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Banking Sector - Signs of Revival ??
By Marek W. Stupka | May 9, 2009
Apart from the fact that equity markets have been surprising all investment sceptics lately by posting higher than expected levels, there are some good news coming from the US banking sector as well that add another spark to the “bottoming-out-of-recession-is-already-happening” camp. And, as we all know, US banks is where it all began…
The Obama administration has given assurances US banks will be allowed to raise less than the $74.6bn in equity mandated by stress tests if earnings over the next six months will be higher than regulators’ forecasts. This agreement means some banks may not have to raise as much equity through share issues and asset sales as the market is expecting. It could also increase the incentive for banks to book profits in the next two quarters.
Banks will have about a month from now to announce their capital-raising plans, and 6 full months to put them to work.
This is a great, great news for all players in the banking industry (currently under the so called “Stress Test”), since if their operating profits will be greater than the government’s stress-case forecast for the second and third quarter, they would receive credit for the difference. This, in turn, would reduce their need to raise fresh equity from other sources.
As we are aware of positive news like the above (and not just one or two pieces of them..) blowing fresh breeze into the sails of the Capital Markets and serving as catalysts of market sentiment, we are beginning to see how the so called “risk appetite” of many investors slowly starts to unleash. Therefore, in the light of the above, we at Gepard Investments, Inc. prefer trading along with the euro bulls at the moment. This renewed euro-strength sentiment is also backed by the 1d EURUSD Ichimoku analysis which shows the price distinctly leaving the uncertainty of the Kumo cloud, and moving high into the bull territory.
Topics: News From Wall Street |