Fundamental Trading Diary

Fundamental analysis of the capital markets

May Musings

With tomorrow’s “stress test” results coming out tomorrow, I am taking a look at which banks the market likes and dislikes in anticipation.

Likes:

  • Bank of America (BAC) +6.46%
  • Capital One (COF) +16.6%

Dislikes:

  • Wells Fargo (WFC) -8.61%
  • JP Morgan (JPM) -5.48%
  • Goldman Sachs (GS) -4.34%
  • US Banccorp (USB) -8.31%
  • Bank of NY Mellon (BK) -4.99%
  • American Express (AXP) -4.27%

Undecided:

  • HSBC (HSB) -0.46%

Just for fun, let’s look at the other important stuff in the market today:

pre-stress_test_jitters

As always, the price is set on the margin, and yesterday’s bids are working on on different themes to today’s, but what’s changed?  No significant information has been released yet, and almost all of today’s performance is a perfect opposite mirror of yesterday.

If we are assuming rational investors, why?  They are afraid of the results?  Really?  The same results that use a 2010 GDP growth of +0.5% as the more adverse alternative assumption?  How damn bad can the capital requirements be if they are predicting a baseline unemployment rate of 8.8% for 2010 – just 0.3% worse than we are now?  Why is the government entering the credit rating business, anyway…?

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May 8, 2009 - Posted by | Uncategorized

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