(New York)
When you first read that headline, you probably thought it was pretty counterintuitive. Bank stocks saw a big selloff and it is looking ever more likely that we are headed towards a recession—certainly not bullish for bank shares. However, RBC Capital markets argues that bank stocks may actually do well. “The recent sell-off in bank stocks provides an opportunity for investors to buy bank stocks”, says RBC. The reason why is that in periods where the economy slows, but an outright recession is avoided, bank shares outperform. This happened from 1994 to 1998.
FINSUM: This could be a good value play if we avoid a recession, but that seems like a gamble with asymmetric risk to the downside.
