Regional banks sank markets!! The negative news & thoughts on regional banks swamped markets today. Dow was down (only) 45, decliners ahead of advancers 3-1 (could have been worse!) & NAZ fell 26. S&P 500 is down to 1228, considered to be a ugly number by many. There were 500 new lows on NYSE, that was to be expected. NYSE volume was 1.4B, pretty much a routine kind of number.
Regional banks probably had their worst day in history, very tough to keep track of all their problems. Washington Mutual (WM & the biggest S&L in the US), along with National City Corp (NCC), First Horizon (FHN & former member of the S&P Aristocrat Dividend list), to mention just a few, were clobbered. Many of these stocks are selling at 20 years. These stocks was sold on fears following the failure of IndyMac on Fri which the FDIC has had to take over. Can you remember the last time the FDIC had to take over a failed bank? All this was in the middle of Fannie Mae (FNM) & Freddie Mac (FRE) getting help from the FED/gov leading to a very confusing mess, something not liked by markets. Oil remained near 145, but today it's like nobody cares. For what it's worth, Pres Bush lifted an executive ban on offshore drilling, putting that ball back in congress's court.
In the midst of all this confusion, junk bond funds & REITs pulled back as they're associated with financial products. The junk bond funds in particular should be getting some respect. They invest in junk bonds, not mortgages & with the latest sell-off have yields typically over 11%. For the very brave, a nice place with yields 700+ basis points over Treasuries.
Asian markets open in a few hours, they should give an early clue of how they're taking the financial news in the US. Earnings are coming in the next few days, bank reports will get the most attention. Stay tuned!!
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