According to MarketWatch, financial stocks slipped Monday morning, as investors weighed in on the possibility of lackluster third-quarter earnings at U.S. banks and the government shutdown.
In a note Monday morning, KBW analyst Frederick Cannon warned that the repo market, a source of short-term loans, could be the first shoe to drop. A prolonged shutdown and debt ceiling debate, Cannon said, “would have extremely negative consequences for other financial markets and the real economy,” and the repo market did show stress during the debt ceiling debate, round 1, in 2011. In other words, Cannon said — when repos start to sell off, time to rethink how much you should be putting in bank stocks.
