- S&P 500 Down — But Not By Much
- EU Finance Ministers Won't Get Fooled Again
- Why Is Market So 'Tired' With Good News?
- What Exactly Have Greeks Agreed To?
- A Greek Deal, but What Is the Deal?
- No Greek Debt Deal? No Problem! (Maybe)
- Irish Finance Minister Causes Draghi's Worst Nightmare
- Caesars' Wild Open
- Forget the Incredible Shrinking Greek Politicians—It’s Draghi Time!
- Trading Day Has Lots of Moving Parts
TRADER TALK RSS FEED
MOST SHARED
- With Investors So Bullish, Pullback Must Be Coming
- How to Date a Wall Street Man
- LinkedIn CEO Calms Post-Lockup Concerns
- Why Greece Will Default, Leave the Euro Zone
- Stocks Hold Losses, Italian Banks Downgraded
- Blue Ivy Gets Trademarked By Beyonce And Jay-Z
- Get Ready for $5 Gas This Year: Ex-Shell CEO
- The World's Best Beers
- Housing Still Hurting Consumers, Economy: Bernanke
- Investing in the Fountain of Youth
- Private Homebuilders: Dead Men Walking
- LinkedIn’s Growth Is Already Priced In: Analyst
- The Real Reason Behind Bank of America’s Rally
- 5 Hedge Funds’ Top Stocks Soar After 2011 Rout
- This Valentine’s Day Love Is Served on a Silver Platter
- CEO to CEO: Our Roles Are Changing
- Clint Eastwood ‘Surprised’ by Reaction to Chrysler's ‘Halftime in America’ Ad
- Bulls Check In to Community Health
- Bank of America’s Worst-Case Scenario Gets More Real
- With Investors So Bullish, Stock Pullback Must Be Ahead
- Is Bill Gross, PIMCO's Bond King, Losing His Touch?
- Greece Austerity Deal Runs Into Trouble Once Again
- Why Greece Will Default, Leave Euro Zone
- Apple’s Record Run: $500 Is a Magic Number
- Private Homebuilders: Dead Men Walking
- Housing Still Hurting Consumers, Economy: Bernanke
- Get Ready for $5 Gas This Year: Ex-Shell CEO
- The World's Best Beers
More Videos
Trader Talk
Text Size 
How Real Is This Rally?
It's a broad rally today—many sub-sectors are up in the high single digits: banks, materials, energy, retailers. semis.
This is more than a short covering rally, but it's not clear how real it is.
It seems that much of the buying is coming from trading accounts—hedge funds—chasing oversold conditions. Problem is these types of traders can reverse their positions just as easily.
I'd be a lot more comfortable if big institutional players and mutual funds were buyers, but I am not hearing that yet.
Some hope for banks is the motivating factor in the rally.
Mr. Pandit's comments that Citi [C
Loading...
()
] was profitable in the first two months of 2009, echoing similar comments from Wells Fargo on Friday, is the primary catalyst.
Traders like this talk, but are not surprised. Remember, banks are borrowing money from the government for essentially NOTHING, and lending it out for...more than nothing. Who can't make money on that trade?
But bad assets are not having a good quarter. There were huge writedowns at the end of last quarter; there will likely be more huge writedowns at the end of this quarter.
That's why the focus of the debate is now over the Obama bank plan, the outlines of which are now pretty clear. The Obama administration will encourage (demand?) banks take large losses on their bad loans. They will set up a public/private partnership that will provide low-cost loans to buyers of those distressed assets.
The Street likes this idea much more than the government buying loans directly. The less direct ownership by the government the better.
The question, of course, is how many banks will bite the bullet, take the losses, and sell the assets, rather than just holding on and hoping prices will improve.
That is the next stage of the debate.
_____________________________
_____________________________
Questions? Comments?
- Marketing clichés aside, sometimes diamonds are for investing.
- Actor Clint Eastwood responds to critics over the Chrysler Super Bowl ad and all the controversy.
- The ‘Fast Money’ traders weigh in on fashion related stocks from apparel to footwear.
- This Valentine’s Day should prove a love fest for restaurants, as many couples will be dining out.
- Here’s a look at Westminster Kennel Club’s most successful breeds—and how much they cost.
- What kind of homes do celebrity couples share? Here’s our updated list. Take a look.
- S&P 500 Down — But Not By Much
- EU Finance Ministers Won't Get Fooled Again
- Why Is Market So 'Tired' With Good News?
- What Exactly Have Greeks Agreed To?
- A Greek Deal, but What Is the Deal?
- No Greek Debt Deal? No Problem! (Maybe)
- Irish Finance Minister Causes Draghi's Worst Nightmare
- Caesars' Wild Open
- Forget the Incredible Shrinking Greek Politicians—It’s Draghi Time!
- Trading Day Has Lots of Moving Parts
Data is a real-time snapshot *Data is delayed at least 15 minutes
