Big Banks Beefing Up & Emerging Markets

big bank profitsFirst of all, please excuse my lack of updates for the past while. Those that are active readers of this site know that this is merely a hobby of mine to update many of you of the changing in markets as well as my own two cents on the always changing economy... and hopefully to profit from it. The past several weeks have been extremely busy for me in other affairs and I have been pursuing a variety of different investment projects that has, unfortunately, eaten up a lot of time. It actually has a bit of irony in all of it, because the overall economy is behaving in a similar manner. In fact, I have not been the only one to be loaded with new projects and possible scenarios that was not available the past two years. The big question is, is it feasible and will it last.

No doubt, investment activity has picked up this year. There is money out there and it is getting itchy. Although many small businesses and middle America investors continue to see no light in this tunnel, know that there are several big businesses and banks who are seeing some of the best profits and deals they have ever seen. Unfortunately at this point, it is all about who you know and do you have the cash (isn't it always about that?). At any rate, phones are ringing more, people are at least trying to make things move, but there still remains a big elephant in the room. What is the economy's next move?!

Many "conservative" economists (myself included) strongly believe that we are directly headed for a "double dip" recession. It is very evident that the job market is not recovering nearly at the rate that was hoped by the Fed. Overall market growth continues to be sluggish, despite monumental bailouts and credits that have been given by government. Keep in mind that during all of this, interest rates remain at essentially 0%. So the big question, can Obama afford to continue to ruthlessly spend to continue this "mirage" of prosperity or will he finally come to the realization that a bit of pain needs to come before a true recovery can begin? It is his call and unfortunately either way calls for tough times ahead.

With that being said, it makes it hard to try and anticipate short term changes in markets. Although I have been busy recently pursuing new investment vehicles, I am making sure that everything I am pursuing is sustainable in an even stronger declining market. I have been offered many investment opportunities that forecasts massive jumps in activity the next five years and projects very rewarding returns, however, I continue to believe those forecasts to be far too optimistic.

One bright spot that seems to be benefiting from the collapse of large economies are the emerging markets. Sure, they will struggle with the rest of us and are somewhat tied to larger market performance, however, they have strongly outperformed most indexes this past year. ETFs like EZA, EWM, EWZ, and RSX have seen some extremely large returns and have rewarded investors who took the risk. The have traced back recently here, but as the Dow lingers near 10000, I would expect a short term "trampoline bottom," thus rewarding these ETFs even more. Time will tell, but I am in them.

Big banks are also strongly benefiting from recent government concessions. The foreclosure market has picked up tremendously, which is a direct correlations with the strength of their balance sheets. Earlier on, banks could not afford to take the hit on foreclosed assets, thus forcing them to modify loans or just not respond to delinquent borrowers. Now, they have replenished the vaults (at the Fed's and taxpayer's expense) and are much more aggressively taking back assets. As these assets hit the market, expect more declining prices in both residential and commercial real estate. It is definitely starting to get interesting. Happy Trading.


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  3. Penny Stock Investments Says:

    As far as those banksters go. I say lets exchange those three piece suites and briefcases for a good pick a shovel a bucket and some pinstripes.


    Emerging markest are looking a little overvalued with the exception of china.