Foreclosure Crisis – Impact for Financials???

What does the Foreclosure Crisis mean for the Financials?

What now, the Paper Pusher crisis?  We had Financial Meltdown in '08, Greek Meltdown this Summer, Irish Meltdown last month and now the US Equity market is to be consumed by mortgage foreclosure paper pushers.... Ouch!  Have the markets found the ultimate foil in the US legal system and all the processors who inhabit it?  Nasty thought.  Let's see how this has played out in the Financials of late.

What I have done, as usual, is created a 3D visual Landscape in AlphaVision to tell the story about what is going in the Financials.  For simplicity, I used the S&P 500 divided up by GICS Sector Names.  I sorted by rows to make what is going on more evident.  Also, for this Landscape, I used just one market indicator, One Week Total Return.

In the snapshot above, the rows of Increasing 1 Week Total Return are sorted from right to left, bottom to top.  The lowest Total Return for each Sector is the last Red Block on the bottom right and the highest total return is the green block in the upper left hand corner.  Red is down for the week and green is up with white being flat (or close to it). The height of each building is the absolute value (degree) of the move. As you can see Bank of America (BAC), which really has taken most of the bad press on the paper pusher crisis, is not even down the most for the week.  The Financials as a group are not the worst performer of the week.  The Utilities as a group have done worse.  While the press talks up the foreclosure issue, it seems to have passed the Equity Markets thus far.  The Financials even had some names moving up.  Maybe BAC is a buy....

Consumer Discretionary (upper left hand corner), on the other hand, looks a bit overbought (lots of green).  Let's see what happens.

Andrew Giovinazzi

For AV for Bloomberg users, just click 1 Week Total Return in the View Library to interact with this view live. If you are not an AlphaVision for Bloomberg Subscriber please follow the download link here:  Download AV for Bloomberg

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