Credit-sensitive stocks and banks face pressure
The guest argued that the banking sector and credit-sensitive equities will face downward pressure in 2026 as investors shift focus to earnings misses and the impact of falling mortgage rates on servicing assets.
The argument
The guest noted that bank stocks and credit-sensitive leaders like LendingClub and SoFi have given back their late-2025 gains. He pointed to earnings misses and the fact that falling mortgage rates have forced companies like PennyMac to write down the value of their mortgage servicing rights.
The thesis, stress-tested
✓ What validates it
- ✓Further downward revisions in bank earnings reports for upcoming quarters
- ✓Continued underperformance of bank ETFs relative to the broader S&P 500
▸ Risks discussed
- ▸A stronger-than-expected consumer economy could support credit performance
- ▸Stabilizing interest rates could limit further write-downs on mortgage servicing assets
Hear it yourself
"operations, etcetera. So I my suspicion is is that having Warsh nominated is gonna lay some of the concerns that Powell has. It would have been very different if they had nominated Kevin Hassett or another, you know, obviously more conservative chairman. But on the other hand, I could see, Powell remaining on the board through the end of his term in 2028, January 2028, simply to deprive president Trump of the ability to nominate another conservative governor. And isn't that being political by doing that? Yes. It is."
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