Banks Can't Catch a Break on Good News

Oh my, these banks, these banks. Morgan Stanley (MS - commentary - Trade Now) jumping up and down, proclaiming the best May in the history of the firm (thanks, Dougie, for that bit of news!). We have some fantastic numbers coming from Goldman Sachs (GS - commentary - Trade Now), according to every report I see. Solid upgrade on State Street (STT - commentary - Trade Now) from SunTrust. US Bancorp (USB - commentary - Trade Now) recommendation. TARP paybacks galore.

But we have this big preferred conversion into common stock going on at Bank of America (BAC - commentary - Trade Now), we have immense option pressure on the group, and we have this ridiculous Johnny-come-lately S&P downgrade. Those guys are unbelievable. The housing bottom is in, and now they take the group down!

So the group, which was crowded enough already, is just getting hammered mercilessly.

This group, along with tech and oil, cannot be lost if this market wants to go higher. I am happy to see the positive action in the drugs and goods, but they cannot replace the oil and oil-related stories (including the fertilizers and the natural gas and drilling plays, which act exactly like they did last year, even though pricing has already been down big).

All in all, this is a disconcerting picture today from a leadership point of view until we get some sense of when the bank buyers are done liquidating and the earnings-per-share people step up to the plate and start buying back the Morgan Stanleys and the Goldman Sachses on the coming multiple expansion that I expect from the dramatic changes in the landscape.

Random musings: Correction -- I relied on certain news stories today to write that FedEx (FDX - commentary - Trade Now) slashed guidance in half. Those stories were inaccurate and I should not have relied on them because FedEx never issued guidance. I regret the error, as I should have checked the guidance myself not taken it for granted that the story was accurate. I apologize for my mistake. ... About the banks, William Furber has some good comments in Columnist Conversation about this issue.

At the time of publication, Cramer was long Bank of America, Goldman Sachs and State Street.

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