After yesterday’s modest up day, shares overseas continued the rally. Asia was up modestly, though the big winner were financial shares in Europe, stocks which have been absolutely creamed so far this year.
MarketWatch: Lloyds Banking Group already 43% held by the U.K. taxpayer, was the biggest beneficiary, surging 31%. Barclays added 8%. The Royal Bank of Scotland which is 70% in the hands of the U.K. government, added 1 pence to 17 pence. “I think what we are seeing is a retreat of the nationalization fears which gripped markets last week, people are buying into what they see as opportunity,” said Patrick Gordon, a market strategist at the U.K. brokerage Killik & Co.
One thing that remains unclear, when people talk about retreating fears of nationalization, is whether investors believe government is less inclined to nationalize, or government is less compelled to nationalize. This is an important distinction, but it’s usually glossed over because the answer is that people have no idea why these stocks move as they do from day to day.