Friday, 27 February 2009

US Banking Index may have a sustainable bottom


The UK government is trailblazing with a sweetheart deal to ring fence those much celebrated "toxic assets". Why is this relevant to the US Banking index (BKX) - I have been commenting for some time that - much as it is counter-intuitive - the US banks may finally be putting in a sustainable bottom.

That’s the good news - the bad news is that although they may have stopped going down - and they have gone down on an epic scale - and even though they may enjoy some nice quick bounces, the ground they now have to try to recover is staggering.

And this is in a financial environment which could take many years, to put it optimistically, to see anything like the supportive conditions and growth potential that resembles those seen in the earlier years of this decade.

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