-- Posted Friday, 25 July 2008 | Digg This Article
| Source: GoldSeek.com
By: Rob Kirby
The following is the banking excerpt from the *August Big Picture* – a comprehensive report on a wide range of topics which paid subscribers are now reading at Kirbyanalytics.com. Other areas covered at length include, understanding the interest rate complex, precious metals, buying physical versus paper alternatives and energy.
The latest trend in Tom-Foolery being practiced by BIG banks was exhibited by Wells Fargo when they ‘beat the street’ - releasing their latest quarterly results [Q2] prior to market opening July 16, 2008.
Wells Fargo Q2 profit down 23% but beats estimates on record revenue
Silicon Valley / San Jose Business Journal
Hit by rising loan provisions, Wells Fargo & Co. said Wednesday its second quarter net income dropped about 23 percent but its revenue and dividend increased.
The San Francisco-based bank (NYSE:WFC) said it had net income of $1.75 billion, or 53 cents a share, compared with $2.28 billion, or 67 cents a share in the same period a year ago.
Revenue was $11.46 billion compared to $9.89 billion in the year-ago quarter.
Analysts expected, on average, earnings of 50 cents a share on revenue of $10.65 billion in revenue.
Fargo sports an unwieldy 84 billion home-equity-line / loan portfolio – much of it underwater due to massive home depreciation. Formerly at Fargo loans were deemed to be in default if they were non-performing, or in arrears, more than 120 days. New rules [conveniently, ehhh?] now “move the goalposts” out a further 60 days so that loans now need to be in arrears by 180 days to be considered non-performing, essentially concealing 60 days worth of defaults [deferring 265 million in charges].
For those of you inclined to think, consider that Wells Fargo [NYSE: WFC] has roughly 3.3 billion shares outstanding. They “hid” [or deferred, if you prefer] 265 million worth of losses through an accounting trick. This amounts to .08 per share. They reported earnings of .53 per share vs. expectations of .50 per share and the mainstream financial press announced that they “beat the street”.
The reality, folks, Wells Fargo ‘missed’ by .05 [.53 - .08]
A real conundrum: would these Fargo dudes make Enron’s disgraced and jailed former CFO, Andy Fastow, envious or proud?
Speaking of obscuring reality, a recent article I penned, archived on the site, titled, Bootlicks for Bankers, I ruminated on how SEC Chairman, Christopher Cox was going to “selectively enforce” on-the-books laws regarding naked shorting of equities – but only for selected financial stocks.
***Take special note of the Date when the SEC made this announcement:
The SEC announced its rule July 15, after bank regulators seized IndyMac July 11 and the Federal Reserve and Treasury Department announced emergency support on July 13 to ensure Freddie and Fannie would have access to capital if needed.
This announcement was undoubtedly “timed” for release at the same time as Wells Fargo’s doctored numbers were about to hit the airwaves – but that would be considered MARKET MANIPULATION, no?
Not surprisingly, this announcement sent “shockwaves” throughout the investment community which manifested itself in an enormous short covering rally in VIRTUALLY ALL WALKING DEAD FINANCIALS.
Well, there’s more to report on this front. It seems that not all financials are created, or viewed by regulators as being, equal. Here’s the list of 19 financial equities that investors are not allowed to short:
Company | Ticker Symbol(s) | YTD % change |
BNP Paribas Securities Corp. | BNPQF or BNPQY | -15.8 |
Bank of America Corporation | BAC | -33.4 |
Barclays PLC | BCS | -36.8 |
Citigroup Inc. | C | -34.3 |
Credit Suisse Group | CS | -26.1 |
Daiwa Securities Group Inc. | DSECY | -2.0 |
Deutsche Bank Group AG | DB | -31.1 |
Allianz SE | AZ | -16.7 |
Goldman, Sachs Group Inc | GS | -15.0 |
Royal Bank ADS | RBS | -54.6 |
HSBC Holdings PLC ADS | HBC and HSI | -5.7 |
J. P. Morgan Chase & Co. | JPM | -8.3 |
Lehman Brothers Holdings Inc. | LEH | -70.8 |
Merrill Lynch & Co., Inc. | MER | -42.4 |
Mizuho Financial Group, Inc. | MFG | 10.7 |
Morgan Stanley | MS | -27.4 |
UBS AG | UBS | -47.5 |
Freddie Mac | FRE | -73.1 |
Fannie Mae | FNM | -66.5 |
In an article published at Seeking Alpha, Mark McHugh reported that 15 of the names on the illustrious list [above] are members of the London Bullion Market Association [LBMA]. As McHugh notes,
“It’s [the LBMA] a pretty exclusive club of 120 members (if I counted right). So, 12.5% of the membership just showed up on the SEC’s enhanced investor protection list. Sure, it seems a little weird, but it’s important that the SEC take action to prevent things like what just happened to Indymac…..
Most of the gold traded in the world takes place in the over-the-counter [OTC] markets and the London Bullion Market is by far the biggest OTC market in the world.”
What’s so strikingly odd about the list is this: not included are such recently besieged ‘domestic’ institutions as Washington Mutual [WM] or Wachovia [WB]? As McHugh articulates,
“Suddenly, I don’t feel so dialed-in anymore. No Wachovia (WB)? No Washington Mutual (WM)? Apparently, I don’t run in the right rumor-mongering circles. Obviously, some of our naked, short-selling sleaze-balls are trying to destroy financial institutions not even domiciled in the US (and no one invited me).”
The salient points here folks: A cabal of international bankers [ones who more-or-less rule the roost in global precious metals trade] have co-opted U.S. regulators into providing a “protection racket” for them. My question is; protection from what???? Could it be despicable, unthinkable deeds that might have been perpetrated in rigging the global precious metals markets???
If any of you still cannot get your heads around just how absurd what is occurring among the banks and banking stocks, a poster in a forum I frequent put it this way,
“Bank of America is borrowing money from Fed's TAF to buy back 75M shares. Lovely.”
Hmmmm…..another can of worms.
The long and short of it folks [so long as we’re able to use the word “short” as a figure of speech when we are speaking of financials] is that the MASSIVE rally in financials we witnessed last week was nothing more than an elaborate, coordinated hoax of a stage illusion [or suckers rally], made possible by aiding and abetting [or willfully ignorant, take your pick?] regulators and mainstream media - that smart, err, make that informed [in on the game, ehhh?], Wall Street money was undoubtedly selling in to. The sickest part of it all; this was probably “all staged” and pre-planned to help Wall Street firms patch up the gaping holes in their balance sheets [where I come from it’s called fishing in a barrel, ehhh]. That folks is why the financials did an about-face – planting their collective kissers into the pavement on Thursday, July 24, 2008.
U.S. Stocks Drop as Financials Have Biggest Decline in 8 Years
By Lynn Thomasson
July 24 (Bloomberg) -- U.S. stocks tumbled, sending financial shares to their worst drop in eight years, after home sales slid more than forecast and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion….
Of course, true to form, the complicit mainstream media [or Ministry of Truth?] always has “another reason” why the market crapped. The August Big Picture reports on other methods that officialdom and the mainstream media employ to achieve managed results in our capital markets. Today’s convenient ass-clown-excuse just happened to be words uttered by Pimco’s Bill Gross [so sickening it makes me wonder how long he might have rehearsed those lines – you know, to make them sound convincing].
- Rob Kirby
-- Posted Friday, 25 July 2008 | Digg This Article | Source: GoldSeek.com
