S&P Downgrades Multiple Banks

S&P Bank Downgrades

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S&P Global cut its ratings and outlook on multiple U.S. regional banks late Monday. Warning that funding risk and other issues in the commerical real estate sector may pose an issue. 

Moody’s also cut it’s rating on 10 banks earlier this month. 

This is all on the back of the SVB crisis earlier this year. 

Banks Downgraded

Schwab - Layoffs

Schwab yesterday announced a round of lay offs and that could certainly be part of the TD merger or other issues but let me dive in quickly to some of the fear mongering. 

Earlier this year I wrote a piece just after SVB on Charles Schwab called “Talk to Chuck”.

At that time there were some clear issues with their T1 capital requirements as well as their bank sweep deposits.


At this point I am well out of the Schwab trade as it returned over +30% for me. 

I wrote about that here.

And right now the stock has pulled back from the exit area, and given this news and fear mongering, likely does a little more. 

Whether or not that warrants another entry is yet to be seen but I certainly hope that it does sell off so I can start to look again. 

Final Word

Like I said in the posts I linked to hear I am not a big fan of investing in the banking sector mainly because there are too many moving parts which makes it difficult (at least for me) to really understand. 

However, I am not against trading in and out of situations where a catalyst creates opportunity – just as it did earlier this year. 

Maybe we’ll see an opportunity in this in the coming months to get into Schwab again and if so I’ll get into that in the weekly report for LongVol members. 

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About the Author

Daniel Bustamante is the founder, managing partner, and CIO of Bustamante Capital L.L.C., a multi-strategy hedge fund management firm based in San Juan, Puerto Rico. He has over 10 years of experience in the financial industry, specializing in equities, futures, and event-driven trading strategies.

He is also the founder of TheLongVol.com, a blog and newsletter that shares his insights on his investing process, travel, and other private investments. He has been featured in Bloomberg, Arizona Business Journal, Business Insider, Yahoo! Finance, Forbes, Seeking Alpha, and other publications over his career on Wall Street.


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