Yen Drops as U.S. Bank Stocks Rally

The stock market is holding on to some decent gains today. The rally is being led by many banks stocks ahead of Goldman Sachs’ (GS) earnings report:

The yen and dollar declined against the euro as a rally in Goldman Sachs Group Inc. and other U.S. banks spurred speculation investors will increase holdings of higher-yielding assets.

The pound weakened versus the dollar after the Sunday Times said Lloyds Banking Group Plc may report as much as 13 billion pounds ($21 billion) of new losses. South Korea’s won slid the most on an intraday basis since May following a report saying North Korea’s leader, Kim Jong Il, is terminally ill.

“It’s clear risk appetite is in its ascendancy today,’ said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York.

Meredith Whitney, who is a prominent banking analyst, gave Goldman the only buy stock of the stocks she follows. As a whole, I still suggest that investors avoid the financials sector.

One of the key reasons why I don’t like financials is that insiders have been selling. Insiders have started selling their shares. According to TrimTabs, insider sales recently outstripped insider purchases by more than 22 times.

TrimTabs said insiders of S&P 500 listed companies have recently unloaded $2.6 billion in shares, compared with just $120 million in stock
purchases. It appears that much of this selling pressure is coming from financial firms. It’s not a good sign when insiders start dumping their own stock. This shows us that even big-wig financial executives don’t believe that their own stocks will be able to sustain the comeback they’ve made in the last few months. At least General Motors had the guts to issue a press release and warn investors that the stock will have no value through the bankruptcy procedures. Instead, the financial companies are just quietly dumping stock out the back door.

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