Can't believe it but $18 is a real possibility, maybe even lower. Sorry all you longs, especially all the employees who have held this in their 401k for years. Wealth destruction. Buy gold, it will go to $3000 before this is over.
Yes, it might hit $18 or lower. Reminiscent of March of 2009.
The djia has tanked nearly 2000 pts since July 22 driven largely by gridlock in dc, concerns that the 30% marks on piigs debt ought to be double and some weak economic data (philly fed survey of -37 which historically shows virtually no correlation to the pmi data.)
Last month, I was about 40% cash and this month have spent about 60% my cash position on banks, transports, industrials. I've been adding bbt, c, pnc, ms, ffch, fdx, ba, de, cmi, cop, mrk, intc, ge, aa and some others.
I think the economic situation is ok. Rail and car sale data is fair. Retail and food sales for July 2011 per us census bureau were up 8.2% vs. last year. Loan data from fed continues to show modest low growth. I think it's noteworthy that residential mtgs through August 10 are up about $30 billion or 2% from 6/30/11. Due to massive refinancing. First time positive net loan growth in mortgage loans in few years. Credit quality continues to get better. Unrealized gains on banks investment portfolio have now reached $29 billion in August of 2011, or about 4% of their tangible capital. Look for a rebound in personal income. Last month was only up .1% but I think it's due to the fluff in the stats.
I think bank m&a in the near term will become much more active - sti, rf, snv, hban, hcbk, fitb fhn and many others are selling below tangible book value. On the other hand, I think the value of branch banking is getting less important as on line banking continues to expand.
If I were Kelly King I would look at acquiring small banks that sell at substatial discount to tbv, generate solid nim, reasonable noninterest income to expense, plain vanilla portfolio, good ALL and are located in growing regions. FFCH is a good case in point. $2 billion loan portfolio. 75 branches located on the coasts of sc and nc where retirees relocate. Solid nim at 383 bsp. Sells at 50% of tbv. Good noninterest income to expense. #2 in deposit share in Charleston. Owes no tarp money. Seems to me acquiring a bunch of these is better than taking on a big rats next like rf or snv but I suppose it all depends on share price.
Of course, it would be nice if King were to publicize that fact that bbt 2nd qtr. earnings would have been close to $1 share instead of $.44 under a "normalize situation" where loan losses are say 70 bsp per year and investment securities have normal durations vs. short term.
Curious as to why you think the economic condition is ok? The FED seems to disagree as they just announced holding interest rates near 0 until 2013. Added to that - many firms (ie MS) are cutting GDP predictions just not for the US, but the world.
And the outlook by companies this qtr were very mixed and earnings projections are getting cut. I would say odds for another dip in the ongoing Depression are increasing daily.