June 28, 2021
At the onset of the pandemic, the Fed and treasury tied up stock buybacks as part of a regulatory measure coupled with the ‘bailouts’ for our nation's largest banks. The central bank wanted banks to be able to have the capital requirements to withstand financial shocks. On the latest stressed tests, the Fed found that the largest banks were well capitalized during pretend financial stress test scenarios. This let loose the relief valve on Wall Street as JP Morgan, Bank of America, and Goldman Sachs will now be able to pay more than $100 billion over the next year to investors. How the banks responded will factor into dividend and capital gains plans going forward for the big banks. In the extreme stress test of 10.75% unemployment, the banks averaged well over 2x the regulatory minimum.
FINSUM + Magnifi: This is a huge win for large-cap banks, as they can now function optimally, leaving the pandemic behind. there is market turmoil, bonds won’t provide the countercyclical hedge they normally do if it's caused by inflation.
Other news today: ETFs that Hedge Higher Volatility and Large Caps Are the Income Investor’s Low Yield Response
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