Markets with Madison: Why US bank stocks are a buy and term deposits aren’t

Sliding United States bank stocks are a buying opportunity, despite the third regional bank failing this week - that’s the latest take from an analyst who told investors to sell bank stocks ahead of the 2008 global financial crisis.

Gerard Cassidy of RBC Capital Markets in Maine told Markets with Madison that JPMorgan Chase & Co.’s deal to buy the defunct First Republic this week was “fantastic” for the dominant bank and its stockholders, but the fallout across smaller bank stocks in its wake was unjustified.

“Unfortunately, the [regional bank] stocks traded off because people are doing a very quick and dirty analysis.

“In our view, it’s a great opportunity to buy some of these bank stocks.”

Three regional banks have collapsed in the US this year, with First Republic following Silicon Valley Bank and Signature Bank.

Cassidy explained the difference between those collapsed banks and others on the market, and why this was unlike the GFC, on today’s episode of Markets with Madison.

Meanwhile, investors holding cash assets are being urged to allocate the assets elsewhere.

Salt Funds head of global diversified income Greg Fleming said investors risked locking in a real negative return on term deposits, because deposit rates were not keeping up with the rate of inflation.

Get investment analysis and insights from the experts on Markets with Madison every Monday and Friday on the NZ Herald.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.

RBC Capital Markets is currently providing services to banks including JPMorgan, the Bank of America, Wells Fargo, CitiGroup and US Bancorp.