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Thursday, March 5, 2009

The Market Rallied, But NOT the Banks

The banks did not rally with the rest of the market. That has to a be red flag. Until the financials can mount a rally, any 'bounces' in the broader market will be short lived...

11 comments:

Anonymous said...

Ben, I am religious about your blogs although I don't always agree with you about gold. Your piece about Goldman Sachs was a superb bit of timing. I went short at just over 97.
I am also short JPM from 32.80 and out just above 20, then back in at 26 with puts. JPM has about $90T deriivative book which they have never had to report on for "National Security" reasons. I believe JPM is facing the knacker's yard and the Fed is in a panic about it.
Josh

Anonymous said...

You mean US banks, right? Can. banks seem to be in better shape.

Irrational Doomsday Blog said...

Any thoughts on the CDS clearinghouse and how that will impact the downward pressure on markets?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2STeWp7caB0

Anonymous said...

Hey! Cool Dr. Doom icon!

Dave Narby said...

Hey Ben,

Not really sure why we can't get (at least a muted) rally w/o the financials.

Maybe I'm missing something, but it seems like they've been beaten down to such tiny market caps they don't impact the major indexes that much anymore.

Jonny said...

Obviously not Ben, but I expect the CDS clearinghouse will really only help keep track of the extent of future liabilities, and will have no impact on our current situation. Do you feel otherwise? Why?

Irrational Doomsday Blog said...

Jonny:

My personal hope is that the clearing house could break the chain of counterparty risk snowballing into systemic risk by putting the clearinghouse in between the buyers and sellers.

I'm just not really convinced that it's going to do that yet.

Ben Bittrolff said...

About the CDS Clearing House... Uh, how is that 'transition' going to work exactly? Don't get me wrong, it's a necessity... and long overdue, but won't trying to clear these trades just reveal that most everybody went swimming naked? Perhaps that will cause that final rinse in the equity markets... and the we can all begin to rebuild.

GE at $2.50? said...

Gosh! Still boring and no panic! Where is PPT? It's cheap! Buy Buy Buy!

Leo Kolivakis said...

Ben,

Think about how twisted our logic has become when we say things like the market cannot rally UNLESS financials rally along too.

I call this the tyranny of banks! I am looking forward to the day where the market rallies WITHOUT those bloody banks.

Sigh!

Leo

Charts and Coffee said...

good post. I noticed that as well and it was a good signal. Of course, many of the other rallies included the banks and those failed as well. But I think this actually strengthens the argument that the Wed rally was even weaker than rallies we saw last year.