Does the price action on major banks in Europe tell investors that the continent is now not a threat to risk appetite and that Wall Street can mount a sustained rally without a repeat of May’s negative blow-up?
No way only 7 of 91 European banks could pass a real stress test. No way could only €3.5 billion in new capital be needed. When the US tested 19 banks a little while ago, 10 were found to be deficient, and $75 billion in new capital had to be raised. It's ok if everyone at MIT passes every test.
Despite the recent rally for equities across the world, the bonds are winning the battle for investors' cash and will continue to do so according to Robin Griffiths, a technical strategist at Cazenove Capital.
The over-under for the European bank stress tests are 12 out of 91 fail the tests and need capital injections. Unlike the US stress tests, the European tests didn’t tell us the metrics or guidelines before the tests were run. This has generated uncertainty over exactly how these banks are going to perform.
Stocks were lower on Wednesday amid weakness in techs and retailers. Barry Knapp, head of US portfolio strategy at Barclays, shared his market outlook.