Banking Sector Problems Continue
|
|
 |
Trading Features / Strategies from Simon Denham of Capital Spreads.
And so the pieces all start falling into place. The UK’s huge dependence on debt to finance everything from that holiday in ‘Majorka’, a new ‘motor’ every few years or little Johnny’s absurdly expensive School fees are now coming back to haunt us. Home owners have become used to ‘unlocking’ the value in their houses to buy today what they probably could not even afford tomorrow.
The belief that the good times would go on forever has now cost us two banks with a third clinging on for grim life. Santander’s audacious bid for Alliance and Leicester looks to be going through on the nod to the relief of all concerned (shareholders, Treasury, BOE and FSA) and little will be made of the fact that they are paying a valuation that was in the market just two weeks ago. What a difference ten trading days can make!
For those who argue against short sellers being allowed yesterday’s action in A&L will come as something of a lesson. This is exactly the type of risk that ‘shorters’ take. Some £150m was probably lost in just a few minutes by funds betting on continued weakness, as the A&L stock was one of the most heavily borrowed stocks on the block. The price opened some 40% to the good from the close on Friday and nobody had a chance to get out. The stock rallied to well above the Santander offer even though the chances of a competitor bid appear slim (although not impossible) as shorts were forced to cover at any price.
Financial Spreads >>
"With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." >> read
Financial Spreads review.
|
The market relief did not last long for other banking shares as the initial boost to Barclays, RBS and Bradford and Bingley had pretty much drained away by the close. And, after the Dow’s dismal performance last night followed by a 2-3% drop across the Far East, this morning we are likely to open lower again. After Eleven years of Labour ‘growth’ the investment value of UK plc is now well below its levels of 1997 (taking out all the foreign members of the FTSE 350). Even the slightly more overt Fed backing for Fannie Mae and Freddie Mac did not help out. The fact is that whilst the US Treasury might guarantee the debt (for fear of a total collapse of US debt markets) this will not aid the share holders. This is potentially a Northern Rock US style. The US Treasury may effectively take on the entire multi trillion dollar mortgage book to avoid an implosion and just wipe out the stock.
This will be yet another call on US public funds and, with the Middle Far East being virtually the only major buyer left for US T Bonds, there must be a fear that indigestion will eventually limit buyers continued appetite for US debt. Other US financial stock is also looking a tad fragile with the banks due to report soon on first half ‘performance’.
The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
Capital Spreads >>
"With Capital Spreads you get all the normal
advantages of Spread Betting plus..." >> read
Capital Spreads review.
|
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Banking Sector Problems Continue' edited by SD, updated 15-Jul-08
Related Articles:
Daily Spread Betting Blog, updated 16-May-12
After yesterday's crunch moment in Greece, when politicians finally threw in the towel, it was always going to be a nervy start to London trading. Shares spread betting markets registered heavy losses immediately on...read article: Daily Spread Betting Blog.
Spread Betting Prices, updated 16-May-12
Spread betting prices - a live spread betting price guide plus which spread betting companies offer live prices, how to use them and...read article: Spread Betting Prices.
Spread Betting Guide, updated 23-Apr-12
Spread Betting Guide: What is spread betting, how to spread bet, spread betting advantages, spread betting examples and...read article: Spread Betting Guide.
Spread Betting Guide to Making a Trade, updated 23-Apr-12
Spread Betting Guide to Making a Trade: A step-by-step guide on how to place a spread bet including a fully worked example and...read article: Spread Betting Guide to Making a Trade.
Stock Market Opening and Closing Times, updated 23-Apr-12
Stock Market Opening and Closing Times: a look at when the leading European, US and Asian stock markets open and close. Plus, where to get stock market index trading analysis, news and...read article: Stock Market Opening and Closing Times.
Spread Betting v Share Trading, updated 23-Apr-12
Some people see spread betting and standard trading as two different sides of the same coin. Whilst the pair do share similarities, it is fair to say that...read article: Spread Betting v Share Trading.
Sectors Spread Betting, updated 23-Apr-12
Sectors spread betting is a convenient way of taking a position on an entire industry by giving investors exposure to a basket of underlying stocks in a particular sector. Sectors are groups of firms that all...read article: Sectors Spread Betting.
First Page << 1 2 3 4 5 6 7 8 9 10 11 12 >> Last Page
Also see:
Trading Features / Strategies Index – an index of all the Trading Features.
|
|
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more!
|
|
