⏳Banks are getting conservative🔫

While banks had passed the Fed’s stress test confidently, they are not generously giving out dividends and share buyback. Banks are set to announce their capital return plans soon, but expectations are lowered given a weakening economic outlook. 

One should expect fewer surprises on dividends as various economic headwinds remain, consistent with our prior updates. This is sufficient to send the KBE Banks ETF to fall by 0.5% on Tuesday, although it fared much better than the broader market, where S&P 500 lost 1.75%. 

Pika World continued to hold banks in our long-term portfolio. 

💰Consumers’ confidence takes a hit📉

Investors received a nasty piece of news on Tuesday. The weaker-than-expected consumer sentiment index is sufficient to drum up the recession narrative as indices failed to bounce up and sell quicken late into the trading session. 

What’s more, the reading for May was cut from 106.4 to 103.2. This month’s reading of 98.7 is the lowest we have seen since Feb 2021, reflecting a further lack of confidence in the general economy.

⏰Commodities prices are coming down🕹

In a split second, this may help to soften the inflation worry. Still, such a trend is consistent with the idea of lower economic demand drizzling down the economy, supporting the fear of an impending recession. 

Pika World will be looking at the US real growth for the first quarter of 2022. We are expecting a fall of 1.5%. It is expected to be released today.

The general fear of a recession continued to power the sentiment, and a risk-off sentiment is likely to hover till we see firmer data with softening price growth.