Banks lost almost $4billion in the second quarter vs. the $5.5 billion they made in the first quarter. Sheila Bair, FDIC chief speaks today at 10am to discuss the current state of the banks and the financial sector. China was lower after some tough talk from their leaders on their own banking system. Asian markets ended mostly lower Tuesday, with Chinese-stock investors locking in profits after the country’s banking regulator warned banks about their capital positions, raising fears that lenders may have to sell shares to raise capital. Chinese banking stocks dropped in Hong Kong and Shanghai after the mainland banking regulator warned banks to meet industry capital requirements or face sanctions.
At last check the dollar was rising against the Euro, but edged a bit lower against the yen. Many banks ave already failed this year an there are many more to come, it’s old news but the reaction today to Shiela Bair’s comments will be interesting. Most banks have become REIT’s in a very subliminal way and we all know commercial real estate has issues, although you would never know it by their stock prices. Distressed commercial real estate is up 600% from 2006,and the piper has to get paid at some point. Most of the cities I’ve visited look like Dodge City during a dust storm.
The dollar has its moments, but we all know the trend is clearly down. My long plays consist of only materials and a bit of oil related names. I may be proven wrong, but I wrote last Monday that I think the yearly highs were put in on XLF last week. Too much weight there and where is the catalyst? I’m bearish and short residential real estate via XHB and the etf gave back practically all its gains yesterday after a “positive” report on home sales. Individual names in that sector look a bit heavy too.
Volume was invisible yesterday but Thanksgiving week can be whippy and make or some great trading. Good luck today.