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Monday Morning Quarterback: Will Banks Bounce into 3Q?


It seems no one wants to hold financials.


"Even a broken clock is right twice a day."

As we tie a bow on the worst June swoon since the Great Depression, a normally jubilant July is limping to the forefront of our collective psyche.

Fireworks are on tap, but what form will they take?

Will we celebrate the traditional fires in the sky that light up lower Manhattan?

Or will a more somber ceremony precede that on the corner of Wall and Broad?

There are several things we "know."

First, markets move in three phases-denial, migration and panic. While hopeful folks whispered "capitulation" in hushed tones on Friday, it's tough to make that case at VXO 25, less than half the level that previous fear fulcrums.

There is history. Since 1960, the average bear market has lasted 14 months and took stocks 31% lower, on average, before we bottomed. Considering that we've yet to enter "official" bear territory for many of the mainstay averages, patience seems prudent.

Finally, there's social mood and risk appetite, which we've spoken about incessantly over the last few years. Given the historical highlight above, it's again worth nothing that the stock market crash didn't cause the Great Depression, the Great Depression caused the stock market to crash.

Debbie Dour you say?

Risk management over reward chasing, I'll counter, with a conscious nod that the most vicious rallies occur in the den of a bear.

It remains my view that we're in the early innings of the deleveraging process that will take five years, for starters, to flush its way through the system.

The good news-and yes, there is some-is that once this occurs and debt is destroyed, the foundational elements of a legitimate and sustainable economic expansion will be in place.

It'll likely be lean from here to there but we'll get through it together.

We are, after all, Minyans.

Random Thoughts

Answers I Really Wanna Know...


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