NEW YORK (TheStreet) -- The media can wear you down to a little nub with their contradictory impulses on bank earnings. Too bad it's so important to get it right when it comes to JPMorgan (JPM) and Wells Fargo (WFC) -- but here's what we were (mis)treated to:
The New York Times (NYT) said in a headline: "Solid Results at 2 Banks Bode Well for the Industry." Got that? The collective earnings of JPMorgan and Wells Fargo (reported on Friday) were so good that traders should be instantly transformed into Good Time Charlies.
Meanwhile, The Wall Street Journal pointed us in an entirely different direction in their headline: "Bank Earnings Worry Investors."Who is right? The New York Times focused on revenue growth compared to expectations, terming it, "a surprise that could bode well for the rest of the industry and the broader economy." But revenues, like beauty, run only skin deep. Nearly every time a justification is built around revenues, you can rest assured that the underlying reality is more complex. The Journal got right to the crux of the complexity: "Although earnings at both banks exceeded Wall Street estimates, that was largely because both are scaling back the amount of money they have set aside to cover future losses." This reserve money shift, of course, is shortsighted and wholly lacking is substance or sustainability. The Times, though, merely mentions it in passing, while separately noting that traders reacted poorly to these supposedly happy-go-lucky earnings due to "concerns that the first-quarter gains may be fleeting and over the European debt crisis." Why might they be fleeting? The Times doesn't say; the Journal, with its sight properly trained beyond the revenue count and on reserve games, clearly does. It's an essential distinction, especially with everyone from Goldman Sachs (GS) to Bank of America (BAC) and Citigroup (C) reporting this week.
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