Roger Biduk; Banks in Focus on Bay Street

Roger Biduk;

Anyone’s guess where the TSX is going this week.
Markets may be due for a bounce and some consider them oversold in the short term.

On the other hand, markets may be under pressure this week with weakness in the financial sector on deepening pessimism about the global economy and worries about the possible nationalization of banks in the United States.
Even though the U.S. government said Friday night they want the banks to stay in the private sector, investors have their doubts.

Canadian and U.S. indexes retreated sharply last week with the Dow Jones industrials breaking through its November lows to end the week down 6.17 per cent with the blue-chip index pushed to 6 1/2 year lows.
The slide came at the end of a week where there were actually positive developments aimed at pulling the United States out of a deepening recession.
U.S. President Barack Obama signed a US$787-billion stimulus bill Tuesday and the next day announced an ambitious $75-billion plan to keep as many as nine million Americans from losing their homes to foreclosure.
However, there was disappointment about the lack of details from the financial sector rescue package rolled out almost two weeks ago by U.S. Treasury Secretary Timothy Geithner.

Roger Biduk;
The possibility of nationalizing some of the hardest hit U.S. bank has come up as a way of dealing with the huge amounts of toxic assets being held by financial institutions.

The pressure on Canadian bank stocks comes just ahead of earnings from the big Canadian banks over the next two weeks. And while there is little worry that banks will cut their dividends, there is plenty of concern about their profits.
TD Bank (TSX: TD.TO) reports earnings on Wednesday, while Royal Bank (TSX: RY.TO), National Bank (TSX: NA.TO) and CIBC (TSX: CM.TO) all report on Thursday.
Bank of Montreal (TSX: BMO) and Scotiabank (TSX: BNS.TO) report Mar. 3.

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