Banks are under assault in Europe and the U.S., Roger Hirst told Real Vision during today’s Daily Briefing. Hirst discussed the profoundly poor performance we’ve been seeing from banks this week, as banks in the U.S. and Europe look like they’re heading back toward all-time lows, Japanese banks are still at their all-time lows, and UK banks are underperforming both the U.S. and Europe.

Hirst attributed this poor performance to the fact that banks are more aligned to the real economy, particularly regional banks, which are more exposed to commercial real estate and bad loans than large banks.

Hirst thinks there’s more downside risk to come because we haven’t seen an organic rally in equities that is driven by true growth, productivity, and innovation. Instead, we’ve seen a rally driven by liquidity and central bank largesse, and banks are a reflection of that lack of organic growth, he said.

Hirst also discussed volatility in markets and said he thinks currencies should be the release valve for volatility adjustment. He said that with the VIX rising to much higher levels than the actual underlying volatility, and bond market volatility at an all-time record low because central banks are destroying their price discovery mechanism, FX and currency markets are one of the few release valves for this whole scenario.

“FX volatility is the thing to own through the end of the year because bond volatility is being destroyed by central banks, equity volatility is already rich, and FX volatility is saying no big issue, but we could see all these issues play out in currency markets,” he said.

Hirst wrapped up the conversation with a discussion around the reassertion of the dollar in currency markets. He said the DXY looks like a reverse head and shoulders is breaking out, which could be the beginning of something.

He believes the real economy is kicking back in, both in Europe and in banks, the exuberance in tech equities is unwinding somewhat, and this could be the beginning of the solvency issue playing out.