Behind the Money

Fast Money First Look: New Low For Financials Today Forebode New Market Low?


While Obama takes the oath, all eyes in the markets will be on the financial sector following RBS's monster loss announcement in the UK and reports of a new phase of the bailout ahead this week in the U.S.

That new phase can't come soon enough as the Financial Select Sector SPDR is just 30 cents away from closing below its Nov. 20th low point of $9.39. This breakdown may be a psychological blow the market finds tough to handle today and this week.

Citing sentiment that embodies the feeling about most of the sector, Stifel Nicolaus analyst Chris Mutascio downgraded shares of Bank of America to "Hold" from "Buy" this morning. His call may push the sector to that new closing low today.

"Downgrading the shares at an 18-year low and at approximately 70%-75% of pro forma tangible book value per share may look foolish to some," writes Mutascio. "In the end, we had to answer one simple question in order to maintain our Buy rating on the shares: If we had a clean slate, would we buy the shares today?"

Mutascio said the answer was "No", citing even further deterioration in bad loans for commercial real estate, along with the substantial preferred dividends Bank of America will need to pay to Uncle Sam. That's the concern about the troubled banks in this sector. Another phase of the bailout could wipe out even more equity for common shareholders.

Our debate on the show tonight will be whether or not the rest of the market can recover while financials go nowhere or lower. Tune in to see what the traders think.

ONE MORE NOTE: Also debuting tonight, a weeklong series on "Finding Yield". This was an idea from host Dylan Ratigan and comes about after observing investors and traders' thirst for anything that throws off some yield, whether it be a corporate bond ETF or so-called safe dividend-paying stock. With the markets set to churn for most of the year, any instrument that provides a higher payout than record low yields for Treasuries will be in high demand for investors wanting to rest a little easier. The gang will try to identify a few of those for you all week. Barron's highlighted one such instrument over the weekend that seemed to break out last week: the Vanguard Long-Term Bond ETF .

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