Who predicted the near collapse of the US financial system? And who predicted its amazing recovery from the abyss? Not many.
As Moody's Investor Service warned last week, three of France's top banks could be in for a credit downgrade as they continue to use cheap US dollar funding to roll their large exposure to Greek debt.
BNP Paribas, Crédit Agricole and Société Générale may all be playing hot potato with debt of a deteriorating quality, borrowing over $75 billion on the short end to finance their longer-term holdings of Greece government paper." Europe on the Brink: Does Their Fall Ensure Our Recession?
6Months Daily Charts
$C Citigroup Inc.
Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS) increased gross exposures to French banks in the year’s first half before the European nation’s financial stocks plunged amid perceived dependence on short-term funding.
Citigroup, the third-biggest U.S. lender, boosted gross“cross-border outstandings” with French banks 40 percent to $15.7 billion from Jan. 1 through June 30, according to the company’s quarterly report. Goldman Sachs increased claims by 31 percent to $38.5 billion in the first half, its report shows. The filings don’t disclose collateral the banks received or hedges, which curb potential losses on existing bets.
Credit Agricole SA (ACA) and Societe Generale SA, France’s second- and third-biggest banks, led a rout in the BloombergEurope Banks and Financial Services Index since the end of June amid concern that some of the region’s lenders may struggle to maintain funding during government-debt crises. Legg Mason Inc.’s bond unit said its U.S. money-market funds won’t buy new debt from French banks to shield themselves from the perceived risk.
“There is a great cloud of uncertainty that’s hanging over the U.S. banks about the full extent of the exposures they have to French and other European banks,” said Andrew Karolyi, a finance professor at Cornell University in Ithaca, New York.“The market is clearly not reacting well to what they’re seeing.” Boosted Ties to French Banks
$GS Goldman Sachs Group, Inc.
When the analysts’ recommendations are strongly positive but the stock’s price action is very negative great caution should be exercised. Do not follow the herd and buy in to all the Wall Street recommendations. The fundamental projections have wide fluctuations in forecasts and are based on very unreliable numbers. Read this Article
$BAC Bank of America Corp
“Heightened volatility is here to stay,” said Sam Stovall, chief investment strategist for Standard & Poor’s equity research.
“The markets are much more interconnected than they have ever been, and new players are exacerbating the swings,” he added. Investors’ memories of 2008 are “very fresh and will cause them to sell first and ask questions later.”
Further undermining investor confidence is the fact that nearly all of the Western markets appear to be moving in lockstep, undergoing disruptive episodes simultaneously. That makes it difficult for investors to find a safe place to park their money — hence the rush to cash and other havens like United States bonds and gold — and stirs even more anxiety about interconnected risks between the European and American debt crises. Wall Street, Dangers Linger
$JPM JPMorgan Chase & Co.
$WFC Wells Fargo & Company
$MS Morgan Stanley
Dr. Doom, Nouriel Roubini, says that more stimulus is needed to grow the economy not austerity. Present policies could produce another recession. Roubini is called Dr. Doom for his pessimistic views. He predicted the earlier recession correctly. Capitalism can destroy itself
$USB U.S. Bancorp
$TD Toronto-Dominion Bank (USA)
$HBC HSBC Holdings
Marc Faber the Swiss fund manager and Gloom Boom & Doom editor spoke Tuesday about the Fed's decision to keep interest rates low for a prolonged period of time and the prospects of QE3. He says the Treasury market is a gigantic bubble and long-dated T-bonds are the short of the century. Faber suggests that sometimes the best the Fed can do for markets is to do nothing!
"The best they could do for markets would be to collectively resign," Faber suggested.
What Can the Fed Do To Help Markets?
No comments:
Post a Comment