Still No Bottom For Financials
CNBC "On-Air Stocks" Editor
The good news is that a feared Monday Debacle never materialized, in fact it never even got close. What worked was the same story that worked for the last five months: buy the dips, sell the rallies. So energy, materials, and beaten up retailers got a modest lift today.
The bad news is that there was no bottom in financials, with 5-year lows in the Bank Index (BKX), and while you could blame the drop on the huge loss from Lehman (and additional concern about UBS), the fact is that the whole group fell apart again. And it wasn't just the usual companies with heavy mortgage exposure like Wells Fargo or Wachovia or Washington Mutual , as well as Midwest banks like KeyCorp that also had significant housing exposure.
No, there was weakness everywhere: even trust banks like Bank of New York and State Street were weak, and even JP Morgan is now down 15 percent in two days, near a new low. Why single Morgan out? Because the Street believes--and analyst after analyst have said--that JP Morgan is less credit sensitive, has better risk management, and has an above-average capital position. Hm. Someone should tell the sellers that.
Fed officials didn't help. The New York Fed's Timothy Geithner said that containing inflation will require higher rates, and that more regulation of financial firms was likely. None of this is shocking, but it doesn't help the mental outlook for financials.
Finally, corn hit hit another high, and as that has been happening in past few days poultry producers like Pilgrims Pride have been hit hard, down another 9 percent today.
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