All of the talking heads in the financial media are popping champagne today as the Dow Jones Industrial Average makes a new all time high. Almost everyone on CNBC is dusting off their pom-poms from 2007 and is now looking for higher prices to come. Everyone in the business knows that this is a central bank induced stocks market rally. The Federal Reserve Bank Chairman Ben Bernanke is living up to his nickname; Helicopter Ben, dropping money from the sky on all of the large banks.
While many investors are celebrating today, we are seeing weakness in one particular group of stocks, the regional bank stocks. Leading regional bank stocks such as BB&T Corporation (NYSE:BBT), U.S. Bancorp (NYSE:USB), and SunTrust Banks, Inc.(NYSE:STI) are just a few leading names that have reversed lower from their early morning gains. Kelly King, chief executive officer of BB&T Corp said that loan growth is now challenging. With the stock market making new all time highs, you would think that these stocks would be soaring higher and loan growth would be surging.
One way to track the regional bank stocks is to follow the SPDR KBW Regional Banking (ETF) (NYSEARCA:KRE). The KRE traded as high as $51.05 a share in 2007, today the KRE is trading around the $30.78 level. Traders can easily see that this is more than $20.00 from its old high. Many small financial firms are also complaining that the large banks get the free money from the Federal Reserve and the small financial institutions cannot compete with the larger global banks. It is never a good sign to see the regional banks lag on a day where the euphoria is running wild.