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Piggy Banks

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We have bulls, we have bears...we even have a hot cow! I mean, this is Minyanville...and if we wanna have a couple of porkers, well, who's to say that's wrong? The banking sector auditioned for that role yesterday (on the back of the CMA blow) as it got waxed for 4 ½ % and led the broader tape down the slippery slope. After the close, BK (Bank of NY) chimed in with a blow of its own, and it's currently offered down 3 points.

I bring this to your attention because the financials are arguably the most important sector in the S&P and they warrant close attention. Aside from having a 21% weighting of the S&P, the financials (read: banks, insurers and diversified financial services) are also a microcosm for credit concerns, geopolitical risk and accounting worries. Further, they will reflect the risk in other Worldly economies such as Japan and Latin America. Watch the BKX (PHLX banking index) as the chief tell for the S&P in the days ahead, and let's use 692 and 670 as "support" zones (currently sitting right at 692).

Speaking of our neighbors down south, the Brazilian elections are being held this weekend and the current frontrunner, Luiz Inacio "Lula" da Silva of the Labor party, is not perceived to be the friendliest candidate for the markets. Still, he was recently endorsed by Brazilian business leaders (he's led the polls for some time) so it will be interesting to see how the Bovespa reacts come Monday. Yet another thing to put on our radar!

Finally, and in response to the influx of emails I've gotten this morning, YES, I went to Syracuse and YES, I have the diploma to prove it!

See you after the opening.

R.P

No positions in stocks mentioned


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