Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.
"... Oh, and by the way, “Financials” earnings got slammed BEFORE A) the recent crash in rates and B) the commensurate compression in one of the core leading indicators for “Bank Earnings” – The Yield Spread.
The spread between the 10yr US Treasury Yield and the 2yr is testing new cycle lows at 98 basis points wide. It’s a leading indicator for bank stocks because it’s a proxy for what they call Net Interest Margin (NIM)."