Others

DOW

Wow, the US banks actually making money huh? Impressive huh!

What about like this :

The Bank borrows money from the Government at 0%. , then lend to people say 20%? Sure make money one!

petertan4949 ( Date: 20-Jul-2009 00:52) Posted:

The Great Bank Earnings That Really Weren't

By Morgan Housel
July 17, 2009 | Comments (8)

Recs

45

Motley Fool Stock Advisor

Since 2002, David and Tom Gardner have returned 32.89% while the S&P 500 returned -8.78%. Try Stock Advisor free for 30 days.

Try it Free

Bank of America (NYSE: BAC) announced surprise quarterly earnings this morning of $3.2 billion, or $0.33 per common share after stripping out preferred dividends. That's good and all -- the bank hasn't had the best of years, you know.

Many are touting B of A's earnings as a sure sign that things have turned a corner. I wanted to be one of them. I crossed my fingers and vowed to stay positive. When the results first came out, I was hoping I could at long last say something upbeat about the bank.

But not today. "Earnings," you have to remember, can be a curiously hazy number.

Behind the seemingly solid news is this little nugget in B of A's press release:

[T]he increase was driven by a $5.3 billion pretax gain on the sale of [China Construction Bank] shares … Noninterest income in the period also included a $3.8 billion pretax gain from the completed sale of the merchant processing business to a joint venture.

Ah … so moving things right along were $9.1 billion in gains from selling assets in order to raise much-needed capital. That's kinda important to note when you're talking about a $3.2 billion profit.

These are one-time gains that don't reflect earnings power and, more importantly, reduce future earnings power as promising assets are shed. Without these sales -- looking at the company on a normalized basis -- B of A surely would have been deep in the red. Some might find that intriguing.

Not so pretty in the Citi
Now we move on over to Citigroup (NYSE: C). Its quarterly earnings also made eye-popping headlines this morning. "Citigroup delivers surprise $4.3 billion profit" said one media outlet.

A $4.3 billion profit? Citigroup? Really?

No, not really. And that's what's sad. Citi's $4.3 billion "profit" was entirely made up of selling most of its Smith Barney unit to Morgan Stanley (NYSE: MS), which generated a pre-tax gain of $11.1 billion.

Never mind that this is obviously a nonrecurring gain. Never mind that without the sale, Citi would have reported a gigantic loss. Oh, and never mind that Smith Barney was one of Citi's only consistently stable sources of earnings. People see green, and they get fired up. That's the life of an investment community whose outlook is firmly locked in a 90-day timeframe.

I've noted that Goldman Sachs's (NYSE: GS) and JPMorgan Chase's (NYSE: JPM) recent earnings, while impressive, might end up being one-off events. But at least they're actually earning the money. They have earnings power -- it just might not be wholly sustainable. For Bank of America and Citigroup, the quest to find true earnings power is still quite elusive.

For related Foolishness:

Earnings goose a rally - for now

The early batch of report cards from Corporate America have revived the dormant stock market. But major companies in the week ahead could kill the optimism.

EMAIL | PRINT | SHARE | RSS

TWITTER
Yahoo! Buzz
DIGG
FACEBOOK
DEL.ICIO.US
REDDIT
STUMBLE UPON
MYSPACE
MIXX IT

Subscribe to Markets

feed://rss.cnn.com/rss/money_markets.rss

Paste this link into your favorite RSS desktop reader

See all CNNMoney.com RSS FEEDS (close)

By Alexandra Twin, CNNMoney.com senior writer

Last Updated: July 19, 2009: 2:37 PM ET

ROAD TO RESCUE

NEW YORK (CNNMoney.com) -- So far so good.

The first week of major quarterly financial results has come and gone, leaving investors more confident about the economic outlook -- and stocks 7% higher.

But the S&P 500's first up week in five has merely left stocks right back where they were a month ago. That's about 40% higher than the low point of 2009.

"Investors are dipping their toes in the water, but not diving in 100%," said Dave Hinnenkamp, CEO at KDV Wealth Management. "Earnings so far have brought some upside surprises, but we'll need to see that continue, supported by the economic news."

The week ahead brings a smattering of economic news, including reports on housing and the jobs market. But the main focus is the quarterly results.

This week, 145 of the S&P 500 companies will report results, or 23% of the broad index. American Express (AXP, Fortune 500), Microsoft (MSFT, Fortune 500), Coca-Cola (KO, Fortune 500) and Merck (MRK, Fortune 500) are among the 12 Dow components that are due to release results.

Influential tech leaders Yahoo (YHOO, Fortune 500) and Apple (AAPL, Fortune 500) are also on the docket.

Investors will also keep an eye on troubled small business lender CIT Group (CIT, Fortune 500), which is fighting to stave off bankruptcy. The company, which reports results on Thursday, is reportedly in talks with JPMorgan Chase (JPM, Fortune 500) and Goldman Sachs (GS, Fortune 500) about getting a loan.

Second quarter underway

Intel (INTC, Fortune 500), IBM (IBM, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup (C, Fortune 500) all reported better-than-expected results or issued improved forecasts last week.

Those reports helped draw investors back into the market. Better-than-expected readings on retail sales and housing -- and an improved economic outlook from the Federal Reserve -- helped as well.

But beyond financial and technology, enough other companies either missed expectations or lowered estimates so as to keep the overall outlook for earnings little changed.

S&P 500 companies are expected to see profits fall 35.2% versus a year ago, according to Thomson Reuters. Last week, the forecast was for a drop of 32.7%.

"Relative to expectations, it's been a good start," said John Butters, senior research analyst at Thomson Reuters. "Companies are beating estimates and doing it by a wide margin, with the caveat that we have only seen 10% of the reports."

Reported results are beating estimates by an average of 11.2%, versus the long-term historic average of 1.7%, Butters said. But on the downside, only 55 of the 500 companies have reported results so far.

"Now we're going to really get into the heart of the earnings season and it will be important to see if this trend can hold up," he said.

With stocks once again gripping the top of a 40% rally off the lows, the trend better hold up.

Results

Monday: Texas Instruments (TXN, Fortune 500) reports results after the close. The chipmaker is expected to have earned 18 cents per share versus 44 cents a year ago, according to a consensus of analysts surveyed by Thomson Reuters.

Tuesday: Five Dow components report results in the morning, including Coca-Cola, which is expected to have earned 89 cents per share versus $1.01 a year earlier.

Caterpillar (CAT, Fortune 500) is thought to have earned 22 cents per share versus $1.74 a year ago. Merck (MRK, Fortune 500) is expected to have earned 77 cents versus 86 cents a year ago. United Technologies (UTX, Fortune 500) likely earned $1.04 versus $1.38 a year ago. DuPont (DD, Fortune 500) likely earned 53 cents versus $1.11 a year ago.

After the close, Apple is expected to report a profit of $1.16 per share versus $1.19 a year ago. Fellow tech leader Yahoo is expected to have earned 8 cents per share versus 10 cents a year ago.

Wednesday: Dow component Boeing (BA, Fortune 500), due in the morning, is expected to have earned $1.21 per share versus $1.16 a year ago.

Delta Air Lines (DAL, Fortune 500) is expected to report a loss of 27 cents per share versus a profit of 35 cents a year ago.

Morgan Stanley (MS, Fortune 500), Wells Fargo (WFC, Fortune 500) and eBay (EBAY, Fortune 500) are all also due to report.

Thursday: Three Dow components are due to report before the start of trading.

3M (MMM, Fortune 500) is expected to have earned 94 cents per share versus $1.39 a year ago. McDonald's (MCD, Fortune 500) is expected to have earned 96 cents versus 94 cents a year ago. AT&T (T, Fortune 500) is thought to have earned 51 cents versus 76 cents a year ago.

After the close, Dow component American Express is expected to have reported a profit of 28 cents per share versus 56 cents a year ago.

Dow component Microsoft is expected to report a profit of 36 cents per share versus 46 cents a year ago.

Amazon.com (AMZN, Fortune 500) reports results after the close.

Friday: No market-moving financial results are due Friday.

Economy

Monday: The index of leading economic indicators (LEI) is expected to have risen 0.5% in June, according to a Briefing.com survey of economists. LEI rose 1.2% in the previous month. The Conference Board report is due shortly after the start of trading.

Tuesday: Federal Reserve Chairman Ben Bernanke gives his semi-annual testimony on monetary policy to Congress this week, speaking before the House Financial Services Committee Tuesday and the Senate Wednesday.

Wednesday: The weekly crude oil inventories report from the Energy Information Administration is due shortly after the start of trading.

Thursday: June existing home sales from the National Association of Realtors is due after the start of trading. Sales are expected to have risen to a 4.80 million unit annual rate in June from a 4.77 million unit rate in May.

Also, the Labor Department releases the weekly jobless claims report before the start of trading.

Friday: The University of Michigan releases its revised July consumer sentiment reading. Sentiment is expected to hold steady at 64.6.

First Published: July 19, 2009: 8:23 AM ET

The Great Bank Earnings That Really Weren't

By Morgan Housel
July 17, 2009 | Comments (8)

Recs

45

Motley Fool Stock Advisor

Since 2002, David and Tom Gardner have returned 32.89% while the S&P 500 returned -8.78%. Try Stock Advisor free for 30 days.

Try it Free

Bank of America (NYSE: BAC) announced surprise quarterly earnings this morning of $3.2 billion, or $0.33 per common share after stripping out preferred dividends. That's good and all -- the bank hasn't had the best of years, you know.

Many are touting B of A's earnings as a sure sign that things have turned a corner. I wanted to be one of them. I crossed my fingers and vowed to stay positive. When the results first came out, I was hoping I could at long last say something upbeat about the bank.

But not today. "Earnings," you have to remember, can be a curiously hazy number.

Behind the seemingly solid news is this little nugget in B of A's press release:

[T]he increase was driven by a $5.3 billion pretax gain on the sale of [China Construction Bank] shares … Noninterest income in the period also included a $3.8 billion pretax gain from the completed sale of the merchant processing business to a joint venture.

Ah … so moving things right along were $9.1 billion in gains from selling assets in order to raise much-needed capital. That's kinda important to note when you're talking about a $3.2 billion profit.

These are one-time gains that don't reflect earnings power and, more importantly, reduce future earnings power as promising assets are shed. Without these sales -- looking at the company on a normalized basis -- B of A surely would have been deep in the red. Some might find that intriguing.

Not so pretty in the Citi
Now we move on over to Citigroup (NYSE: C). Its quarterly earnings also made eye-popping headlines this morning. "Citigroup delivers surprise $4.3 billion profit" said one media outlet.

A $4.3 billion profit? Citigroup? Really?

No, not really. And that's what's sad. Citi's $4.3 billion "profit" was entirely made up of selling most of its Smith Barney unit to Morgan Stanley (NYSE: MS), which generated a pre-tax gain of $11.1 billion.

Never mind that this is obviously a nonrecurring gain. Never mind that without the sale, Citi would have reported a gigantic loss. Oh, and never mind that Smith Barney was one of Citi's only consistently stable sources of earnings. People see green, and they get fired up. That's the life of an investment community whose outlook is firmly locked in a 90-day timeframe.

I've noted that Goldman Sachs's (NYSE: GS) and JPMorgan Chase's (NYSE: JPM) recent earnings, while impressive, might end up being one-off events. But at least they're actually earning the money. They have earnings power -- it just might not be wholly sustainable. For Bank of America and Citigroup, the quest to find true earnings power is still quite elusive.

For related Foolishness:

coming week will decide whether the rebound is REAL....

8.8 the deciding number.....

my boss bets < 8.8.... hehe.... Smiley

U.S. Stocks Post Biggest Gain Since March, End Four-Week Slump

Share | Email | Print | A A A

By Lynn Thomasson

July 18 (Bloomberg) -- U.S. stocks rose, propelling the Standard & Poor’s 500 Index to the biggest weekly advance since March, after Goldman Sachs Group Inc. and Intel Corp. beat analysts’ estimates and reports on manufacturing and retail sales signaled the economy is improving.

Goldman Sachs surged 11 percent to the highest price since September after reporting record profit of $3.44 billion. Also, analyst Meredith Whitney gave the bank the only “buy” rating among eight companies she covers. Intel, the world’s biggest chipmaker, added 17 percent and completed a seven-day rally as it reported twice as much profit as analysts forecast.

The S&P 500 rose 7 percent to 940.38 for the second- steepest weekly gain of 2009. The Dow Jones Industrial Average jumped 597.42 points, or 7.3 percent, to 8,743.94. The Russell 2000 Index of small companies soared 8 percent to 519.22.

“We’re bullish,” said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis. “Between now and the end of 2010, we’re looking for the market to be up at least 25 percent.”

The S&P 500 has added 61.25 points since July 10, almost erasing the 67.08-point retreat from the prior four weeks, as Goldman Sachs, Intel and Johnson & Johnson helped allay concern that equities had risen faster than the outlook for corporate profits. S&P 500 companies that reported second-quarter results since July 8 topped estimates by 16 percent, according to data compiled by Bloomberg. Thirty out of 38 beat projections.

‘Relatively Sanguine’

The Chicago Board Options Exchange Volatility Index, used as a gauge of investors’ concern, tumbled 16 percent to 24.34 for the steepest weekly decline since December. All of the S&P 500’s 10 industries rose this week, with technology companies having the biggest gain.

“The picture looks pretty good,” Jack Ablin, who oversees $60 billion as chief investment officer at Harris Private Bank in Chicago, said in a Bloomberg Television interview. “Outlooks are relatively sanguine.”

Goldman Sachs jumped 11 percent to $156.84. Whitney, who correctly predicted in 2007 that Citigroup Inc. would cut its dividend, said Goldman Sachs will probably advance to $186.

Financial stocks soared even as CIT Group Inc., the 101- year-old lender facing bankruptcy, plunged 54 percent to 70 cents after failing to receive federal guarantees for its bonds. Red Hat Inc., the biggest seller of Linux operating systems, was picked to replace CIT, which finances about 1 million businesses, in the S&P 500 after the close of trading July 24.

‘For Real’

Intel increased 17 percent to $18.79. The company also predicted third-quarter revenue above analysts’ estimates, indicating that shoppers in Asia are helping reignite demand for personal computers.

“Earnings have definitely driven the market,” said Russell Rolnick, who helps oversee about $1.2 billion at Lenox Advisors Inc. in New York. “What’s going to show that these numbers are for real is if we see unemployment start to slow down.”

The number of Americans filing claims for unemployment benefits fell last week to the lowest level since January, while retail sales rose more than economists estimated. Government reports also showed that industrial production shrank less than forecast and a New York regional factory gauge had the smallest contraction in more than a year, a sign that manufacturing is on the verge of stabilizing.

GE Drops

General Electric Co. dropped 6.1 percent yesterday, the most in three months, to $11.65 after second-quarter sales trailed projections. The maker of jet engines and medical imaging machines gained 8.1 percent for the week as the better- than-estimated economic reports lifted industrial companies.

Almost 150 companies in the S&P 500 are scheduled to report results next week, including Apple Inc., Coca-Cola Co., McDonald’s Corp., Microsoft Corp. and Morgan Stanley. Analysts estimate profits fell 33 percent in the second quarter and will drop 20 percent in the current period.

The Conference Board’s index of U.S. leading indicators probably rose in June for a third consecutive month, another sign the economy may be emerging from the worst recession in five decades, economists said before a July 20 report.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net. Last Updated: July 18, 2009 08:00 EDT

DJ INDU AVERAGE .DJI i -- 8743.94 +32.120 +0.4 301,413,216

If Obama's Admin and China's offical talks like singapore analysts/officials, the world economy will take longer to recover... luckily, both are optimistic about the recovery..

Mobius says US out of the woods:

http://www.bloomberg.com/avp/avp.htm?N=av&T=Mobius%20Says%20U.S.%20%60Out%20Of%20The%20Woods%2C'%20Russia%20Undervalued&clipSRC=mms://media2.bloomberg.com/cache/vELujdoyyXT4.asf

short big time.... go for quick profits.... hehe.... Smiley

Fast and furious is for taking profits for trading stocks... long term stock will move higher step by step after correction..

ronleech ( Date: 17-Jul-2009 22:52) Posted:

Hope DOW slow down...too fast, player dont dare to come in...

8.8 the tough resistance... not easy to break one... hehe.... Smiley

my boss said got spare cash .... go for zinc.... 0.9 on the way...

my boss said one hor.... hehe.... Smiley

Hope DOW slow down...too fast, player dont dare to come in...

it will go past 9000 this mth

DOW up 4 straight session

OK to be down today, EVEN BY ALOT TODAY

NO WORRIES MATE - THE UPTREND IS STILL ON !!

DON'T MISS THE 2ND RUN UP !!

i think DOW is dragged down by GE (-5%)

I am surprise Wall Street in red with so many good news announced by BOA, CITI and GE. The BB must be manipulating the stock. They must have pressing the stock low so that they can get in low. It's a dirty game.

Dow Jones Industrial Average up 95.61 to 8711.82.

No I offload everything. Tomorrow is Friday. See how first.

dealer0168 ( Date: 16-Jul-2009 23:22) Posted:

Ooo cathyimg, for this quarter i anticipate that US will recover well. But of course not totally recover.

China already recovers..., singapore also out of technical recession..., & .....so on.

So for this round i believe both US may hit 9000 & STI to hit 2600. Abit bullish mindset in me....haha

Above are my opinion.

Emm, btw u short today Is it Cathyimg.....??

cathylmg ( Date: 16-Jul-2009 23:06) Posted:

Could you please explain how different?

"Vitoman" contains Zinc too... Smiley

zinc a better bet... if you have spare $$$....

my boss said one hor.... Smiley

Login Register

DOW

The Great Bank Earnings That Really Weren't

45

Motley Fool Stock Advisor

Earnings goose a rally - for now

The early batch of report cards from Corporate America have revived the dormant stock market. But major companies in the week ahead could kill the optimism.

The Great Bank Earnings That Really Weren't

45

Motley Fool Stock Advisor