US Banks have under performed in the last 3 months. With the S&P500 up almost 4% and the banks up on average around 1.5%.
Q1 bank earning reports showed bank loans shrinking since late 2016.
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This is likely caused by the first-quarter 2017 GDP growth that was anemic at .7%. Investors are expecting GDP to grow 3% or better during the remainder of 2017, we’re not so sure.
Bank earnings will do well in a environment of 2.5 to 3% plus GDP, anything less than 1% is likely to be problematic. While improving unemployment rates and the Fed’s intentions to raise rates this year, suggest the US economy is doing okay, the slowdown in lending, slowing GDP, rising loan defaults, tighter lending standards may suggest otherwise.
