Three of the financial institutions that were key catalysts to the global financial crisis – and that owe the federal government billions of dollars as a direct result of those problems – have seen their shares triple in price so far this month.
Where are we now? Still in the Twilight Zone economy as far as we’re concerned. US stocks ended strongly on Friday. And they’re set to rise again today if Europe’s strong morning performance is anything to go by. Commodities are up too. Nymex crude oil futures are at $74.24 a barrel at writing. Gold is trading at $953.50 an ounce – not far off Friday’s one-week high.
One of the most accurate forecasters of the global economic crisis, Nouriel Roubini, said last week that last September’s spree of bank takeovers deepened the crisis because it made the already-too-big banks even bigger.
The Financial Select Sector SPDR (NYSE: XLF) has rallied over 40% from its low on March 6 through to last Thursday’s higher opening. The price action last week has triggered a half-day buy signal, which means that it should make at least a three-wave move to the upside.
Steve McDonald of Investor’s Daily Edge recommends three profit-potential bank stocks that could play out following the downside of government intervention.
We are reaching a stage of maximum pessimism in the market, says Louis Basenese. And that means we could be close to a great buying opportunity. But Louis says investors should only consider strong companies with robust growth prospects like ‘nuts and bolts’ firm Fastenal (Nasdaq:FAST).
Clean energy ETFs became hugely popular in 2007. But they’ve been taking a beating since this August, when crude oil prices began to fall from their year highs.
Nevertheless, Jim Stanton says alternative energy — and the wind-energy market in particular — has a big future. Wind energy is already the second largest source of new power generation in the US, and it now has the backing of the much-hyped Pickens Plan.
Jim says two clean-energy ETFs that look undervalued right now are PBW and GEX. He also recommends FAN for a more wind-specific ETF.
At a conservative estimate, the government has so far this year stumped just under $300 billion worth of taxpayers’ money in mopping the problems triggered by the subprime mortgage crisis.
In July, the Federal Deposit Insurance Corp (FDIC) said the cost of insuring the deposits of failed bank IndyMac would be $8.9 billion. The bailout of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) put taxpayers on the hook for at least $200 billion.
The AIG (NYSE:AIG) rescue adds another $85 billion to that figure.
Lehman Brothers (NYSE: LEH) has a lot to answer for… No sooner had I wrapped up this edition of “Sector Watch” than the company declared bankruptcy, thus forcing me into a swift re-write! So much for my plan to go fishing yesterday…
The dominoes are falling, says Adam Lass in Taipan Daily.
The housing market is still a shambles, nine U.S. banks have failed so far this year, and Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) are all but nationalized. What’s more, the world’s central bankers can’t agree on what caused this mess, let along how to fix it.
But amid the gloom and doom, Adam says put options on MetLife (NYSE:MET), Bank of America (NYSE:BAC) and Capital One (NYSE:COF) can still yield triple-digit gains…