer
https://www.cnbc.com/2023/06/14/bite-of-higher-rates-gaining-traction-every-day-kbw-ceo-michaud.html Rising interest rates are gaining momentum by the day: KBW CEO Michaud

Back to top button