Is It Time To Panic? We On The Verge of A Rude Earnings Awakening While Global Financial System Remains Exceptionally Fragile

Why Bank Earnings Could Face Rude Awakening

Are banks facing a rude earnings awakening?

With JPMorgan and Wells Fargo on tap to report this week, some investors may be questioning whether the depletion of loan loss reserves — the money banks set aside to pay for loans that turn sour — is too premature as credit quality keeps improving. (Read More: 10 Big Bank Stocks Gearing Up for Third-Quarter Earnings.)

A recent report from the Federal Deposit Insurance Corporation showed that banks’quarterly provisions, or the amount that banks are allocating to these bad loans, have slowed to pre-crisis levels. In the second quarter, the amount set aside by U.S. banks reached its lowest total in five years.

That trend has raised serious concerns among key banking regulators — including those at the Office of the Comptroller of the Currency.

In late September, OCC chief Thomas Curry warned banks that “too much of the increase in reported profits is being driven by loan loss reserve releases” and that the issue “has to be a matter of great concern” as risk levels remain elevated for the industry….

** Now Comes The Worst Earnings Season Since The Financial Crisis
** Why Alcoa’s results matter – Stay alert: Shortly after 4 p.m. EST Tuesday, the big aluminum maker unofficially kicks off another earnings season

One Of The Biggest U.S. Investment Banks Is On The Verge Of Collapse

Jim Willie’s latest Hat Trick Letter, ‘Firestorms & Currency Twisters‘ is a MUST READ!!
Willie states that Morgan Stanley faces IMMINENT FAILURE & RUIN, that The older employees are selling all of their stock, and that Many workers are making contingency plans for their next positions in another firm.

He states that JP Morgan will devour the carcass, and that The Morgue may be preparing to execute the 1st ever private stock account vaporization/ rehypothecation.

AN ABSOLUTE MUST READ!!!

MORGAN STANLEY IMPLOSION

The insider conversation, often called chatter when it become deafening in tone, is that Morgan Stanley faces imminent failure and ruin. Almost two weeks ago, the Jackass provided a tip to Bill Murphy of GATA to post on his popular LeMetropole Cafe that Morgan Stanley fund managers and high ranking employees were preparing for the firm’s implosion. A subscriber to the Hat Trick Letter has a good friend whose father works as a fund manager and provided the story. It was not detailed, and bore no follow-up after my request. The older employees are selling all of their stock, some legacy stock from one or two decades ago. Many workers are making contingency plans for their next positions in another firm. When Lehman Brothers was killed, thousands of employees had to find new jobs, some without success. In the last week, the shock waves are being heard from internal Wall Street sources in an unequivocal manner. The implosion is in progress, like the collapse of several platforms and structural cables. The inside is caving in, and the ranking members recognize it, even talk about it openly. Much discussion swirls about a transition to antiquated software that is greatly disturbing the trading desks, causing tremendous problems at precisely the wrong time. A redux of the Knight disaster could be in progress.

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**A Bunch Of Big Advisers At Morgan Stanley Might Leave The Firm For A Totally Embarrassing Reason (Aug. 31, 2012)

IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump

The world economy will grow 3.3 percent this year, the slowest since the 2009 recession, and 3.6 percent next year, the IMF said today, compared with July predictions of 3.5 percent in 2012 and 3.9 percent in 2013. The Washington-based lender now sees “alarmingly high” risks of a steeper slowdown, with a one-in-six chance of growth slipping below 2 percent.

“A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European and U.S. policy makers deal proactively with their major short-term economic challenges.”

The IMF’s 188 member countries convene in Tokyo this week as low growth damped by fiscal consolidation in the richest economies hurts developing counterparts fromChina to Brazil. As the IMF urged measures to boost confidence, uncertainties out of Europe show no sign of abating, with leaders still divided over a banking union andSpain resisting a bailout.

“Confidence in the global financial system remains exceptionally fragile,” the IMF said. “Bank lending has remained sluggish across advanced economies” and increased risk aversion has damped capital flows to emerging markets, it said.
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