We were far too conservative with GS when we made it a Top Trade Idea for our Members on October 14th:.
Bank earnings are excellent..
Well, Goldman Sachs (GS) and JP Morgan (JPM) are great, Wells Farge (WFC)– not so much. And Im unsure I d call JPM “excellent” as $5.2 Bn of the quarters $14.3 Bn in revenue originated from the release of loan reserves that were reserved last year to cover anticipated loan defaults. Given That the Federal Government tossed $6Tn at the economy ever since– it ends up they didnt require the $5.2 Bn to cover bad loans so now the cash (which was constantly in the bank) is relocated to the income side of the journal.
I have constantly objected to Loan Loss Reserve accounting since it permits a bank (and lots of other companies) to take revenues that have actually currently been declared (and currently moved the stock) out of Cash (showing a loss as needed for taxes, housecleaning, etc) and after that back to profits when they seem like it (to improve the stock cost or conserve a quarter). Especially for Businesses that have the ability to purchase back their own stock when the cost is depressed due to a loss they intentionally triggered and after that, when they want to sell more stock or take benefits– they just re-recognize the profits as needed. What a fraud!
