Not a whole lot on at 3am here, so caught a bit of Mad Money. Not a big Cramer fan, personal think he close to an idiot, but entertaining. Any how. Treasury rates increasing, so the spread between interest on deposits bank pay and yeild on treasuries puts more cash to the bottom line of banks. Can't go on forever though, as rates increase further, sooner or later I would think banks would need to pay more to depositers.
This also relates to the recent, marked increase in mortgage rates. This is a complex dynamic, and there's a good video titled something like "RIsing Rates ... Headwind for Banks" listed on the recent news. The interview focuses on the two "moving parts" of (1) the net interest margin and (2) the unrealized gain in the bond portfolio. Bottom lines are that the trend - along with the improving national economy - favors regional banks, but if the increase in mortgage rates becomes too steep, all bank stocks may suffer. Like I said - complex dynamic, and I have no idea how to react, or when. GLTA - seriously, good luck.
Mortgages, and the auto loans RF been pushing. Gonna have to look at the numbers see how much of each is generating income. But think you are right, rates go to far to fast, economy may take another hit.
Complex dynamic is an understatement. My only solution for myself as to how and when to react. Need to keep an eye out here, could be sell 25% at $12.00, if it pulls back wait for a decent repurchase price. If not, sell another 25% at around $14 (now, personaly I am talking if these prices hit in next 12 months or so).
Then, since I have over 50% of my original shares, let them ride, on my remaining 20% of money I have put in. If RF does it to us like they did in the past, and seen many from them days here lately, I am leaving enough on the table if it keeps getting better, yet taking off enough that excluding the tiny dividend I get paid, Ionly stand to lose 20% of my money if I am dumb enough to hold and it goes bankrupt.
Seems a safe strategy, but will work on it as time unfolds and tells us what is happening.