HAVE YOU REALLY LOOKED AT THE BANKS? I MEAN REALLY LOOKED?
You gotta zoom out. This is an environment where you need perspective. I see the disease of myopia everywhere I look. Look at the big picture. That's where the money is going to be made.
The banks. They are an absolute disaster. The markets WILL NOT bottom without financials getting their act together. We are a long ways from that happening judging by the price action in the major financial institutions.
Let's have a look at the monthly charts to get a view of the broad landscape. No commentary needed...just look:
click to enlarge
BAC
BCS
C
DB
GS
MS
My 5 year old just walked by and said, "holy shit dad" when he saw the charts. It's that bad.
I don't know if these names are going to revisit their 2009 lows. I do know that they are telegraphing a sewer system being discovered inside of one or more of their books in the coming weeks and months. The markets are attempting to factor it in as fast as possible.
The only question an investor should have here is as follows: How jaded is the Fed from what occurred in 2008-2009 and how will it effect their decision making if another bank needs a lifeline in 2011-2012?
My guess is very jaded. The phrase "moral hazard", I promise you, is being used in more Fed meetings now than at any point in 2008. The Fed is very aware of the political climate and the resistance to further intervention.
As a result of these battle wounds, perhaps a different, less market friendly method will be used to deal with the seepage from the ruptured sewer lines that twist and turn their ways throughout the balance sheets of many of the aforementioned institutions.
Something to consider.
