Banks are weak, the S&P 500 FINANCIALS INDEX is declining again. Their Feb high was 138, forget about the starting level for 2009, & the index was not able to break that ceiling. Congress wants to make those who were betting on Citi returning to 5, sorry they took that bet.
| Value 110.93 | Change -4.95 | % Change -4.3% |
Confusion about bank & financial institution growing regulation is not helping stock markets. The AIG tax idea, while it sounds good because it beats up on villains to the vast majority of Americans, is bringing more gov meddling in the business world. Singling out a few "bad guys" at AIG because the Congress didn't know what it was doing when it passed wide ranging financial reform legislation WITHOUT first reading what they were signing, brings on all kinds of problems. First slapping a special tax on a limited group of people is not constitutional not to mention it comes after the fact (the money has been paid). This legislation was written so the mega bucks bonuses paid to Merrill Lynch execs & others are excluded. Where's the outcry about the $B that was paid to foreign banks? Again, we have Congress that doesn't know what it's doing & to cover its tracks will punish anybody it can blame. A very danger precedent.
Now Congress wants to RUSH (where have I heard that word before?) new laws to make more execs sorry they got gov money. Haste maskes waste & Congress wants to show they haven't learned that lesson. This is Congress, where it normally begins by taking a month or more to first create a committee to think about things. Barney Frank is de facto CEO of Citi & he's going to make Citi, along with other banks receiving gov backing, sorry they received gov money! Citi (C), still a Dow stock, is absorbing the news well, up 2¢ to 2.62.
MLPs & REITs are weak while junk bond funds rose. It could be that increased enthusiasm for Treasuries is bleeding over to riskier investments with 20+% yields.
While stocks remain in the doldrums Treasuries are strong, having one of their best weeks in a long time. The yield on the 10 year Treasury bond plunged from 3% a couple of days ago to under 2.6% today. After traders have had a chance to think things thru, the inflation threat which brought on the commodity rally yesterday, they aren't bidding up bond prices todayt.
•Treasury Notes Head for Best Week in 2009 on Fed's Plan to Purchase Debt
Oil slipped after it's big rally yesterday, but then headed north to a small gain on the news about a navy ship & a sub colliding in the Straits of Hormuz (threatening the access to the Persian Gulf). Excitement in commodities has dimmed led by gold prices little changed near 960.
I hate to dwell on blundering Congress, but the constant theme about rushing out new legislation after a track record which is so bad should send worries to all investors. I hate how often the word "rush" is used to describe new legislation. Congress still hasn't learned that rushed brings sloppy & careless, but the public has to pay for their mistakes. Dow has had a choppy week, post FED announcement has not seen fit for a rally. Not good going forward!
Dow Jones Industrials --- 1 week
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