The below article was sourced from Seeking Alpha: Philip Davis.
BAC missed!
Bank of America Corp.’s third-quarter net income fell 32% from a year ago as trading losses, write-downs on a wide variety of loans and soaring reserves for likely future loan losses undermined profit, financial results showed Thursday. The last of the nation’s top three banks to report results this week, the company chalked up big charges due to credit-related turmoil, suggesting that the problems in the credit market may yet be closer to the beginning than to the end.
Oh dear! As I mentioned in last night’s post, we saw this coming yesterday as C and FITB were signaling problems, even as I was incredulous earlier in the morning that the markets in general were glossing over the disastrous report by TMA.
The BAC report certainly indicates something is breaking down in our economy, as profits dropped 32% for the quarter as the bank had to double their provisions for credit losses to $2.03Bn. That’s a lot of money, people! While BAC may be able to find a billion dollars by simply turning over the cushions on the couch, I will say again that the regional and local banks are not likely to be as lucky and we may be looking at a series of misses in that sector.
22 analysts, who are paid big money to follow this bank for a living, had thought the bank would earn $1.05 a share, they were wrong by 22% (.82 was expected)! Not one of these Bozos has a sell on this Bank, which is trading just 5% off it’s all-time high.
This puts the Fed back on the table, which will send the dollar to new all-time lows (it finished yesterday at 78.09) and should reignite our gold plays, which we’ve been pressing during the recent downturn.
Oil should get a lift today on the declining dollar, but between BAC and the Beige Book, the majors have nothing to celebrate as the greedy energy industry has finally broken the consumer’s back and will now begin to reap what they have sown in the form of demand destruction.