Vultures Start to Circle

Ben Bernake's soothing of the markets lasted just a little more than one day. Then BNP Paribas said that they were unable to value three of there funds and suspended investor withdrawls. Central banks from around the world injected billions to dollars to help with the liquidity crunch. It was off to the races for a down market from there. The market ended the day down 387 points, the second worst performance of the year.

Goldman Sachs, considered the Rolls Royce of investment banks, has even been under pressure the last two days as rumors have swirled that the company may shut down one or more of it's hedge funds. Goldman Sachs has denied this rumor.

My advice, stay away from financials. I do not believe for a moment that the true risk has been priced into the this sector. Financials had jumped the prior two days based on investors take on the Fed's probable rate cut. Currently, the market is pricing in 100% chance of a cut in September. If current market issues persist, do not be surprised to see a cut in the meantime. Otherwise, things could get uglier in the next 6 weeks.

See my Nesteggr blog to see what stock sectors you should be looking at right now.