Lower interest rate concerns are again messing with the global markets, particularly financials. Many European bank stocks closed down 4 percent to 7 percent. Big U.S. banks are also down 2 percent or more.
The yen had another move up overnight to 108 to the dollar, a big move considering it was 113 few days ago. It's at a 17-month high against the dollar.
This is partly as a result of a more dovish Fed, but it's making life more complicated for central bankers.
Japanese officials have been trying to talk down the yen this week, unsuccessfully.
This is starting to mess with Japanese corporate profits. It of course makes exports more expensive. Toyota sells cars here, and when they repatriate profits they are getting fewer yen.
Japanese stocks are reflecting these concerns. A new fiscal year has started in Japan, but just look at big Japanese stocks this month:
The Nikkei was up fractionally overnight but is down 17 percent this year.
In Europe, the ECB appears to be opening the door to further rate cuts, and that has weighed on European bank stocks.
Here in the U.S., the 10-year Treasury yield broke briefly 1.70 percent for the first time since February. That means more pressure on net interest margins.
And the news flow doesn't get much better. The Comprehensive Capital Analysis and Review (CCAR) is coming up, where the Fed will again scrutinize big banks to ensure they have enough capital to buffer them against a downturn. There will likely be some credit issues. But with this environment, how much capital can banks give bank?
So what's the argument for owning U.S. banks right now? They're cheap? Sure, most are trading below book value, but no one is impressed by that anymore. European banks have been trading at 60 percent of book value for years. No one is rushing to buy them.
Rates lower for longer. Flat to declining net interest margins. Slow-growth economy in the United States. Little or no-growth economy elsewhere.
Is it any wonder the SPDR Bank ETF (KBE) is down 12 percent this year? They're sitting zombies. There's other places people can invest.