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Dangerous Liaisons: Banks & Oil

This is how problems in an industrial sector spread across an economy. It has been no secret that the energy sector has been under heavy pressure due to the precipitous decline in oil prices since last summer. But the banking sector has more recently presented itself with its own set of related problems. For what was once a fruitful and prosperous relationship between the energy sector and the banks has become increasingly precarious.

A Recent Price Trend Affair

A notable relationship has suddenly presented itself on Wall Street. Since the beginning of the New Year, the banking sector has been moving with a particularly high correlation to oil prices (USO). While the association has existed for the financial sector (XLF) as a whole, it has been particularly true among the regional banks (KRE). For as the oil price plunged to new lows through January, financial stocks in general and regional… Read More …