Dick Evans, chairman and CEO of San Antonio based Cullen Front Bank (CFR) made the rounds in December chatting with CNBC in an effort to reassure investors that the low price crude oil was only temporary and would not translate into a revisiting of the bloodbath of the 1980's, however their chart says that investors aren't drinking the koolaid. (chart right - click to enlarge)
The same investor fear can be seen in southern lender BOK Financial which operates in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/Missouri. (chart below - click to enlarge)
I believe that barring an OPEC cut in production or some outside supply disruption, crude will NOT recover in 2015 as explained in this post. Is this what these bank charts are hinting at?
The next question is if these banks begin to see defaults in oil and gas names, just how many dominos lie behind in the high-yield bond financial trail. As Becky Quick points out, hedging only lasts for so long so if crude oil does not recover, 2015 will definitely weigh further on Southern small, regional banks.
In fact the chart of high yield bonds, HYG seem to imply investors do believe there's more pain ahead. With these breakdowns, traders will look to fade any rally at overhead resistance and lower targets are near the 50 month and 100 month simple moving averages (for now).
It may be time for Steven Neil from BOK to hit the airwaves in an attempt to reassure investors but charts don't lie folks. As we've learned in the past, bankers do.