Healthy Banks Could Fail the Stress Test

Thanks to yesterday’s rally, the stock market is up slightly for the year. That’s a nice turnaround from where we were two months ago.

This may soon be a tough week. First we have the biggest week ever for Treasury auctions. If they don’t go well, then you can expect the dollar to fall and inflation to perk up.

On Thursday, the stress tests results will be announced and may include more banks that previously believed, including strong banks like Wells Fargo (WFC). The Wall Street Journal is reporting that ten banks may need to improve their capital base.

Finally, the Obama administration’s proposal to tax overseas earnings will cause more companies to flee the U.S. Halliburton (HAL) and Transocean (RIG) have already fled and are now foreign chartered.

It’s really China’s resurgence that has been driving the market.

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