End of the semester: from inflation fears to recession fears

The first half of 2022 closes as the worst since 1970 for the main American index.

Among inflationary concerns, linked to the invasion of Ukraine, of a pandemic, in the last sessions at the end of the semester, recession concerns have come full circle.

Europe, even before proceeding with its first rate hike - after eleven years - wishes to change the accounts on possible scenarios and invites, through the voice of its President of the Banking Supervisory Board Andrea Enria, before the European Parliament, the system bank to review its stress tests and capital distribution policies: ‘We will propose to ask banks to recalculate their capital trajectories in a more unfavorable scenario, potentially including a gas embargo or a recessionary scenario, and to also use it to check their future distribution plans’. Proposal to be discussed by credit supervision during the next months.

European banking sector which, after having had to freeze dividend distributions during the pandemic, is now forced to new limitations, again highlighting greater fragility than its overseas cousins ​(which have recently received a green light on mega profit distribution plans). This trend is highlighted by the relationship between the ETF on the European banking sector (EXV1) and the American one (KBE) which since 2010 has seen a strong US outperfomance.