The glass is still 1/2 empty for the financials. They may get an initial pop from a rate decrease, but the brokerage's bread and butter in the form of IPO's has been exposed. That avenue of revenue for them will be hard to make up in the short run. Therefore, I see some stormy seas ahead for the brokerage firms in the short-term. Banks, on the other hand, still have more loan defaults to come, especially from the consumer credit division in the form of bankruptcies. We haven't even begun the see this play out, and until we do, the rise in financials will be short-lived, IMO.
Rate cuts will help stimulate growth going forward, but unfortunately we have to purge these enormous inventories in all aspects of life, from houses, to cars, to computers, to cell phones, to professional sports franchises, to office buildings, to strip malls, to mega-movie complexes, and many many more, before one could ever expect construction, and consumer spending to increase, and that's my reasoning that the financials are in for a stormy future for now, until there's more bad news priced into this sector.
KM |
