Bank Of America Posts Earnings, Sets Aside $5 Billion For Credit Losses; Logic Sees Through COVID Crisis

Anybody who has every employed critical, logical thinking to address any problem probably sees what's going on regarding the pandemic, government mandates, Wall Street's enthusiastic rally, and the financial strip-mining of what's left of the middle class, not just in the United States, but around the world.

Just in case one is in need of a refresher, here's a brief month-by-month rundown:
January, 2020: WuHan Flu detected and reported upon in China.

February, 2020: Flu spread, China is largely locked down, other countries begin reporting cases.

March, 2020: Flu spreads massively to Europe and Asia, entire countries locked down, businesses closed, people forced to "shelter-in-place" and "social distance." Stock market crashes. Fed steps in with various programs to aid Wall Street and bolster stressed balance sheets in major firms and banks.

April 2020: Flu continues to spread: New York City is epicenter in United States; lockdowns continue. Stocks begin to rally.

May 2020: Some states begin re-opening their economies, CDC and mainstream media warns of a second wave. Stock rally accelerates as unemployment spikes to record levels.

June 2020: Cases begin to build up in states that were warned by the CDC. Stock rally moderates.

July 2020: The world's biggest banks, those in the US, begin reporting second quarter results, which are almost universally positive and higher than estimates. Stocks resume rally. Media and CDC continue to warn about virus, which, to most people, seems non-existent. States begin imposing more strict requirements for mask-wearing, shut down "non-essential" businesses again. Northeaster states (New York, New Jersey) begin imposing travel restrictions and mandatory quarantines to visitors from other states.

OK, left out are a load of details, including the protests, looting, rioting, tearing down of statuary and associated BLM and ANTIFA-inspired madness. That was largely an unrelated sideshow.

Logical-thinking people have determined a number of things:

• The mainstream media is full of liars, prevaricators, and propagandists. This was already well known.
• The coronavirus kills mostly people over 60 with pre-existing conditions (co-morbidities) such as heart disease, diabetes, and especially, morbid obesity.
• Government lockdowns, school closings, business closings, stay-at-home orders, etc. were government overreach and crushed the Main Street economy.
• The Federal Reserve bailed out Wall Street and the banks, as it always does.
• While private sector small businesses and employees were ravaged, nobody in the public sector (federal, state, local government) missed a day's pay even though most of them were not working full or even part time.
• The current "wave" of cases is largely made up and bolstered by an enormous ramp-up in testing. More tests = more cases = more fear-mongering by the media. Meanwhile, death rates have been decreasing steadily and the media fails repeatedly to report that.
• Far less than one percent of the total population in the United States has contracted COVID-19. Fewer than 150,000 have died from COVID-19, according to official sources. Anecdotal evidence that COVID-19 deaths have been wildly exaggerated is everywhere.
• It's estimated that 42-50% of small businesses which were shut down by state governments will never reopen. Bankruptcies are about to explode. Unemployment is not going to rebound.

Now, here are two stories to sort out in the logic maze:

Wolf Richter of Wolf Street reports: It Starts: Mortgage Delinquencies Suddenly Soar At Record Rate

and

From Great Britain: NHS Consultant Says Staff Are Being Silenced Over COVID19

Finally, the last of the important second quarter earnings reports, from Bank of America (BAC):

Bank of America (BAC) profit was cut in half from a year ago, totaling $3.28 billion, or $0.37 per share in the second quarter of 2020. This compares with $7.11 billion, or $0.74 per share, in 2019's second quarter.

Analysts had expected the company to earn $0.27 per share, so it actually counts as a win ("beat") and will be reported as such by many outlets.

Revenue for the quarter fell 3.2% to $22.33 billion from $23.08 billion last year.

Loan loss reserves, or, as the banks like to call it now, "provision for credit losses" was increased by 5.1 billion to nearly $10 billion total for the first and second quarter combined. Bear in mind that Bank of America is one of the world's leading consumer lenders, issuing mortgages for residential and commercial clients, credit cards, auto loans, personal loans, business lines of credit, and home equity loans.

While $10 billion in reserves may sound like a lot of money, in reality, it's far short of what will eventually be written down by the bank. Mortgages and credit cards have been put into various forbearances, beginning in March. Along with the PPP loans to small businesses and the $600 extra unemployment benefits doled out to millions across the country, the recession and resultant slowdown in consumer spending and business activity has been delayed. More pain will come in the third and fourth quarters. This quarter's results are very counter-intuitive, so it's essential to sift through the noise and bluster and realize that this is only an early reprieve from a financial panic which continues to unfold in fits and starts.

The biggest banks largely made money trading, as the stock market rallied from late March through to the present.

Those interested in slogging through the 18-page press release and financial data [PDF] can do so here.

Second quarter results and loan loss provisions from non-bank financial entities, especially CapitalOne (COF) and Discover (DFS) should be more revealing and possibly more severe. These "shadow banks" don't have investment arms like BofA or JP Morgan. They are mainline consumer lenders of credit cards, auto loans, and a small mix of home equity and mortgage loans, thus, subject to be hard hit by an economic downturn and chronic unemployment. Both report next week, CapitalOne on the 21st and Discover on the 22nd. Also, watch American Express (AXP) which reports on the 24th.

As an afterthought, consider what's coming down the pike. Now that the BLM and ANTIFA protests have subsided and the backlashing by conservative America has begun, the next issue will be whether or not to open public schools over the next four to six or seven weeks, depending on where one lives.

So far, the school districts that have announced plans have presented a basket of options, each district making up an agenda as they go along. Some are not re-opening to students, opting for some form of distance learning alternative. Others are using a hybrid approach. A small number are opening fully, but with various new rules and restrictions. It's complete chaos with no guiding principles.

The other issue will be professional sports, which have been shut down for four months, suspending the NBA season and all but canceling Major League Baseball. Both are supposed to resume in some fashion - without fans in the stands - soon. The NBA is set to resume play for the 2019-20 season on July 30. MLB is planning to open a 60-game season beginning July 23 and 24. Both leagues have announced that some players have tested positive for COVID-19 and some players are already refusing to play.

College football is in limbo. There's been no word from the NCAA on whether play will go according to schedule (about six weeks from now) or whether there will be a delay. The NFL has announced that the 2020 season will proceed as planned. Some teams have already announced that no fans will be allowed to attend games.

First, it's hard to imagine empty stands in arenas, stadiums, ballparks, and fields which normally accommodate tens of thousands of fans. Up to 100,000 attend some college football games. Baseball stadiums are built for anywhere from 38,000 to 50,000 fans. NFL stadiums routinely host up to 80,000. Even if the games are played, it won't be the same. One questions the logic of even playing in the huge facilities. Teams and leagues could save significant sums of money playing in more cozy environs. Without fans, all they need are the fields or courts and some sideline area. NFL games could be played at larger high school stadia.

Then there's the distinct possibility that the games will be cancelled again, either by government edict or over fear of contracting the dreaded COVID by players, officials, mascots, trainers, you name it.

Schools and sports need to be monitored for future developments.

You've been played. Again. You're still being played right now and it's not going to stop.

Do not be guided in your personal economic and social decisions by garbage media, Wall Street hype, nor government dictates. Let logic and critical thinking guide you to your best outcome.

---

The following is presented as a public service:

Dr. Vladimir (Zev) Zelenko

Board Certified Family Practitioner

501 Rt 208, Monroe, NY 10950

845-238-0000

March 23, 2020

To all medical professionals around the world:

My name is Dr. Zev Zelenko and I practice medicine in Monroe, NY. For the last 16 years, I have cared for approximately 75% of the adult population of Kiryas Joel, which is a very close knit community of approximately 35,000 people in which the infection spread rapidly and unchecked prior to the imposition of social distancing.

As of today my team has tested approximately 200 people from this community for Covid-19, and 65% of the results have been positive. If extrapolated to the entire community, that means more than 20,000 people are infected at the present time. Of this group, I estimate that there are 1500 patients who are in the high-risk category (i.e. >60, immunocompromised, comorbidities, etc).

Given the urgency of the situation, I developed the following treatment protocol in the pre-hospital setting and have seen only positive results:

1. Any patient with shortness of breath regardless of age is treated.

2. Any patient in the high-risk category even with just mild symptoms is treated.

3. Young, healthy and low risk patients even with symptoms are not treated (unless their circumstances change and they fall into category 1 or 2).

My out-patient treatment regimen is as follows:

1. Hydroxychloroquine 200mg twice a day for 5 days

2. Azithromycin 500mg once a day for 5 days

3. Zinc sulfate 220mg once a day for 5 days

The rationale for my treatment plan is as follows. I combined the data available from China and South Korea with the recent study published from France (sites available on request). We know that hydroxychloroquine helps Zinc enter the cell. We know that Zinc slows viral replication within the cell. Regarding the use of azithromycin, I postulate it prevents secondary bacterial infections. These three drugs are well known and usually well tolerated, hence the risk to the patient is low.

Since last Thursday, my team has treated approximately 350 patients in Kiryas Joel and another 150 patients in other areas of New York with the above regimen.

Of this group and the information provided to me by affiliated medical teams, we have had ZERO deaths, ZERO hospitalizations, and ZERO intubations. In addition, I have not heard of any negative side effects other than approximately 10% of patients with temporary nausea and diarrhea.

(Under severe pressure from the media, government entities, and presumably the CDC, Dr. Zelenko retired from his clinic on May 20, 2020 after 20 years as a medical practitioner.

---

At the Close, Wednesday, July 15, 2020:
Dow: 26,870.10, +227.50 (+0.85%)
NASDAQ: 10,550.49, +61.89 (+0.59%)
S&P 500: 3,226.56, +29.04 (+0.91%)
NYSE: 12,391.32, +187.12 (+1.53%)

Bank Earnings Continue to Shock and Awe As Goldman Sachs, PNC Blow Out Expectations

The parade of bank earnings reports continued prior to the open on Wednesday with heavy-hitter Goldman Sachs leading the march.

Goldman Sachs (GS)

Roughly 10 years ago, Rolling Stone columnist Matt Taibi slapped the moniker of "vampire squid" on Goldman Sachs, describing how their financial tentacles reached into every asset class around the world. The name stuck and Goldman's reach proved unimpaired by the coronavirus as the firm blew away analyst estimates for second quarter revenue and earnings.

EPS rose 7.7% to $6.26 on revenue of $13.3 billion, a 41 percent improvement over the same quarter a year ago. Fixed-income trading revenue shot up 1.49% to $4.24 billion, the best performance in nine years. Equities revenue jumped 46% to $2.94 billion, the highest in 11 years. Investment banking climbed 36% to $2.66 billion.

Analysts were looking for the firm to generate EPS of $4.27 on revenue of $10.07 billion.

Provision for credit losses rose to $1.59 billion from $214 million a year ago and $937 million in Q1, reflecting predictions for deteriorating economic conditions but Goldman's loan loss reserves continue to be much smaller than rival banks because of their light footprint in consumer banking though exposure to commercial real estate is still significant.

Goldman Sachs stock climbed 4.1% to 222.76 in premarket trading.


Bank of NY Mellon (BK)

The company reported revenue of $4.0 billion and earnings per share of $1.01, which was flat compared to last year's second quarter. BNY Mellon added $142 million to its loan loss reserves and increased Tier 1 Capital by $2.55 billion, including issuance of $1 billion of preferred stock. Overall there were no surprises in the company's second quarter report.


PNC Financial (PNC)

Bolstered by the sale of its interest in Blackrock in May, U.S. regional bank PNC Financial Services Group (PNC) reported second-quarter profit more than doubled. Net income attributable to common shareholders jumped to $3.59 billion, or $8.40 per share, in the three months ended June 30, from $1.31 billion, or $2.88 per share, a year earlier.

However, the company reported a net loss from continuing operations, which excludes the one-time gain from shedding its Blackrock investment, was $744 million.

PNC set aside $2.46 billion as loan loss provisions in the quarter, up from $180 million a year earlier.

The bank’s net income from discontinued operations, which includes gains from the sale, was $4.4 billion. The company also said it will continue the temporary suspension of its common stock repurchase program and reaffirmed the quarterly dividend to shareholders of record at $1.15 per share.


US Bancorp (USB)

Beating lowered EPS estimates, U.S. Bancorp (USB) reported second quarter earnings per share of $0.41, compared to $1.09, a year ago. On average, 22 analysts polled by Thomson Reuters expected the company to report profit per share of $0.22 for the quarter. Net income applicable to common shareholders declined to $614 million from $1.74 billion.

The company's provision for credit losses for the second quarter of 2020 was $1.737 billion, a huge increase over the previous quarter and year-ago quarter, reflecting deteriorating economic conditions due to the coronavirus.

Second quarter total net revenue was $5.84 billion compared to $5.82 billion, previous year, in line with estimates. Net interest income on a taxable-equivalent basis was $3.22 billion, a decrease of 3.2 percent.

Thus far, the banking segment, which was largely routed during the early days of the pandemic issue, has delivered results for the second quarter above and beyond even the most optimistic. With US GDP expected to contract by as much as 45%, the banks managed to make hay within unstable conditions, largely due to actions taken by the Federal Reserve and experience in dealing with potential credit losses from 2008 and 2009.

Bank earnings - with the notable exception of Wells Fargo - have generally surprised to the upside, with Goldman Sachs and JP Morgan Chase managing to navigate the rough waters with steady hands.

A week that easily could have blunted the ongoing rally has instead turned the market wildly positive. Leave it to Wall Street and the bankers that run the investment capitol of the world to put the bears back into hibernation. With less than an hour before the opening bell, stock futures have exploded higher. Dow futures are up 540 points.

At the Close, Tuesday, July 14, 2020:
Dow: 26,642.59, +556.79 (+2.13%)
NASDAQ: 10,488.58, +97.78 (+0.94%)
S&P 500: 3,197.52, +42.30 (+1.34%)
NYSE: 12,204.21, +189.51 (+1.58%)

JP Morgan Chase, Citigroup, Wells Fargo Release Second Quarter Results; Loan Loss Provisions Rise Significantly

Being that this week is going to prove to be one of the more significant periods of the ongoing economic storm, Money Daily plans to dispense with most of the rhetoric and focus on stocks as banks release second quarter earnings reports. The ramifications of bank earnings specifically in this quarter will likely be felt for years.

On Monday, the markets took a decided turn with an hour remaining in the trading session. Some have attributed the sudden reversal from positive to negative as a response to comments from OPEC on oil production levels while others blamed Dallas Fed President Robert Kaplan's remarks that mask wearing would lead to faster economic growth or the WHO's Tedros Adhanam saying that government's have sent mixed messages and the response has been inadequate to halt the spread of COVID-19.

How the virus proceeds, and what the incidence is, is going to be directly related to how fast we grow," Kaplan told Fox Business Network in an interview. "While monetary and fiscal policy have a key role to play, the primary economic policy from here is broad mask wearing and good execution of these health care protocols; if we do that well, we'll grow faster.

-- Dallas Fed president Robert Kaplan

The commentary from these diverse sources seemed to be very well-timed, like a chorus from Wagner's Götterdämmerung, signaling chaos and destruction on a massive scale. Whatever the matter, they provided cover for speculators to flee the scene in advance of Tuesday's expected tsunami of bad news, which starts with second quarter earnings from JP Morgan Chase.

J.P. Morgan Chase (JPM)

The nation's largest bank by assets, JP Morgan blew away analyst expectations, which were significantly lowered in response to the coronavirus impact. Adjusted revenue came in at $33.83 billion vs $30.4 billion expected. Adjusted earnings per share was $1.38 versus $1.05 per share expected, a 51% decline from a year ago as the bank made $4.7 billion net and set aside $8.9 billion in loan loss reserves for the quarter, anticipating massive credit losses due to the severe economic impact from the pandemic and government response.

Trading revenues were JPM's strong suit, with market revenue coming in at $9.7 billion, up 79% from a year ago. Revenue from fixed-income nearly doubled from last year's results, up 99% to $7.3 billion, while equity trading revenue rose 38% to $2.4 billion.

The firm suspended its share buyback program until at least the end of September on orders from the Federal Reserve. CEO Jamie Dimon stressed that the company would continue to pay out its dividend of 90 cents annually.

While Bloomberg and CNBC were gushing over the bank's "positive" results, drilling down into the data showed that JP Morgan Chase last money during the quarter in its Consumer and Community Banking (CCB) division, losing $176 million, compared with net income of $4.2 billion in the prior year. Net revenue was $12.2 billion, down 9%.

The company also lost money in commercial banking, dropping another $691 million. The provision for credit losses was $2.4 billion, driven by reserve builds across multiple sectors. Net charge-offs were $79 million,
up $64 million versus the prior year.

Adding it all up, JPM lost money on both sides of it banking business (consumer and commercial), but made up for it by having a blowout quarter trading stocks and bonds. Their loan loss provisions are probably too low and their gains in the market were driven almost exclusively by easy conditions and easier money from the Fed. If the company has a rough quarter in the markets and loan losses continue to pile on, JPM's "fortress balance sheet" will crumble like Chinese concrete.

The company press release and full financials can be found here. [PDF] Be sure to read the notes at the end, which describe some of the tortured "non-GAAP" metrics the firm deploys to persuade Wall Street and the investing public that all is well.

Following JP Morgan, which reported at 7:00 am ET, were Citigroup (C) and Wells Fargo (WFC) at 8:00 am ET. This is where it got a little more interesting.

Wells Fargo (WFC)

Wells Fargo, the bank in which Warren Buffet has a heavy investment, lost $2.69 billion in the second quarter compared to a profit of $5.85 billion in the same period last year. EPS was -$0.66 in Q2 vs. $1.30 in the same period last year. -Analysts projected -$0.20 per share.

Gross revenue was $17.84 billion in Q2 vs. $21.58 billion in the same period last year.

The bank set aside $8.4 billion in loan loss reserves. The Federal Reserve instructed Wells Fargo to cut its 51 cents per share dividend to 10 cents, or 2.5 cents per quarter.


Citigroup (C)

Citigroup reported a nearly 73% plunge in quarterly profit as the bank set aside $5.6 billion to cover potential loan and credit card defaults stemming from the coronavirus outbreak.

The New York-based bank reported a profit of $1.32 billion, or 50 cents per share, for the second quarter ended June 30, down from $4.8 billion, or $1.95 per share, a year earlier.

Revenues were actually higher, up five percent, to $19.77 billion.

Analysts on average had forecast $19.12 billion in revenue and earnings of 28 cents per share, so, on the surface, Citi looks like it beat the estimates, though the numbers were slashed early in the quarter by analysts.

Overall, the banks have now put over $50 billion into loan loss reserves, while some of the other big names, notably Bank of America, still have not yet reported. While the numbers may seem to be adequate to cover losses, it should be noted that many lenders have provisioned troubled borrowers with considerable forbearance on credit card, mortgage, auto, student and private loans.

With unemployment still very high and the effects of many Main Street businesses going broke having yet to be felt, if the crisis continues much longer, these banks may be facing more serious losses than anticipated. Of course, the Fed has all of them backstopped, thus averting a full-blown banking panic.

As the opening bell approaches, it appears that confidence is waning, with Dow, NASDAQ and S&P futures off considerably from levels prior to the bank earnings reports. The NASDAQ and S&P have fallenen into the red and Dow futures are barely positive.

More tomorrow...

At the Close, Monday, July 13, 2020:
Dow: 26,085.80, +10.50 (+0.04%)
NASDAQ: 10,390.84, -226.60 (-2.13%)
S&P 500: 3,155.22, -29.82 (-0.94%)
NYSE: 12,014.67, -60.91 (-0.50%)

WEEKEND WRAP: Banks To Report All Week As Second Quarter Earnings Season Gets Underway; Gold, Silver Soar

In what's become something of a recurring theme, stocks ramped ahead on Friday, sending the Dow and NYSE into positive territory for the week. As usual, the NASDAQ sent home the biggest gains, popping another four percent as the tech-heavy index scored record closing highs every day except Tuesday.

Large caps chopped ahead. The S&P put in it's ninth week of gains against six losers since hitting bottom in March. Weighed down by Walgreen's, the Dow managed to close positive, thanks to a big upside move on Friday. Ditto, the NYSE Composite Index, which remained the laggard among US equity indices.

Beyond the obvious love for all things tech, the bulk of the market was rather soft. Stocks are being led by a mere handful of companies, but it's been more than enough to almost fully erase the losses from earlier in the year and in the case of the NASDAQ itself, the erasure has been a clean sweep to record highs.

If there was a bit of edginess, it was hardly noticeable, and likely due to the oncoming rush of earnings reports from what figures to be a dismal second quarter, irreparably harmed by the coronavirus and government shutdowns across the nation and around the world. The condition is going to be frenetic come next week, as all of the major banking interests open their books to reveal the carnage from what is likely to be the worst quarter in American history.

Pepsico (PEP) will get things off to an effervescent start before the opening bell Monday, but financials take center stage after that. JP Morgan Chase (JPM), Wells Fargo (WFC) and Citi (C) all report prior to the open on Tuesday which should provide plenty of grist for the stock-churning mill. Wednesday morning has Goldman Sachs (GS), BNY Mellon (BK), and PNC Financial (PNC) reporting. Bank of America (BAC) and Morgan Stanley (MS) join the party Thursday morning and the week closes out with Blackrock (BLK), Citizens (CFG), First Horizon (FHN), Ally (ALLY) and Regions Financial (RF) all due to report prior to Friday's opening bell.

The shorthand approach is to see just how large are the loan loss reserves of the majors (JPM, BAC, WF, C, GS). They should be mammoth, considering the amounts of mortgages, credit cards, auto loans, personal loans and student loans went into forbearance during the quarter. If the set-asides are not shockingly large, the banks are either lying or overly optimistic about a quick recovery, but that too is unlikely, so expectations are set for some truly horrific numbers.

No matter what they bring to the table, individual bank stocks may get an initial whack, but the general market is very likely to continue higher, as has been the case since the March bottoms, defying the laws of commerce, physics, gravity, and common sense all at the same time. At this point, while a serious downdraft would be the primary expectation, a bouncy week ending positive could happen. Nothing would surprise anybody.

The story for oil is pretty simple. With benchmark WTI crude stuck at $40 a barrel, everybody is happy. Sheiks, Russians, shale drillers (maybe not so much, but an improvement over recent weeks), company executives, pipeline workers, and even car drivers are sated with gas at the pump bouncing around $2.00 a gallon ($2.19 according to AAA), highest in the West, cheapest in the South.

Treasuries rallied through the week, especially on the long end where the 30-year yield dropped 10 basis points, to 1.33% on Friday. The ten-year was as high as 0.69% and as low as 0.62%, finding the sweet spot Friday at 0.65%. Shorter maturities, through to 3-years are all yielding less than 0.20%, the one-month dropping down to 0.10% by week's end, the lowest since the end of May.

Precious metals had a banner week, with gold cresting over $1800 an ounce and silver smashing through $19. Premiums persist despite shortages easing on most products.

The US Mint is charging $27.65 for random date silver Eagles while some 2020 varieties are much higher and back ordered for three weeks.

For physical, eBay remains the most vibrant market and trustworthy price indicator. Here are the most recent prices on selected items (shipping included):

Item: Low / High / Average / Median
1 oz silver coin: 24.50 / 43.98 / 33.05 / 32.48
1 oz silver bar: 23.50 / 42.95 / 30.56 / 29.90
1 oz gold coin: 1,892.54 / 1,995.95 / 1,917.91 / 1,914.41
1 oz gold bar: 1,800.00 / 1,917.20 / 1,878.18 / 1,881.80

Stay liquid and hydrated. Most of the US is going to be under an oppressive heat dome all week with record-breaking temperatures predicted for the Southwest and East coast.

At the Close, Friday, June 10, 2020:
Dow: 26,075.30, +369.21 (+1.44%)
NASDAQ: 10,617.44, +69.69 (+0.66%)
S&P 500: 3,185.04, +32.99 (+1.05%)
NYSE: 12,075.58, +146.95 (+1.23%)

For the Week:
Dow: +247.94 (+0.96%)
NASDAQ: +409.81 (+4.01%)
S&P 500: +55.03 (+1.76%)
NYSE: +84.06 (+0.70%)

Teetering On The Brink: US, Global Economies Reeling From Virus, Lockdowns; Bank Earnings Next Week

It didn't have to be this way. Apparently, imploding the US and global economy was part of somebody's plan, though nobody is exactly sure whose.

Expressing discontent and lacking in funds are millions of US consumers, who cut their borrowing by $18 billion in May, according to the Federal Reserve, that bastion of freedom and fairness in all economic activity.

May marked the third consecutive month of reduced borrowing by consumers, coinciding with the outbreak of the coronavirus and the imposition of lockdowns and stay-at-home orders throughout the world and in most US states. After falling 4.5% in March borrowing cratered by 20.1% in April, the largest one-month percentage decline since 1945.

Credit card use fell $24.3 billion in May following April's record $58.2 billion collapse, a result of the purposeful downsizing of the US economy. With stores closed, businesses shut down and many without jobs, borrowing money to pay for mundane items was pretty much out of the question. Spending on vacations, dining out, just about any travel-related expense was off the board for most US consumers. Most people were forced to stay home or very close to it. Those with kids out of school were spending more time reacquainting themselves than luxuriating in the outside world.

On top of the virus-related issues comes the rationalization that many folks were simply shut out of credit card use. Banks closed or limited a massive number of credit card accounts during the corona-crisis, a trend that's more than likely to accelerate as layoffs and furloughs morph into permanent job losses.

The US economy is collapsing, and with it the currency. If credit continues to be slashed, the Fed is going to get mighty upset about it and probably demand that banks open the spigots to allow more lending to people who are broke or nearly bankrupt. Because of the CARES Act, which pumped some trillions of dollars into the US economy, the full effect of the corona-lockdowns and incredible unemployment have yet to be felt, but that's coming. Enhanced unemployment benefits via the act are due to run dry by the end of July. Unless congress agrees to put up another round of checks to Americans and extend enhanced unemployment, there's going to be some monstrous pain in the body politic.

Because of these projections, perhaps the image of who exactly wanted the economy to implode becomes a little clearer. It's one with the face of Nancy Pelosi, the torso of congressman Jerrold Nadler, the attitude of Mitch McConnell, overall a grotesque figure with a multiple of purposes, getting rid of President Trump chief among them.

To think that elected officials wouldn't lie about the virus, their political leanings, the state of the union, their personal fortunes is to be overtly naive. Politicians wake up in the morning lying about everything and go to bed doing the same. None of them can be trusted to do anything they say they will do, especially with elections less than four months hence, as is currently the condition.

With the latest media-driven barrage of corona-fear, politicians are looking to renew or at least revamp business shutdowns and limit the movements of people, effectively shrinking the economy a little bit more in the run-up to election day because it's all about getting elected, or, as is the case of most of the most heinous among them, re-elected.

Politicians have a high degree of control over the people in America, and it's probably worse in other countries. US politicians have been flexing their unconstitutional muscles for months now, but what's coming from them over the next few months could be even more startling, mind-bending, and autocratic.

As it is already, the economy is a basket case, and the miscreants in DC have plans to make the November elections the most confusing and confounding ever, with mail-in balloting in many states already in the works, ramping up the fear of close contact at polling places has taken on new and alarming anti-democratic dimensions.

With America on the brink of wholesale economic collapse, the rhetoric and spasmodic jerking will intensify next week as the nation's biggest banking interests report second quarter revenue and earnings. If there any doubt that the banks will show up with very distressing news in the coming week, one has to look past credit card use and consider the lost revenue from forbearances on everything from car loans to credit cards to home mortgages that the banks have tossed out to consumers in light of the coronavirus circus. Millions of Americans were not paying on loans, cards, mortgages and other bills over the past three months and that's got to show up on the balance sheets of Bank of America, JP Morgan Chase, Citigroup, and Wells Fargo.

The panic caused by bank numbers in the toilet should be magnificent. Under normal circumstances, the revealing of massive loan loss reserves alone would cause a stock market crash, but these are not normal circumstances. The Fed will be there to protect investors, supposedly, averting a downswing similar to what occurred in March.

Or will they? If the narrative is supposed to be frightening to everybody involved, wouldn't a market crash based on actual business lost by banks and a threat to the entire financial system be in order?

First clues have already been revealed with this week's trading. While the NASDAQ is having another banner week (up more than 3% through Thursday) stocks are marginally lower for the week, led by the Dow Jones Transportation Index. If Friday doesn't end positive for stocks, the carnage coming from bank earnings next week might prove to be a bit unsettling.

At the Close, Thursday, July 9, 2020:
Dow: 25,706.09, -361.19 (-1.39%)
NASDAQ: 10,547.75, +55.25 (+0.53%)
S&P 500: 3,152.05, -17.89 (-0.56%)
NYSE: 11,928.63, -157.76 (-1.31%)