Intraday commentary on gold, silver and the world currency situation here.
American Airlines declared bankruptcy today.
After the bell S&P downgraded JP Morgan, UBS, Wells Fargo, Citi, Goldman, Bank of America et al.
"Bank of America Corp. (BAC), Goldman Sachs Group Inc. and Citigroup Inc. (C) had long-term credit grades downgraded to A- from A by Standard & Poor’s after the ratings firm revised its criteria for the banking industry.
Standard & Poor’s also made the same cut to Bank of America’s Merrill Lynch unit. S&P listed its ratings for 37 of the largest financial institutions in a statement today.
The move may increase pressure on Bank of America, which has plunged 62 percent this year in New York trading. The second-biggest U.S. lender by assets said in a filing this month that a ratings cut could trigger billions of dollars in collateral payments and crimp access to credit markets.
Downgrades may be costly for banks. Bank of America said in a regulatory filing this month that it may have to post $5.1 billion of additional collateral and termination payments on its trades were it to be downgraded one level by rating companies.
Ratings downgrades “could likely have a material adverse effect on our liquidity, potential loss of access to credit markets, the related cost of funds, our businesses and on certain trading revenues, particularly in those businesses where counterparty creditworthiness is critical,” Bank of America said in the filing.
The company, which noted the risk of downgrades from S&P and Fitch Ratings in its third-quarter filing, previously said it has prepared by lining up funding for a year."
Some of my friends and I noted in our discussions today that the Banks were lagging the SP 500 noticeably, especially on FAZ and some other plays on bank stock declines. Because of the divergences between the SP 500 and the Banks, as well as the weakness in the NDX 100 I shifted my positions to decidedly bearish into the close. Long gold bullion, a little silver, and short stocks.
Bloomberg says the SEC will look into any unusual activity on the bank stocks today in light of these after hour downgrades. Yeah, uh huh, sure. And they will file the information with the silver manipulation report from the CFTC.
When it comes, the financial reckoning will be like a thief in the night. Or like MF Global if you prefer. There will be a bank holiday, and after a few days you will be informed by the bank on how much of your money you have left, and when you can expect to have access to it.
