• Banks will lag the market in an inflationary environment.
  • Banks lagged the market in the inflationary 1970s.
  • The reason for this is financial assets go down in real value during inflation.
  • Bank Financial assets are just dollars or promises for dollars in the future.
  • Most of bank assets are fixed income or dollar themselves.
  • Inflation lowers the real value of dollars and fixed income assets.

JPM JP Morgan
BAC Bank of America
WFC Wells Fargo
KBE SPDR S&P Bank ETF
KBWB Invesco KBW Bank ETF