Banking sell off drags down markets

Dow ended last week at 7223. After today's loss, the Dow managed a gain of less than 60 for this week. Stocks peaked at mid week after the Federal Reserve's announcement about buying more bonds. Since then, gov officials in DC have only one thing on their minds, take away bonuses from a handful of AIG execs. Today, they are going after more at Fannie Mae & Freddie Mac after finding out that a handful received a modest amount compared the enormous sums already lost. It looks like DC has declared war on bonuses as a way to cover up their bungling in contributing to creating this financial mess. Dow sold off 122, decliners over advancers 3-1 & NAZ fell 26.

S&P 500 FINANCIALS INDEX were weak as banks keep selling off after their recent rally. From a low of 82 on Mar 6, they rebounded to 126 12 days later (Wed). This reversal I think is more than profit taking by those who lucky enough to buy 2 weeks ago.

Value 109.74

Change -6.14

% Change -5.3%

High yielders sold off today. The Alerian MLP Index kept sliding all day, down 5 taking it below the important 190 line to close at 188.88. The Dow Jones REIT Index was weak all day, dropping a very big 9. Junk bond funds were lower while VIX shot up 2½ to 46s. The chart below shows VIX is back at its 2 week high, increased fears are creeping back into the markets.


VIX ---- 2 weeks





Gov investment means more gov interference. Now Fannie Mae & Freddie Mac have to justify bonuses to the gov (i.e. Barney Frank). I really don't know what's going on at these institutions but newly appointed CEOs working at a salary of $1 are being treated as the enemy by the largest stockholder, the gov. Barney Frank is quibbling about $4M in bonuses. Good boy! Somebody needs to tell Barney that they were just following rules established last fall when the gov rescued these quasi gov institutions. Why is Barney the last one to figure out bonuses were paid? We're back to - watch the molehills, the mountains will take care of themselves. The banking officers are trying to solve gargantuan financial problems, having gov officials looking over their shoulders questioning every move is a kick in the head they do not appreciate or need. This is just the beginning of what some call more interference, gov officials view execs at banks (& much of Wall Street) as enemies who have to be punished.

•Frank Asks Regulator to Cancel Bonuses at Fannie, Freddie, Recoup Payments

• Fannie Mae CEO defends retention bonuses- AP

Oil & gold, leading other commodities, slipped back as the commodity boom yesterday faded out today.


Autos are out of sight but not out of the woods. Bruce Rattner, Treasury's chief auto advisor, said GM & Chrysler may need far more than the $22B already ask for. I wonder if those gov guys can find a few bonus people to hammer on while ignoring the bigger problems! The auto companies will give an update by month's end, 12 days away.

•GM, Chrysler May Need `Considerably' More Than $21.6 Billion, Rattner Says


Increased gov regulation is is not liked by investors & is placing stocks back on defense. Even more dangerous is the attitude which has taken over DC that Wall Street is the enemy.