Thursday, September 11, 2008

Financial Stocks Under Pressure Again

I feel like a broken record posting that title, but the financials are weighing on the market again. Lehman didn't do much to inspire confidence yesterday, and the stock is -40% lower again today, trading at just $4.50. Simply amazing.

It seems the problem at Lehman is simply that they continue to have way too much commerical real estate on their balance sheet. In hindsight, its kind of surprising that an investment bank would wind up with all of this real estate, but in the last several years these investment firms got into all sorts of different business segments.

Washington Mutual (WM) is also trading below $2, as regulators have started to take a closer look at that bank as well. Wamu has billions of pay-options ARMs and various home equity loans on their books, and these loans are likely well under water.

Asian markets were lower across the board overnight, on continuing credit concerns. The dollar is higher once again, which is pressuring gold and other commodities. Oil is also lower, and has reached $100 and change today. The 10-year yield is at 3.61%.

Lower oil and commodities are pressuring the energy and materials sectors in the short-term, but is a major positive for consumers and the economy longer-term.

The markets opened a lot lower, but have bounced nicely from their lows. The Nasdaq 100 is actually in positive territory, and the S&P 500 is near its highs of the morning. The put/call ratio opened at 1.36, which could help.

long SDS


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