The banking sector has been under pressure since the middle of last year. However several events over the last few days can be a signal that a catalyst for a bottom. Some several events of note:
- BofA buying Countrywide.
- BlackStone buying GSO Capital to invest in commercial loan.
- JP MorganChase buying some of Northern Rock assets.
- Berkshire signals that they are interested in buying a loan insurer.
- Fed signal that they are ready for a substantial rate cut.
- The convergence of the LIBOR rate to the fed rate and return of liquidity to the commercial paper market.
- Change of leadership in wall street firms.
- Increase in capital raised for distressed debt funds.
- $27 billion of new capital invested in Banks: Citi, UBS, Morgan Stanley and other, and it seems that there is more investment to come.
The implication to me is to increase, although incrementally, some of my bank holdings. I intend to add a bit to BofA and to buy a small position in another bank. I will not go all in right now as there is a possibility that further deterioration can happen, if 4th quarter earnings are worst than expected.