Banks Test the January Lows
Potential for massive move still exists.
- If Apple and Nike merged, would the new company be called Nipple (AAPL) (NKE)?
- It was a lot easier for me to hate the banks last summer when nobody else did. Still, if they break BKX 77.80 (January lows), it'll be a bad omen of the bulls.
- As per Mr. Practical-and continuing a theme we discussed when the banks issued offering after offering-the Ambac (ABK) news is dilutive and deflationary.
- That is in stark contrast to the socialization programs that are being bandied about in Fannie (FNM) and Freddie (FRE). No wonder we're confused.
- Reading between the lines, it's pretty telling that the banks did NOT step up and ABK did NOT break the company in two. Not saying that was the solution, I'm simply peering through the smoke at the news that didn't break.
Meanwhile, as we dance along the credit chasm:
The action in energy and metals supports the counter-trend Tuesday vibe. So you know, I still think real risk remains for commodities on a trading basis.
What do you think about energy and metals long term? I remember six months back you thought they were trends for the future. Do you still feel that way?
Great question. Old school Minyans know that I've been on the metals and energy bandwagon since the end of 2003, offering that they'll "toss the leadership baton back and forth" on the upside.
Into year-end, I cooled on these groups-admittedly early and missing this last gasp higher-with thoughts that we would toggle from stagflation-hyperinflation into deflation. That hasn't happened yet as a function of a few developments, most notably the socialization of the marketplace. And there's no knowing for sure when that flip will switch, only that it likely will.
To your question, I do believe energy and metals will likely out-perform over the long-term on a relative basis. What that is, vis-a-vis other asset classes, is tough to know. My point was that they've prolly gotten a bit ahead of themselves in the short-term as investors stumble over themselves to gain exposure.
We've seen this movie before, I fear, so I'm just looking out.
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