US stocks are rallying after several banks boosted their dividends and China pivoted away from its strict COVID policy. Wall Street seems to be close to figuring out how high central banks may take rates over in the short-term and that is supportive for long-term investors to scale into positions. We will see if the peak of inflation is in place, but for now some traders are comfortable with the idea that the ECB will bring rates to positive territory and as Fed easily has a couple more massive rate hikes on the table.
US banks pass stress tests
A lot of the major US banks celebrated stress test results with a strong boost with their respective dividends. Morgan Stanley, Goldman Sachs, Bank of America, and Wells Fargo raised their dividends, while JPMorgan and Citigroup kept their dividends unchanged. Given the uncertain economic environment, you can’t blame the decision to refrain from boosting payouts as a severe slowdown with economic activity could lead to the need for additional capital.
JPMorgan and Citigroup might need to free up some cash later this year for the new required capital levels, which might make them the least attractive of the banking giants.
One of last week’s crypto saga occurred when physical futures crypto exchange CoinFLEX halted all withdrawals. This week, the crypto exchange announced they will launch a Recovery Value USD token. They are relying on private investors to cover half of the issuance and that if that holds, they appear on their way to surviving this liquidity crisis. It will take some time for investors to feel the liquidity concerns are in the rear-view mirror.
Bitcoin remains anchored at around the USD 20,000 level and won’t break out until Wall Street is confident a broader slowdown is not happening.
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