Today in the trading room I was asked by one of the most knowledgable ‘students’ as to what I thought about getting into some bank names here (for what follows, let’s just stick with $XLF, the ETF that is inclusive of all the big bank and some other names within the financial sector.
I told him to stick to LIBOR. To ALWAYS check LIBOR.
Then the trading day got a bit busy and the question and response were both put on hold. Until after the markets closed, when the same member [thanks for being such a good sport Matt; this guy is literally a professional, yet humble enough to ask when he doesn’t know. i might respect him for that more than his tank of mental information] asked why the credit markets didn’t seem to be showing much fear. Well, to make my life easier and your eyes a bit of an easier job, here’s that conversation with screenshots. Two charts are expanded so you can see them with more clarity.
Oh and ALWAYS CHECK LIBOR when playing fin names.[Read more…]