While it has been fashionable to say that the worst of the financial crisis is behind is, bearish economist Nouriel Roubini posted yesterday that the banks have lost a trillion dollar market:
“…securitization of mortgages, that was running at the annual rate of $1,000 billion in January of 2007, was down 95% to an annual rate of $50 billion by January of 2008.”
Even if the worst is behind us, how do these companies make money in the future?
And the worst may well be ahead of us. Four days ago, I posted:
“Credit is tightening. The economy is contracting. It ain’t over.”
…and today, ace banking analyst Meredith Whitney picked up my theme:
“The real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,” analysts led by Meredith Whitney wrote in a research note today.”
I have a fat profit on my SKF position, but I’m not selling it here. The XLF today plunged through the bear-flag pattern it had made on it’s chart over the past several days, and it looks like some more downside is in order.
Nice trade on the SKF. Looks like I sold mine early again!
Thanks Robo. I didn’t sell any of my short positions today. Now that the S&P 500 has broken its intermediate trend-line, every technical trader on the planet will be shorting any kind of bounce from here. The demise of a “rising wedge” pattern isn’t pretty because it doesn’t leave behind any good support areas. I have to study the chart more closely, but I think the XLF should find a little support around $24-$24.25, and if that doesn’t hold, then we will probably test the March lows. This could happen very quickly now that the Fed has told the market: “You’re on your own.”
Matt