Sunday, January 20, 2008

Bank Stocks Continue Free Fall

Rough times for shareholders of U.S. banks, which are leading the stock market slide during the first half of the first month of January. Year to date (yes we are only 20 days in), the market is down nine percent.

In the meantime, Merrill Lynch and Citigroup are collectively laying off some 5,000 employees because they are losing so much money, and eliminating dividends. But, tied to lucrative contracts with its execs, the companies will pay billions to the leaders of theserms, whether those executive stay or go in the fallout of the worst performance by bank organizations in more than a decade.

Even the more profitable banks, such as JPMorgan Chase & Co. (JPM) and Wells Fargo & Co (WFC)., said they were bracing for more problems in a wide swath of consumer credit, from home equity loans to auto loans and credit cards. This week will bring earnings from more banks, notably Bank of America Corp. (BAC) and Wachovia Corp. (WB) Companies outside the financial sector with a strong global presence might ease some of the anxiety about America's corporate muscle, but it is unlikely they will cure it.

Upbeat financial results in the coming week from some of the large, multinational companies that make up the Dow Jones industrials - Microsoft Corp (MSFT)., AT&T Inc (T)., Johnson & Johnson (JNJ), Pfizer (PFE), Caterpillar Inc. (CAT) andHoneywell International Inc. (HON) - could lead to some rallies. But no one should be surprised if the gains evaporate as soon as they developed.

The entire 2007 profit of the S&P index occurred during a single week in 2007, despite all the volatility the entire year. Which is why its crazy to guess what's going to happen in the market next.

The mutual fund scandal of the past decade is softening, but on many peoples minds.

But commercial/investment real estate is holding its value and lenders have money to loan. Thus endeth the preaching for the weekend.

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