Fitch Turns European Woes Against U.S. Banks... Warning of a Warning (GS, MS, C, BAC, JPM)

Fitch is warning that U.S. banks could be adversely affected unless the Eurozone debt crisis “is resolved in a timely and orderly manner.”  The mention is a warning that the credit outlook (which is currently stable) of the U.S. banking sector could change.  The report noted that “risks of a negative shock are rising and ould alter this outlook.”

The report from Fitch is something we would call “A Warning of a Warning” and the impact was noticed in key players.

The Goldman Sachs Group, Inc. (NYSE: GS) slid in the final minutes of the day to close down 4.1% at $95.60. Morgan Stanley (NYSE: MS) was particularly brutalized and closed down 7.9% at $14.66.

Citigroup, Inc. (NYSE: C) also slid at the end of the day and closed down 4.1% at $26.86.
Bank of America Corporation (NYSE: BAC) slid at the end of the day to close down 3.75% at $5.90.  J.P. Morgan Chase & Co. (NYSE: JPM), supposedly the safest of the huge banks, slid at the end of the day and closed down 3.7% at $31.47.

Again, the outlook was called ‘stable’ but we would consider this as a vocalization that Europe is far from over and is yet one more tipping point that could pose systemic risk.

JON C. OGG