Traders take note. According to John Najarian from CNBC Fast Money, financial stocks could skyrocket 100% “within hours” if mark-to-market accounting rules are relaxed at a House financial services subcommittee hearing. Najarian is not one to make such statements likely, so it is worth reading the exact quote:
“if the government relaxes mark-to-market for 12 to 18 months you could
see financials move 100% in a matter of hours.” And he went on to say, “In
fact, I hope you’ll replay the soundbite because if the government relaxes
mark-to-market accounting a number of banks stocks will be unbelievable
values at these levels.”
Here is the CNBC Fast Money clip on the subject, including a call on which financial stock would most benefit. For his money, Najarian suggests a higher risk play – long the Financial Bull 3x ETF FAS (take a look at the 6-month chart).
Hat-tip to Howard Lindzon of Stock Twits
UPDATE:Â Citigroup Up 30% Since Blog Alert, Bank Of America Up 50%
Regards,
George
@Hub C, thanks for the comment. You don’t have to agree with everything I post. I just want to get info into the hands of investors and this seemed like very good information. I have no vested interested in Citi et al.
With respect to the catalyst for today’s gains, I don’t think its a coincidence that Citi “leaked” their internal e-mail just before the hearing. Personally, I hate the banks with a passion for what they have done to investors – but it still doesn’t mean I won’t profit on an opportunity if I can. One way or another, the financials are up big prior to March 12th.
Further, I don’t think mark-to-market will be done away with either. But I do expect some kind of short-term relief to help provide liquidity for bad assets held by the banks.
Regards,
George
Your “update” – “” Citigroup Up 30% Since Blog Alert, Bank Of America Up 50% “” is misleading. You want investors to link your post with the SP increase, when in fact it is because the internal email at Citigroup indicating very good profiits for the first 2 months of the year.
George we delete pushers posts. Should we delete yours?
Just to add that many analysts are saying that the chance for this ruling to pass is almost zero.
Dony!!! I hope you had a chance to benefit from this and unwrap some 50% gains for your birthday!
Happy Birthday Dony.
The Greek
George March 10th is my birthday. Is this your way of giving out gifts? Thanks for the heads up.
Don
@Jay I don’t disagree that suspending mark-to-market rules is a bad long-term decision – but you have to concede that M-M has caused a bit of a self-perpetuating problem as buyers stay away and assets artificially drop at accelerated rates. We have to suspend them for a while in order to allow buyers and sellers to begin transacting. The banks are still going to take a haircut but it won’t be an artificial haircut.
@Chris Agreed! An entire network can’t be entirely useless. The Fast Money group is worth listening to because they’re actual traders with reputations to uphold. Doesn’t make them right but they’re analysis is far more thoughtful than a bunch of reporters that know less than most online investors.
@Doni Can’t go to “con” yet but I will agree that it will be viewed as massively irresponsible for not having done it sooner – giving it the appearance of impropriety. Only way for banks to earn back respect is to get rid of executives that got us to this state and start locking a few of them in jail. They knew exactly what they were doing but turned a blind eye in favour of fat bonus checks.
Thanks All!
Regards,
George
If they lift the mark to market now after allowing the markets in general to slide the way they have, the general public will view this as the biggest con of all….it will be view as a greedy move.
Shocking the market at this point, IMO, would be the worst thing they could do. The banks need to earn back the respect they polluted.
Thanks George!
We know you only like a few key folk at CNBC, your like most!! This is indeed interesting, will follow closely. Thanks.
Chris M.
You might well be right on an explosive rally in financials if “mark to market” is relaxed. But relaxing an accounting rule is not going to do a thing about the fact that many of the “assets” held by the banks have been booked at significantly more than they are presently worth.
By all means ride the rocket up; but be prepared to take your profits and run.
@Mark. Good point. To be clear, I’ve always been a fan of Fast Money and Dylan Ratigan. I’ve often stated he is one of the few bright lights at CNBC because he cuts through the bull and gets straight to action. He doesn’t treat any guests with kid gloves and keeps the FM panel on a short lease. For example, take a look at his “send everyone to jail” update in my blog post a few months ago:
http://blog.agoracom.com/2008/10/06/why-wall-street-ceos-must-go-to-jail-and-payback-billions-in-bonuses/
The Najarian brothers are 2 of the common guests on FM and are known for putting their trades on the record. Hence, why I was very interested in this FM clip.
This is a big difference from the 8-5 CNBC crew that tends to stare at the ticker and lob softballs at their Wall St friends. They’re more interested in being part of the club than tearing Richard Fuld and Ken Lewis to shreads.
Thanks for the note. Hope this clarifies where I sit with these guys.
Interesting… just a couple of days ago you gleefully posted about John Stewart ripping CNBC to shreds for being wrong most of the time. Now you’re suggesting we listen to them??
Consitency, please!
Thanks george will watch closely…coswil