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Citigroup (NYSE:C) and Bank of America
(NYSE:BAC) both posted disappointing earnings this
morning. Both banks beat quarterly earnings estimates. But revenues were
weak.
Despite record low interest rates, loan demand is not
improving, and may even be getting worse.
Even Google (Nasdaq:GOOG) was unable to put up good enough
numbers to sustain its valuation.
The major indices
are showing big declines this morning. After attempting to break above its
50-moving average, the S&P 500 has retreated below support/resistance at
1,090/1,100 and appears headed for the next support level at 1,070.
Considering that today is a Friday, I wouldn’t expect much
of a rebound ahead of the weekend.
Congresspassed the
financial regulation bill yesterday. The banking lobby was successful in
preventing the harshest new rules from becoming law, but there seems to be
enough still in the bill to weigh on banks’ profitability.
To make up for restrictions on debit card fees, the New York
Times reports that Bank of America and Wells Fargo
(NYSE:WFC) will add fees to checking to accounts.
Citigroup has already sold off some business units that it
believed would have been in violation of new regulations.
It seems likely that the weak results we’ve seen from banks
so far are in part a result of curtailed activity in response to the new
banking rules.
Most analysts agree that banks will adapt, and make up lost
revenue. But it will take time. It will also be interesting to see how
customers react to having new fees charged for checking.
At leastwe got some
good news from BP (NYSE:BP). The company’s latest efforts to cap the leaking
well in the Gulf of Mexico appears to have been successful.
That’s great news for Gulf coast residents. But what does it
mean for oil investors?
Oil prices are down slightly on the news. That’s a bit
surprising, but then oil’s reaction to the spill from the start has been a
bit surprising. Prices never really spiked higher when the government
proposed a moratorium on drilling in the Gulf.
At the same time, oil prices aren’t reacting strongly to the
possibility that a capped well might ease some of the pressure on Gulf
drilling.
Ultimately, the driver for oil prices is demand. And prices
have been resilient in the face of weak demand. It would seem that investors
simply don’t won’t to give up their oil positions. And that’s because oil is
becoming a store of value, much like gold.
Oil is valuable. Whether demand is currently strong or not,
there’s little doubt that with a growing global population and rising costs
and risks for new supply mean that oil prices will rise in the future.
At Energy
World Profits, I am continuing to
add quality oil stocks to take advantage of the inevitable rise in oil
prices. For more on how to buy the best oil stocks for as little as $4 a
share, click HERE.
As always, thanks
for all of your comments, and please keep them coming:[email protected]