Banks usually rally when rates fall with no recession, Mike Mayo says

Bank stocks may climb over the next few months following the Federal Reserve's decision Wednesday to cut its key overnight borrowing rate by a quarter percentage point. According to data from Wells Fargo, banks have rallied heading into the Fed's first cut in the past six rate-cutting cycles, then declined 6% over the course of the next seven to eight trading days. But in three cycles in which a soft landing was achieved — namely, 1995, 1998 and 2019 before the Covid-19 pandemic — bank stocks rallied, on average, 21% from their postcut low. In contrast, in the past three rate-cutting cycles leading up to a recession — in 1989, 2001 and 2007 — bank stocks saw modest declines after the first Fed rate cut, but continued to weaken for the remainder of the quarter after. "Many still view banks