Research Zeitgeist: Stress Tests, Schmess Tests
The bank stress test process, if it can still be called a process, is in danger of devolving into a mess. With repeated delays, “negotiations” and (orchestrated?) leaks, the eventual official announcements are likely to be anticlimactic at best and a self-fulfilling prophesy to boot. It seems the back-and-forth between the banks and the government will continue until the “right” outcome is arrived at i.e. one that will not surprise the markets and that will instill confidence in the banking system.
This may be all to the good, but it does perpetuate the reputation of the banking system being overly complex and opaque.
The banks, however, have already apparently passed the Buffet stress test, with the sage of Omaha telling ABC News that all 19 banks will be OK.
Meanwhile Standard & Poor’s revised its assumptions for loan losses under its stress tests that could result in ratings downgrades for the most vulnerable US banks.
S&P also provided the top post of the week at ResearchRecap with it latest weakest links report. Its list of companies with negative outlooks or with ratings on CreditWatch with negative implications has now topped a record high 300.
Oxford Analytica’s Weak fundamentals suggest oil prices will remain low, also attracted strong interest, as did its report on India’s Pharma industry being poised for strong growth.
Research Recap Quote of the Week
Actually, banks are doing very well on new business, and their deposits are coming in … those 19 banks [that received bailout money] will all be OK. – Warren Buffet on ABC News
Research Recap Tweet of the Week:
France Leads OECD Nations In Eating, Sleeping: http://tinyurl.com/cpagnp
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