There has been a ton of bad earnings this past week. I think the scariest part isn’t so much the bottom line but the Top line. Revenues for companies that reported this week fell from 10% to as much as 35-40%. The earnings targets have been set ridiculously low in a bid to build confidence, but the ones that have been the biggest surprises – are the biggest fakes. The “fake” Bank earnings… Really, how long can the fake earnings continue to drive bank stock prices up? Some banks are up 60-200% in just 8 weeks. Unless banks or companies are at serious risk of failing or the economy rebounds (for real, not fake) the chances of bank earnings being stable or improving are slim to none in my opinion.
Citi, Goldman, and JP Morgan reported “profits.” WHAT, Are you kidding me? These profits came from the trading desks – day trading and short term trading. Goldman made $6.5B (after losing $3.5B in Q4), Citi –almost $5B, and JP with $5B. Of Citi’s “Real” business activities ALL segments lost revenues and profits. This is one big dog and pony show folks. What is worse is the Federal governments (taxpayer funds) bailouts were used to help the day trading activities and bets against itself. Back door financing will continue to help Citi for who knows how long. If only more people knew what was really going on behind the scenes. It seems that the amazing reactions to earnings may mean a correction is coming as people/institutions do a reality check. In my opinion there has to be a pull back in all these financials soon or it will just be another House of Cards developing.
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