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Thursday, March 12, 2009

Speaking of risk…

The SEC and FASB seem to be talking about loosening mark to market restraints.

This is entirely misguided and probably will kill the bank rally.

Without mark to market, banks are going to be incredibly paranoid of one another’s books and counterparty risk increases manifold.  They can’t accurate gauge each other’s financial viability without a clear and consistent standard.  Expect to see yields rise as this becomes factored into the market.  It will also be good for gold.

Short XLF.

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