By Eric Bush, CFA - Gavekal Capital Blog
The KBW Bank Index, which consists of 24 banks, is approaching 2008 and 2011 lows relative to the S&P 500. In the chart below, we plot the KBW Index against the S&P 500 going back to September 1992 which is when the KBW Bank Index began.
We have indexed the chart at 100 starting in September 1992. Banks have underperformed the S&P 500 by nearly 37% since 1992 and only twice, in 2008 and 2011, have banks underperformed more. In 2008, banks had underperformed by nearly 48% and in 2011 banks had underperformed by about 43%.
It's not just banks in the United States that have been getting pummeled either. Not a single stock in our GKCI DM Banks Index is trading above its 200-day moving average. The median developed world bank is down 20% over the past year and 85% of developed world banks made a new 200-day low on January 20th. This was a greater percentage of bank stocks that made a new low in either 2008 or 2011.