Big U.S. and European Banks Cautious Ahead of FOMC/QE3

The eurozone bailout approval and the coming announcement (or continued hint) of additional quantitative easing from the FOMC is not adding to the banks at the current time. We saw a “Sell the News” reaction over Europe, and it seems as though smarter heads are under the impression that QE3 cannot be as effective as QE1 and QE2.

The “assistance-dependent” big American money-center banks are lower ahead of Bernanke. Citigroup Inc. (NYSE: C) is down 0.6% and Bank of America Corp. (NYSE: BAC) is down by 0.2%, but that is still on the heels of large gains in the last week. Wells Fargo & Co. (NYSE: WFC) is up 0.25% at $34.41, and that is within 2% of a year high; and J.P. Morgan Chase & Co. (NYSE: JPM) is down by a surprising 0.4% after nearly closing above $40 yesterday.

Deutsche Bank A.G. (NYSE: DB) is down by almost 2% as its ADRs are down 1.99% at $41.58 in trading. The banks in the lands of the PIIGS are down: National Bank of Greece S.A. (NYSE: NBG) ADRs are down a whopping 7% at $2.42; the Bank of Ireland (NYSE: IRE) ADRs are barely lower by 0.2% at $5.94 on very low trading volume in New York; Banco Santander S.A. (NYSE: SAN) is down by 2.6% at $7.79 in its ADRs; and ADRs in Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) are down by 2.7% at $8.28.

The Brits and Swiss are not in the euro but their banking ADRs traded in New York are still closely tied due to large business exposure. Barclays PLC (NYSE: BCS) is holding up 0.4% at $13.95, Lloyds Banking Group PLC (NYSE: LYG) is up 0.4% (a whole penny) at $2.46, and rhe Royal Bank of Scotland Group PLC (NYSE: RBS) is down 0.2% at $8.81 in thin volume trading. UBS A.G. (NYSE: UBS) is down 0.5% at $12.75 and Credit Suisse Group (NYSE: CS) is down by 1.6% at $22.19 in lite pre-FOMC trading.

JON C. OGG