Sloppy Market? Blame the Financials
By Barry Ritholtz - May 17th, 2011, 11:30AM
Master technician John Roque of WJB Capital put out a fascinating chart this week, looking at what a drag the financial sector has been on the overall market. John also notes how poorly Goldman Sachs is trading; only AIG (-37% ytd) and HCBK (-27% ytd) have worse year-to-date performance among S&P financials.
If you could magically back out the financials, the market would be at an all time high:
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S&P500 Ex-Financials
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May 17th, 2011 at 11:54 am
as my friend says….. “if my aunt had balls, she would be my uncle”
May 17th, 2011 at 12:00 pm
let me get this straight…even with crew that gave us their only great financial innovation (the ATM — hat tip Teaneck Paul), this market is STILL at an all time high?? So from the March 2009 bottom we’ve barely had more than one greater than 200 point slip (April to July 2010) in over two years of the return of financial civilization? What’s really fueling this..can’t be those jobs and wages going up. And with consumer debt in Brazil looking hairy and that teetering Chinese anvil of govt meddling leaving ghost cities behind where is the next leg up in the S&P going to come from? 4G Ipads?
May 17th, 2011 at 12:09 pm
Well, I figured out how to get a rate of return from a bank on my cash. Chase is offering $100 if one opens a savings account with a deposit of $5,000 and keeps it open for 6 months. By simple interest, 1% annually would be $50. So $100 net in six months approximates to 4%! That’s one way to beat uncle Ben’s .016% interest rate or whatever it is now. Although I have an aching feeling Chase makes more in creative accounting such that $100 is nothing to them.
May 17th, 2011 at 12:22 pm
By the way, anyone amused by my previous posting, TCF Bank has a $100 dollar offer on now as well. Open a checking account with at least $500, make 10 transactions on the account within 60 days, and get $100. Though TCF is a regional bank (located in 8 midwestern states), anyone in the U.S. can take advantage of the offer (according to the rep I sat down with). The initial deposit needs only to be mailed into one of their branches. The downside: they charge $17 for the initial batch of checks they’ll send you. So the $100 is actually a net $83.
May 17th, 2011 at 12:35 pm
[...] John Roque Chart on Performance S&P500 ex-Financials (BigPicture) [...]
May 17th, 2011 at 1:04 pm
If we could magically back the financials out of the whole economy . . . . . .
It’s actually interesting, because I can’t see how any regulation or threat of enforcement will meaningfully impact them at this point. Granted, if they have to go back to traditional banking as a source of income, that would be ruinous. . .but I don’t see it threatened. Their traditional lines are taking a hit, sure – but what part of their income is that any longer?
If the market had any attachment to reality, I’d be tempted to think that they were pricing in the increased systemic risk and thin markets threatening an end to the great ponzi. But that’s crazy talk – the market acting efficiently on available knowledge. It’s a puzzle, alright.
May 17th, 2011 at 1:29 pm
Not too long ago financial stocks were leading the market higher.
May 17th, 2011 at 1:54 pm
“If you could magically back out the financials, the market would be at an all time high. . .”
What about all of the magic we already have supporting the markets, generally? Do away with the prestidigitation we already have — especially in “financials” — and the market would crash.
May 17th, 2011 at 3:07 pm
[...] The S&P 500-ex financials is at a new all-time high. (Big Picture) [...]
May 17th, 2011 at 4:26 pm
OK, a neat bit of chart porn. But I’m unsure what to make of it. As Julia points out, the entire economy might have been better off without the financials, not merely the markets.
But in the current environment, these lepers can’t be gotten rid of. We can’t even enforce existing laws on their behavior, much less get rid of them. So, again, I’m unsure what to make of this bit of chart porn, other than a possible pair trade in ETF’s to go long SP500 components that are not financials (or financials in drag, ala GE) and go short financials…
May 20th, 2011 at 10:06 am
[...] Ritholtz posted a chart of the S&P 500 with and without the financial sector. I constrcuted my own version of the same chart below (though see my note below). The Financials [...]
May 20th, 2011 at 11:19 am
[...] John Roque Looks at S&P500 Ex-Financials vs S&P500 with Financials (BigPicture) [...]
May 20th, 2011 at 11:31 am
[...] this week, we looked at the impact the financials had on the S&P. Today, I want to bring two charts to your attention that might give you some [...]
May 20th, 2011 at 1:28 pm
[...] story. Especially when there’s a broader context: financials, very much including Goldman, continue to struggle relative to the rest of the S&P, weighed down by, well you name [...]