Wells Fargo started the bank rally, beating numbers by extending the delinquency date on home equity lines to 180 days. Take out this $265 million, and they would of missed by 5 cents.
Bank of America closes on the Countrywide acquisition after Q2 ends, and after Countrywide writes down $4 billion. Remember when Tyco used to take massive charges on an acquisition, and then reverse these cookie jar charges when you needed the earnings? It was the same here. Countrywide guts itself before it is sold, so it's now an accretive acquisition for BofA.
Big deal. These stories are inconsequential (until they matter!).
Banks have already set up billions of reserves. What happens if we reverse any of them? Do we really care about $265 million? Do we really care that BAC swallowed CFC? It's just whining. You can find problems with any bank's earnings.
Tomorrow Wachovia reports, and the bank has already prepped it's workers on how to deal with the "bad news" to it's customers. Buy it on the bad news, and don't sell it!
Today was the day, when the shorts said, "I told you so." This whole rally will be attributed to SEC Chairman Chris "get the shorts" Cox and the stock locate rule.
We've just had the greatest rally in financials that the stock market has ever seen, and now we're going to get a do over? That I doubt.
But one thing that it looks like we will surely get-an ugly opening.
I just hope the bounce will be better to look at!