July 13th, 2009
Earnings week is upon us. My gut is that banks with strong mortgage divisions will report earnings ahead of Street expectations due to strong loan origination channels. The good news for investors is that lenders have been originating mortgages at industry-low costs and they have never been more careful on credit quality. The mortgage division once again is becoming a feather in the cap of many banks that without it would not be reporting a very good quarter! Diversity is once again so important with banking as the ebb and flow of momentum takes place in the market.

But for now I am treating these industry earnings as a spike rather than a trend, as they reflect expedient action rather than fundamental evolution in the way the industry operates.