This faux-recovery we are now in, being hailed as the beginning of a true turn-aroud, continues to defy top-calling from bloggers and pundits alike—not so much in amplitude, which is still modest, but in duration. I figure, you get to make a top or bottom call once. Mish threw his away months ago, I blew mine earlier this month. Both of us were close in terms of value, the market has not gone up much since we made these calls, not far beyond the normal range of noise, but it still hovers in mid air, and is certainly not going down.
The March rebound began with Citibank's announcement of better-than-expected profits, defying expectations, and other banks have done likewise, and many are taking aggressive steps to pay back TARP money. This latest spike once again stemmed from Citibank's announcement of profits.
And as a result of widespread "profits" and repayment of TARP bailouts, financial executives will resume collecting outrageously high salaries and bonuses. Keep in mind the amount of government (taxpayer) support for the credit industy, even outside the TARP, and the ongoing suspension of mark-to-market accounting, where one can place whatever value they like on toxic assets. Financial stocks are still in the toilet and their shareholders are still screwed.
The day of reckoning is merely postponed. Saying: "we need to rescue banks because our economy depends on credit" is like saying: "we need to bailout Enron because we need energy."