The Volatility Index (Vix) jumped 12 percent yesterday to 26, only slightly above the long-term average of 20, reflecting the fear rising on Wall Street. As investors find safe haven for their money, plenty are worried about the world’s biggest banks, citing their vulnerability to the primary drivers of the current market volatility. According to Reuters, fears about the health of the world’s banks continue to drag stocks down in Asia and Europe, while Citigroup’s stock is down by more than a fourth so far this year. The share declines indicate investor skepticism over big banks’ future profits, due to ultralow interest rates around the world and to the risk of defaults in the energy sector. The pessimism may be unfounded given how much stronger banks are now than they were during the financial crisis in 2008, and the general health of the U.S. economy verses the rest of the world. But all signs point to banks getting more risk averse, which spells trouble for the businesses that depend on them. To read more, click here.
