It seems as though the stress test has been priced in this week. BAC and C have been leaking hints as to their capital needs. Does anyone else feel that the sell-off will start tomorrow as profit-taking begins now that the long awaited stress test results are finally out?
Markets will trade sideways as the Fri. BLS jobs report will be "less bad" than expected ... as with other technicals. Banks financial health can only be revealed when all toxic asset exposure comes out maybe in a couple of quarters. Govt.money via institutions will keep momentum going for a while though it should retrace but when is the key !!
And to add that the 19 banks will not be allowed to fail ..they will bleed tax payer money and so as long as other technicals .. GDP,employment keep an uptrend ..the markets will be sideways for sometime with an upward bias.
Other news that SHOULD affect:
Goldman Sachs (NYSE:GS - News), Morgan Stanley (NYSE:MS - News) and Bank of America (NYSE:BAC - News) all backed New Century Financial Corp. which originated more than $75 billion in high-cost loans between 2005 and 2007, according to the non-partisan group. The center says it specializes in investigative journalism on issues of public concern.
In all, the Congress has cleared $700 billion in taxpayer money to help stabilize markets with Goldman and Morgan Stanley receiving $10 billion each while Bank of America got a $25 billion investment.
While subprime lenders are a thing of the past the rescue funds are going to aid brand name banks who quietly made big subprime bets, the report concludes.
full link: http://finance.yahoo.com/news/Major-banks-funded-US-rb-15151079.html?.v=1
I think the news that the banks are not accountable should raise FAS by 30%.
this buy seems that he has been a bear for a while, but he makes a good point. If the government does start nationalizing some of the smaller banks, how much time can they really spend directing towards running all of these banks? Doesn't this pose a huge conflict of interest?
Ultimately fundamentals will rule the day. They don't justify the current p/e, market has to fall, regardless of FED.
No one could stop last fall's crash, not even the PPT. Similar situation brewing now, in my opinion. Give it a couple weeks.
I believe that the big trading banks will do just the opposite of what the market expects; hence tomorrow this could drop huge as the banks rally, next week may be the time to get involved. The Goldman's are expecting everyone to sell on the news and they need that fuel to keep pressing shorts. WATCH OUT!!!
Nothing! Absolutely nothing! JMHO, the FEDS have orchestrated this rah rah rally since March. This is why they delayed the results, so they could leak the info and spin it into good news for the rally "better than expected". I think that they plan for the leak and then have the PPT support the stock so that the market interprets it as a good solid stock.
How can companies that are on the brink of BK be trading with P/E's over 20. If it weren't for the TARP funds, these banks would have be shut down already.
I lost a lot of money in FAZ and pulled out at $8.25. I don't think the FED's will let the market tank yet. They are trying to suppress the shorts, so that when they (PPT) run out of funds to inject, the shorts won't have the @#$% to jump on. I think we hold out for a while after the results and look for entry towards the end of May. I think that the FED's are going to hold the market up through May to be contrary to the "sell in May and go away".
FAZ is done.
I was in @ 8.68. Still beleived it was all hype.
Then I got a call from one of my college roomates, who like to trade like me. His neighbor works for the Treasury and basically told him...."there will be no more "BAD NEWS" from the banking industry, especially at the highest levels."
That told me, what I had suspected all along....the GOVT will not let financial's suffer at any cost.
I'm with you on that boat. I bought in at 10.03 and dumped at 8.38. Everything it seemed was pointing to a collapse in the financials two weeks ago or so. Fundamentally it still seems the economy is in bleak times with little on the horizon.
The old man of Omaha is saying it is such a great time to buy right now. Yet, with unemployment growing, the automobile market fluttering on the brink of disaster, and housing still in the dumps - what exactly would be propping up the market?
What else is out there that would stop the rally in the short-term besides (possibly) the stress tests?
I agree with the one post that the stress tests may add a degree of certainty to the market which wouldn't be a bad thing for the financials....
Spike up hard. The likely answer now becomes each of the results will be that necesssary capital is less than what each has already received such that there will suddenly be a large movement to repay some or all of the TARP. In a flick of the magic capital switch, the banks will become over-capitalized. Once this announcement happens, wait for the dividend raising announcements.