The EU sovereign debt issue will remain on the table for some time with major financial institutions like Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC), are getting hit hard today, as a number of factors have come together to shake investor confidence in the economy and the banking sector in general.
Along with the bailout concerns in the EU, which is more related to the consequences of the bailout, rather than the fact that there will be one, is one of the obvious factors in the financials having so much downward pressure on them.
Other elements of the pressure are the sustainability of investment revenue and profits, whether there is going to be an economic recovery, and lack of clarity on what the regulations will be for the banks and how it will affect the bottom line banks in the years ahead.
For the economy, we continue have the ignorant mainstream media use the term “unexpected,” every time the latest unemployment numbers are down, which they are again. And of course, it is “unexpected.” Why is the mainstream media always saying it is unexpected, when so many do expect it? That’s a rhetorical question, I know that answer. Think about it.
Although attempts are being made to paint us as being in an economic recovery by that same mainstream media, it’s far from conclusive, and as we look at the global picture, including the consequences of China battling inflation, which will result in lowering demand for some commodities, that will have a direct impact on not only companies, but some countries as a whole.
There is also the increase in value of the U.S. dollar, which will also have an impact on exports, slowing them down because of exchange rates.
For new regulations, most of that is simply from waiting to see what will emerge from a new bill, once it is agreed upon and brought to a vote.
That could go either way depending on the decision of lawmakers, and could cause more problems for banks, or maybe even help them (highly unlikely).
All of these factors, and more, are having a dramatic impact on the financial sector, and until they are resolved, or we see the depth of them, banks and financial institutions will probably remain under pressure.