Sorry to hear the news for Loyal reader G, but keep on keeping on my friend and it will work out!
Terminator Banks: Nothing Can Stop Them!
I was going to write about the Citi C) earnings report but really if you thought the Goldman Sachs trickery was something you would have to give C the top honor. I thought I would focus instead on a recurring theme so far through the bank earnings parade.
After reviewing the conference calls by JP Morgan (JPM) and C I came away with a particular mental image. Here it is:
Where the more naive of us, myself included, thought that the banks were in bad shape and were in need of billions upon billions of taxpayer dollars to survive, to hear them tell it there is nothing that can phase their bullet proof business. As the character Kyle Reese would say about the banks path to record earnings:
"Listen and understand. That terminator is out there. It can't be bargained with, it can't be reasoned with. It doesn't feel pity, or remorse, or fear, and it absolutely will not stop. Ever."
To see what I mean consider the following items from the past two days:
- JP Morgan CEO Jamie Dimon says they have no "toxic assets" they want or need to sell in the PPIP program. JPM also can pay back the TARP anytime and wants nothing to do with government partnerships.
Treasury Head Timmy G was so sure the PPIP was the touchdown pass the banks needed, yet JPM will not even run their receiver route to get to the ball. They are a machine! Coated with living tissue!
Now perhaps JPM and GS are just the two best banks on the block. Maybe they are in a better spot than others as GS is the government and JPM is the FED's bank of choice. fair enough. But what about the red headed step child of the finance sector, Citi?
If you thought they were in trouble, you did not review the conference call from this morning! Consider these items relayed by C CFO Ned Kelly (CFO Vikram Pandit did not participate for some reason?):
- 9:00: Questions and answers begins. Kelly begins by saying he's been through an immersion process that might make it difficult form him to answer some of the questions.
9:01: Guy M. first, as always. Asks about credit card reserves, which have declined. How's that happen? Kelly tells Guy that credit cards came in better than expected, outpacing loss reserves already made.
Citi's credit card business is doing better than expected? Even JPM said theirs was going south in a big way. Capital One as well. Maybe Citi is collecting payments in person in full robot terminator mode?
Then there was this one:
- 9:10: Meredith Whitney asks about the trends in the mortgage portfolio. How much was the effect of foreclosure forbearance? Not much at all, Kelly says.
A 2-3 month mortgage foreclosure moratorium made no substantial difference to C's bottom line? That has got to be the biggest whopper this earnings season! We will revisit that one now that the foreclosure wave is rolling after the moratorium have ended.
In short, the banks are all powerful machines right now. Nothing can stop them and business has never been better. How long can this charade go on? The terminators power cell in the movie was good for 10 standard years. I will guess that the bank days of sunshine will not make it even 1/10th that time.
Friday Night Entertainment
Home a bit late, and so on to the fun!
The great book "The Red Dragon" by Richard Harris is an all time favorite. The first time it was made into a film it was called "Manhunter". In this scene dtective Will Graham (played by William Petersen) uses pure brilliance in deductive reasong to figure out how the serial killer "the tooth fairy" is selecting his victims:
Music for One and All
My father (now passed on) used to play this song on his 12 string guitar all the time and I never knew who's song it was. While my Dad's 12 string version was better, listen to Don Williams and "I Believe in You":
If you can never get enough Steve Perry vocals, and really who can, try out "Oh Sherry":
The band Quarterflash is a Youtube "embed disabled" offender, but I was able to find this live version of "Harden My Heart". I love saxophone!:
Iron Maiden is a live show phenom. Take a listen to the powerful cryptic lyrics and all around rock out performance of "Revelations":
Have a good night.