Cathie Wood, the brains behind Ark Invest, is raising a red flag about the global economy, suggesting it may be in worse shape than most people think. She’s especially concerned about the recent challenges faced by regional banks. While some people believe the banking sector’s troubles are under control, Wood thinks they’re actually accelerating. She feels the movement of capital deposits out of the system is a sign that we’re just entering a credit crunch that could be even more intense than anticipated.
Meanwhile, billionaire investor Nelson Peltz suggests that more regional banks could fail if the rules for depositors don’t change. Peltz, CEO of Trian Fund Management, thinks that people with over $250K in a U.S. bank should pay a small insurance premium to the FDIC. By doing this, it could help prevent money from leaving smaller and regional banks. His comments come on the heels of First Republic Bank being snatched up by the FDIC and its assets being sold to JPMorgan Chase, as well as plunging share prices for banks.
A look at the financial sector’s overall performance via the Financial Select Sector SPDR Fund (XLF) shows that prices have fallen over 12% during the past three months, with many individual stocks faring significantly worse.
