A reader left a comment yesterday noting the LIBOR scandal and he said "it never ends."
Yes, this is what I have been saying for years now in terms of other shoes will continue to drop. This will continue to play out, by this I mean bad news for the largest US and European banks. The totality of the banking crisis is still years from being solved.
Short post, big testing day for RRGR.
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10 comments:
I am in agreement with your banking thesis, but other shoe to drop is in Chilean banking shares. As goes China, so goes Chile.
not sure how you get to gross misuse of leverage and unethical behavior on the part of the Chilean banks based on China's economy possibly slowdown.
Chile might face the threat of a slowdown which is different than a banking crisis.
Thanks, Roger. It's the unethical stuff that's really bugging me.
What's the point of even having a board of directors? They don't protect shareholders, they don't punish wrongdoers, and voting my 100 shares won't keep them from being re-elected. Maybe the Occupiers had a point after all.
I don't think I bashed on OWS so hopefully this is not hypocritical or contradictory but OWS asked question which is healthy. We may or may not draw the same conclusions they did but it is ok to ask questions.
No one is able to step out of the box and make drastic changes...that's what so frustrating. Board of Directors, politicians, regulatory agencies, some CEO's ...they are all worthless as knowledgeable guides. I'm a common man, but I know what changes are needed.
Chile mines about one third of global production of copper,
which accounts for more than half of its total export revenue. Last time the price of copper took a big hit in 2009, Chile went into a pretty good recession. I think GDP for a time was down 6%. What happens if copper sells at below $2.50 per pound for an extended period of time? Under that scenario, I think you would have a banking crisis.
recession does not mean banking crisis. recency bias
Recency bias is the "other shoe to drop" thesis on US Banks. Very tired, and since 10/11, very wrong. I guess we'll see.
Very wrong?
The JPM loss and this Libor thing are more fundamental shoes. Since October XLF has outperformed but since April it has lagged. This has been correct more often than not.
Roger,
I own 6 bank stocks, BAC, WFC, C, SNV, ZION, TAYC.
Since 10/3, the returns are: 49%, 47%, 19%, 106%, 42% & 188%.
My thought is that the capitalization and earnings power of banks are very favorable, while the bar is set very low due to recency bias, and fear. Remember, good prices and good news very rarely happen at the same time.
The JPM loss is so far, a JPM problem. We will see if it spreads. The LIBOR deal is by far the worst behavior since Lehman, and again we need to see how it plays out.
I don't follow the XLF, I am a individual company investor.
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