WFC

by Larry Levin

Thursday's market exploded when Wells Fargo bank reported a "record" profit. Hmm, anyone else wonders if this is true or an extreme exaggeration of the truth. It must be nice to be able to keep loans on the books at whatever price you feel like now that WFC and other banks have pressured FASB to revert to mark-to-myth accounting, receive billions of taxpayer money including financial assistance acquiring Wachovia, and then turn out to not need it, right? Yep, that sure would be nice.

As soon as the results were released, people all over the net asked the same thing: either Wells Fargo is lying, or the massive Wall Street bailouts were not needed. In other words, the American taxpayer was robbed. So which is it?

Does Wall Street need the money or not? If not, return it and allow interest rates to find a natural equilibrium without Federal Reserve intervention. Never forget that interest rates are extremely low NOT to help out the masses, but to help the bankers. It is through Fed intervention that banks are able to borrow from it at near ZERO interest and then rape you coming and going. When borrowing from the banks you will be raped via paying high interest, outrageous fees, and penalties. When lending to the banks you get raped again via almost no return on savings! The insanely low interest paid on savings since Greenspan's 2001 rate reductions has surely robbed TRILLIONS of dollars from Americans in favor of bank profits. Sickening.

Wells Fargo's obfuscation of Wachovia Bank could be called into question I'm sure. But as long as half truths pop the indices, nobody is going to complain. We only want the truth when the market is going down - not when it's climbing, right? WFC took over bankrupt Wachovia with government help, but that doesn't relieve WFC of taking charges from the acquisition of the failed institution.

As of today, Wells Fargo has yet to take a significant charge from its purchase of Wachovia Bank, which helped its capital position in the first quarter. WFC initially had said the charge would be around $10.0-BILLION, but as of now it has only taken $77.0-million. In short, Wells Fargo counted earnings from the Wachovia acquisition but almost none of the losses. How convenient!

Although it's maddening, it shouldn't surprise those who follow the trend. When the market is rallying, the trend will tell you which news will be important and which will be ignored. Since the current trend is up, good news, whether it's a perception or reality, is driving the market and bad news is simply shelved for a later date. Who knows what will cause the Street to stop ignoring lies and bad news, but when that does happen people will surely call into question the WFC "earnings." At that time you will shake your head in bewilderment wondering "why weren't the earnings questioned on day 1?"

Until that day comes, the path of least resistance will continue to be up, as it has been for weeks.



Previous Day's Trading Room Results:

Trade Date: 4/9/09

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


1) IDVA buy @ 1:20pm at 846.25 = +.75 (1 lot)

2) Algorithm positions (1)...combined Secret's and Algo total...+0.75


Electronic (YM) Mini-Dow:

1) None today



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