Friday, February 22, 2008

yes, more financial stuff

to start off, why hasn't the ecb reduced rates in 5 years? in my opinion, that's a ridiculous paranoia over inflation. inflation's a LAGGING indicator; in my opinion, what's going on now is horribly DEFLATIONARY!

shorts ran for cover in the last hour today on a rumor/story out of that rudeass windbag gasparino that an abk bailout may be announced monday or tuesday. financials turned on a dime; hopefully this is a sign things are finally working through the system/working out, and we can be well on the road to recovery by the summer. which brings me to my point:

on the subject of the major money center banks, i continue to be an annoying, table-pounding bull on bac, which i own. this company is going to come out of the current credit crisis looking at her competitors in the rear view mirror. bac has not only managed its way through this debacle relatively unscathed, but has been quite the “vulture capitalist”.

i say buy with both hands here in the low 40’s and continue to buy. i believe this is the point in the rate cut cycle where the street mantra becomes “don’t fight the fed”. i realize some say the opposite, but hey, we all have opinions. hopefully the fed will keep cutting to the point that banks make good money just by turning on the lights - just like 18 years ago. many indicators illustrating fundamental, macro and quantitative bullish signals not only for bac, but also for several others in the money center bank space, like c.

as for c, which i also own, every now and then she goes through turmoil and conveniently helps the us treasury recycle a few of those petro-dollars back into the country. i believe that at 50% of its highs, paying about a 5% dividend, the market has priced a dividend cut to probably coincide with the ongoing diet of c's global footprint. parts of it, at least. i think book value of about 23/24 is a floor.

disclosure: my opinions only; do your own DD!

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