Is this a Replay of 2008?
Sep 5, 2011
Posted by Jody Eisenman | Filed under Uncategorized
In an article featured on Bloomberg, a prominent European banker claims that current conditions in the stock and bond markets are analogous to the situation in late 2008. Josef Ackermann, CEO of Deutsche Bank, sees similar uncertainty and volatility (sound familiar?) as was the case three years ago in the financial markets. European stocks have lost about $7 trillion since July. Meanwhile, with the news that seventeen banks are being sued over sales of mortgage backed securities.
Here’s a look at the top four European banks as ranked by 2010 profits and their stock performance this year:
Bank Country YTD Return
HSBC UK -16.9
BNP Paribas France -34.1
Deutsche Bank Germany -30.3
Santander Spain -19.4
Although these numbers are not horrendous, especially as compared to their US counterparts, the majority of the decline has occurred in the last 2 months. As I stated last week, I do believe that the markets are about as skittish as I have seen in the few years. As such, any negative event could easily be magnified into a very severe reaction in prices. It is now up to the Federal Reserve and European Central Bank to put together policies that will calm the markets… if they can.
