This is the time to be shopping on Wall st. for opportunity being created by the sub-prime sell off created by HSBC's revolation. The weak shall perish, the strong propsper. I have owned Citicorp for 4 years. If it goes below 50 I will add. Subprime is negligible to them looking at the big picture. I bought WAMU today at 43.20....I will add to it as it goes lower( 5% yield and a strategic acquisition target for the major banks as a kicker).
Wall ST. always over-reacts and throws the baby out with the bath water. Again, this is not new news about sub prime lenders. It has been discussed widely on this board as well as the media in general. Use this to buy great companies ( Wells Fargo, Citicorp, JP Morgan, Bank of America ) in case they sell off appreciably because investors panic and sell the blue chips along with the crap !!
Goofer, I do not think the major Banks will become defunct due to subprime loans, I think that delinquincies will rise more than HSBC's "revelation"
HSBC, as well as some of the Banks like Chase and Citicorp, tried to get into a lucrative market with subprime loans and they went to play ball without a mitt. I started in the subprime market 22 years with one of the first subprime second mortgage lenders. I also was constantly recruited by the above lenders to come and show them how to enter the business years later.
IMO, the poo is going to hit the fan with much more impact than anticipated as a trickle down effect to the hedge funds, derivatives, and every other firm these Banks lent money to who played in the sandbox with them. No. its not news about subprime lending defaults, but what no one really talks about the potential trickle down effect.
I agree Wall Street overreacts, but this time I am taking the back seat, I've played in this sandbox and know what's still buried. ;-)
I'm still betting that the next rate move (if there is one) will be up. The US needs all the help it can get in attracting much needed capital to keep paying off the interest on its debt. Moreover, the Fed will want to distance itself from the "easy, exotic money machine" it created that made homeOWERS out of the masses (Greenspan started the trainwreck when he touted ARMs vs Fixed as the 'way to go' just a few months before he started jacking up the rates.
). If Ben and Co. see the need to lower the rates, the U.S. will be in seriously deep do-do.
SHELLY'S ANSWER TO GOOFER'S "STRAW HAT" THEORY
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I agree on the rate increase and BTW- that looks like the hats they wore in that movie with Mel Gibson and the aliens.