Interesting Development for Financials
The short vs long term yield curve appears to be correcting. (chart) For the last few months the curve was inverted, which means the banks were making less money. With the yield curve correcting (to a rightward slope), bank margins can start going up, which is good for COF due to its banking division. (With respect to the chart I linked to, the value has to be less than 1.0)
There is still some fear regarding sub-prime spill over, especially w/AHM issuing a warning on Friday. But keep in mind this warning was from the money AHM would of made selling the pooled mortgages w/in the Seconday Market. The institutions are not paying what AHM was expecting (probably because of the increase in risk premium caused by the sub-prime space).
May 13th, 2007 at 10:51 am
[…] COF - I mentioned COF and this macro economic situation before, but now the COF chart looks to be getting a more bullish. (see post) Breaking from its long negative trend, and putting the subprime mess behind it. […]
March 9th, 2008 at 5:05 am
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Excellent post. Keep it up!…