Profits?

by Larry Levin

Today's market opened lower with follow-on selling from yesterday's very bearish market structure. However, the bulls had an ace up their sleeves: Tax-Cheatin-Timmy. With his comments, the markets turned up and stayed up into the close as many of yesterday's short sellers were forced out of their positions.

Tax-Cheatin-Timmy told a congressional panel charged with oversight of the bank bailout that there is $109.6 billion remaining of a $700 billion bailout package, with an additional $25 billion expected to be returned over the next year. That would bring the available funds to $134.6 billion - more than thought.

The latter statement may have been what the market wanted to hear - that the Treasury is letting banks return their TARP funds and ostensibly be without Big Brother looking over its shoulder. And this certainly would be good news as it would prove that many banks never needed the money to begin with. Of course, the cynic in me must mention that several banks, like Goldman Sachs and JPM, may no longer need the TARP money because its mega-losses had been averted via the AIG pass-through payments.

As a true banker, however, Tax-Cheatin-Timmy hedged his answer. The market chose to ignore the hedge. Shortly after the comments above, he went on to say that he and other bank regulators may not immediately accept funds from participating banks seeking to return it. Geithner said the Treasury, the Federal Reserve and the OCC (Office of Comptroller of the Currency) are considering both the viability of each financial institution and the economy "as a whole" before deciding whether to let financial institutions return the funds.

When asked about the "stress tests" of the banks Geithner refused to comment.

Here are a few snippets of today's earnings results:

? YAHOO! Profit plummets 80%; up 5% in aftermarket.

? Huntington Bancshares posts a staggering $2.49-billion 1st-Q loss; closes +10.9%.

? Northern Trust's net income plummets 64%; closes -3.4%.

? Norfolk Southern Corp's net income plummets 39%; closes +4.8%.

? Gilead Sciences profits up 63-cents/share. Good job fellas!

? Altera profits plummet 48%; closes +0.9%.

? AMD profits worse than expected; down -5.95% in aftermarket.

? SanDisk losses a staggering 18.4 TIMES MORE than what it earned during the 1st-Q of 2008; up +10% in aftermarket! But I guess it could have been worse; it could have been a loss of 18.5 times more than the prior year.

? Capital One Financial also reported astoundingly bad "profits" of 327%...swinging from a gain last Q to a large loss this Q.

But who needs profits when we have "hope" and TARP?



Previous Day's Trading Room Results:

Trade Date: 4/21/09

E-Mini S&P Trades*
(before fees and commissions):

1) FT sell @ 8:40am at 828.75 = -1.50 (1 lot)

2) TP buy @ 12:10pm at 839.75 = -1.75 (1 lot)

3) OTF sell @ 1:00pm at 840.75 = +2.25 (1 lot)

4) Algorithm positions (3)...combined Secret's and Algo total...+1.25


Electronic (YM) Mini-Dow:

1) None today



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