CIT-Ting Duck

After a boisterous +256 points rally in the US, one would have expected Asia to take over the baton and rally further on the back of Intel's positive forward looking expectations. This did not eventuate. Instead, after an initial morning rally, Asia traded cautiously throughout the day as news filtered through that CIT, a 100 years old finance company turned bank in the US, might file for bankruptcy after all.

CIT must surely have felt like sitting ducks as their fate was out of their control. As the Treasury, the Fed and FDIC deliberated their fate, CIT sat and wait. By 6pm (US), CIT announced that their talks with the Government has ceased and said that "US support was unlikely".

I guess the critical reason why CIT was left to die, was because it was not deemed "to big to fail", unlike the likes of Citibank and AIG. With total assets of USD 70 billion, it accounted for less than 1% of the total banking system. For now, they are the albatross on the mariner's shoulders. But with market so bullish, I think it will turn out to be a sparrow, rather than an albatross. The market would probably digest the bad news easily. Instead, investors would be more interested in JPM, CITI and BAC earning results, which would be released over the next 2 days.

Meanwhile, after a 150 points rally in 3 days, the STI paused today despite the strong overnight session in the US. How would we trade tomorrow?.....It depends on JPM and the albatross (or is it the sparrow).