Too Good To Be True?
Jul 31, 20204.9K Shares259.7K Views
Bank of America’s announcementtoday of a 41 percent decline in earnings - its fourth-straight drop - is generating the same reactionon Wall Street as Citigroup’s lossesdid last week: It’s bad, but not as bad as we thought.
That kind of thinking prompted a rallyin financial stocks, aided by JPMorgan Chase and Wells Fargo delivering upbeat earnings reports. And it raised hopes that banks might be doing a little better than expected. Maybe, this thinking goes, the worst of the credit crisis is behind us.
I just met Stewart over the weekend at the Netroots Nationconference in Austin. He was still annoyed that Citigroup’s $2.5 billion quarter loss on Friday was portrayedso positively. After his panel was over, Stewart told a little crowd that grew around him that if he had any financial stocks, he’d dump them sooner rather than later. Bank losses are worrisome and huge despite what the analysts say, more bank failures are imminent, and the worst is yet to come, he said.
Here’sa glimpse of Stewart’s thinking:
“„Ladies and gentlemen — anyone that is recommending you move into financial shares is an idiot. There are still major problems out there. Credit standards are tightening and loans are getting harder to come by even though the Fed has (again) lowered interest rates to 0% after adjusting for inflation. None of this is good news.
When it comes to bank losses reported as surprisingly good news, don’t fall for the spin.
Hajra Shannon
Reviewer
Latest Articles
Popular Articles