Happy days

are here again, hopefully, and have not just snagged a limb on a continued decline. My statement showed that my portfolio showed a significant gain this past month. Well, I regained (almost exactly) what I'd lost the previous month.

 

I'm not so sure what all the joy is about. This thing is far from over.

 

True, but from what we know, there's a good chance that the Market has turned around. Unemployment will continue to rise before it turns. Supposedly the Market is a leading indicator of the economy, employment is (a)last.

 

I just don't think there is fundamental evidence that the economy has turned. They've pumped a ton of money into the economy but that comes with major long-term consequences and we haven't seen those start up yet. Furthermore, wait until the unsecured debt really starts to crumble as unemployment continues to rise. We haven't had these levels of unsecured debt in past recessions like we do now. And those defaults are increasing.

Also, commercial still hasn't really gotten as nasty as I think it will.

It's great to see how quickly the stock market can rise but I think we still have a whole bunch of mess to come. Though, when we get past some of this toxic stuff, I really think the market will roar back like it has in the last month (many don't agree with me on that but we will see I guess).

 

I'm watching to see how much psychology plays into any new bubble that may develop. People "think" things are better so the market improves just like when they "think" things are terrible the market tumbles. In both instances the "thinking" is usually exaggerated and fundamentals are ignored. And yes, credit card debt is just beginning to rear its ugly head as is commercial real estate foreclosures.

 

Citi just posted. They beat the street est but it was still a loss...just better than expected. Stock is on the rise as well as its peers.

 

Citi beat what though? Is it such a great thing to beat really low expectations? Citi should of been bankrupt long ago.

I hope things are turing around, but I've seen to much other stuff that limits my enthusiasm at this time. Hope I'm wrong.

 

It's all turning around. If banks are making money - it will all turn. Wells huge profit was the first clue.

BAC announces Monday.

Banks were sick for awhile before the economy got hit, it's likely that banks will need to be healthy for awhile before the general economy comes around.

That said, I don't see how you can have record profits for Wells and still be in a 'crisis'. A banking crisis means the banks are coming unwound, which essentially means that MONEY is broken. That was the fear last fall. Wells profits tell me that is not happening.

 

I'm suspicious of the Wells profit, especially given the huge ARM portfolio it inherited from Wachovia. Also, when does the new accounting rules come into play? Any profits after that are immediately suspicious. I thought it was rather ironic that although Citi had +1Billion in profits it actually lost money per share due to interest payments to the government. Damned if you do, damned if you don't.

 

VA, I think they are already in effect and that is a big part what we are seeing here. Course, borrowing at near 0% and loaning at 4-5% in a big refi environment doesn't hurt either.

BTW, if they had relaxed the mark to market rules at the beginning of this, it might not have gotten here. Maybe our kids wouldn't be going trillions further into debt.