It was a VERY big day in the markets. The Dow was up 1.7%, the S&P 500 was up 1.8% and Toronto was up 0.9%.
For once, the market behaved just as I had talked about in terms of the stress tests on banks. The banks passed the tests and announced dividend increases and their prices rose. (See my comments about the stress test under march 10, March 5, and February 7).
It all happened a bit sloppily today, it was not supposed to be announced until Thursday but J.P. Morgan spilled the beans and then the FED released its report. (It’s unfair to release this kind of news during the trading day, but not unusual.)
Anyhow we enjoyed Wells Fargo up 5.8% and Bank of America of 6.6%. Just about everything was up today but it was the U.S. bank stocks that were the big winners (except poor Citi Group and a couple of smaller banks failed their tests).
This will confuse the heck out of all those doomers who read somewhere that “all the U.S. big banks are insolvent” and other nonsense. As they say a little knowledge is a dangerous thing and people need to watch whose opinions they believe.
And that is not to say that the doomers don’t have some legitimate concerns. Many countries are of course in too much debt. Unfunded liabilities are a problem. But when the doomers tip into the realm of thinking the U.S. (fiat) dollar is about to become worthless and when they start ranting that banks create money from thin air (and that this is a bad thing) and that the FED is a private company and on and on then it is time to stop listening to those doomers because they are alarmists. I mean to each his own, let those people crawl into a bunker with water, tinned food guns and ammo and some Gold, just don’t follow them there. Hopefully they sold their stocks to us near the bottom in 2008 or early 2009.
Perhaps I am being over confident but I continue to feel good about the prospects for stocks.
Still, with my own very heavy exposure to equities I may look to take some profits and move some money into cash.