Is it time to turn cautiously optimistic that the worst for banks is behind us? Or is that just wishful thinking?
Since he took office in January President Obama has introduced some interesting if not immediately effective strategies to fight the financial crisis.
1) a new plan to mop up toxic assets
Obama’s Treasury Secretary has said the President supports a public-private investment fund to purchase bad assets, though details are still forthcoming. It’s widely believed it would involve some kind of insurance mechanism that would allow the private marketplace to come in do this in partnership with a federal guarantee.
2) taking a new look at mark-to-market accounting
On Thursday, the administration intends to take a close look at mark-to-market accounting and it’s impact on the current financial crisis. If that meeting results in the government relaxing mark-to-market rules, optionMonster Jon Najarian thinks the stock market could explode.
3) restoring the uptick rule
Rep. Barney Frank, chairman of the U.S. House Financial Services Committee told CNBC he was hopeful the SEC would restore the "uptick" rule in about a month. The rule slows the pace of short selling and could help calm volatile markets.
So, is the financial rally for real?
Sanford Bernstein analyst Brad Hintz suggests keeping the recent climb in perspective and reminds, “it was a rally from a very low valuation.”
And he adds, “recognize that there are consumer problems ahead and massive uncertainty about regulation going forward. That’s really going to interpret the future of financial services.”
However Hintz suggests money could continue to flow into Goldman and Morgan. “Brokers are considered safe stocks because they don’t have the consumer exposure that banks have,” he says.
And don’t hold your breath waiting for the government to eliminate mark-to-market accounting. He tells us, “I don’t think they will do away with mark-to-market accounting. Instead I think they will talk about how it was implemented.”
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Trader disclosure: On Mar. 11th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (GDX), (MSFT); Najarian Owns (COF) Call Spread, (FCX) Call Spread, (GS) Call Spread, (PCU) Call Spread, (X) Call Spread, (XHB) Call Spread, (GLD) Put Spread; Najarian Owns (MS) & (MS) Calls; Karabell Owns (AAPL), (BHP), (FCX), (FXI), (GOOG), (GLD), (GE), (JPM); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Own (RIG); Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (BBT), (IYR), (IJR), (IWM), (MDY), (SPY), (USO)
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