For the most part you can blame it on the big mouths on Capitol Hill.
On the still not getting it...after losing big time in Boston the President, according to some reports, is trying to back his populist reputation by getting strict with banks and threatening them with stern measures vastly diluting their future earnings. Even though TARP has been paid back by these same banks with huge profits for taxpayers the administration is bent on separating speculative trading from banks traditional activities. This is Glass-Steagal redux even though the biggest players and blow-ups for the 08 mess were not commercial banks but Lehman, AIG and Bear Sterns. The reality is it will take several years to get this done but for the time being it makes for a horrible story for investors.
The President forgets that Mommy and Daddy middle-class own these very banks in their mutual funds and retirement accounts.When their shares lose money like they did last week the Dems will continue to lose support. Bill Clinton got it. This President doesn't...yet.
Letting go of Ben Bernanke is another live story that lead investors to confusion. Bernanke is slowly losing support and this is also taking a toll. Every time someone came out against him the markets lost a few points, said one observer.
Another voice to drop a pill into the Kool-Aid was Barney Frank who called for the elimination of Fannie Mae and Freddie Mac and rebuilding the U.S. home finance system from scratch. Investors thinking Frank meant the government should get out of the housing biz altogether had their own moments of panic selling. Reshuffling $5 trillion in agency mortgages doesn't happen overnight. But, when investors are nervous they're nervous.
There is always a reason to sell and takes many compelling reasons to buy.And, even though the numbers reported by the financials and tech were good but not great experts contend the sell off only confirmed that the good numbers were already baked into the share price.
Peter Boockvar of Miller Tabak summed it up by saying that earnings relative to expectations were mediocre.
If you have questions on anything in this blog call Paul Stanley@ 877 783 7080 or write pstanley@westminsterfinancial.com. Register your email to be alerted to new news and information.
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