Markets were higher, but not with a lot of strength & conviction. Dow was up 45, advancers ahead of decliners by 25% but NAZ was up just 5. Volume continues at just 1.2B. The durable goods report helped stocks, but oil continues high. Oil rebounded to 131 on more worries about Nigeria supplies. Oil rebounded from a 3 dollar loss earlier in the day to close up 2.18 at 131.03. Markets are mostly trading on financials & oils, the drama continues with no end in sight.
Regional banks got a lot of attention, on the negative side. Regions (RF), Fifth Third (FITB), Key (KEY), etc. took big hits on gloomy forecasts. The entire banking sector was affected although buying late in the day trimmed losses. American International Group (AIG,), in the Dow, was down to an 11 year low on worries about their credit worthiness.
Bloomberg TV reported about an Alabama county which may have to declare bankruptcy. The idea is JP Morgan bankers (among others) convinced them to issue very sophisticated debt to finance the sewer system. It looks like they didn't know what they were doing & are now in so far over their heads they may have to go under. Meanwhile banks & friends received very nice fees. Given the problems with sub-prime loans, this kind of story may play out elsewhere. For the market's sake, I hope not.
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