I kid you not! That is the latest word from the manipulators at the US Treasury. Tonight’ Bloomberg headline “Fed Said to Order Banks to Stay Mum on ‘Stress Test’ Result” smacks of manipulation.
From Bloomberg:
April 10 (Bloomberg) — The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion.
Did you catch that? The Fed is targeting asset prices, specifically they are targeting the asset prices of financial stocks and trying to manipulate them higher, or at the least keep them from tanking again ahead of their pre-determined stress-test results.
“No matter what the result, the stress tests are going to move markets,” Camden Fine, president of the Independent Community Bankers of America, said in an interview yesterday. “That’s the tricky part. If they don’t give out enough information or the information is presented in the wrong way, that could cause markets to plunge.”
Silent on ‘Process’
Banks should stay silent because a focus on the tests would be “a harmful distraction” from earnings, said Scott Talbott , senior vice president for government affairs at the Financial Services Roundtable in Washington. “It is premature for banks to talk about the stress tests,” Talbott said yesterday.
By Scott Talbott’s remarks alone we know that he believes the results would hurt the stock prices of these financial firms, which is consistent with every analyst’s take on the street. Namely this is a bear market rally in the financial sector that should be sold as soon as the peak financial earnings has passed, which is April 14 to April 20.
Just know this: the Q1 09 earnings season from the financial sector is all smoke and mirrors. After April 20th, this will limit upside potential and stock market risks to the downside will eventually increase.
