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This earnings season has shown this quarter's research to be quite accurate. I am still bearish on the market, and the weak earnings performance coupled with the still elevated equity prices and valuations make me even more suspect. The last time this happened to this extent (well, not quite to this extent) was right before the crash. As a quick recap for the past week.

Wells Fargo, right on point, nearly to the "T":

Caterpillar, very, very close to perfection. I also believe we have caught CAT in a shenanigan or two, which I will post on later:

GS, results are on point, valuation is through the sky as I have anticipated.

And just this morning, Starwoods, whose actionable intelligence item I posted very recently: Starwood Hotels (HOT) Intelligence Note_072009 -  Starwood Hotels (HOT) Intelligence Note_072009 - 2009-07-22 03:45:18 927.84 Kb. From

Starwood Hotels & Resorts Worldwide Inc.'s second-quarter earnings rose 28% on a tax benefit as world-wide revenue per available room slid sharply. Exactly as we predicted!

The hotelier also cut its 2009 earnings estimate again, this time to 65 cents a share from its prior view of $1.10. Analysts' surveyed by Thomson Reuters recently anticipated a smaller cut to 76 cents.

For the third quarter, Starwood projected earnings of 6 cents to 10 cents a share, far below analysts' estimate of 21 cents.

The weak economy has squeezed the hotel industry for some time, with timeshare businesses also under pressure. The outlook for 2009 is grim, despite efforts by hoteliers to cut costs. Hoteliers and cruise lines have offered discounts and promotions in an effort to boost slumping sales, with Starwood earlier this month offering one of the bigger ones, featuring rate cuts of up to half at nearly 600 of its global locations.

The operator of the W Hotels, Westin, St. Regis and Sheraton hotel brands reported a profit of $134 million, or 74 cents a share, up from $105 million, or 56 cents a share, a year earlier. Excluding items such as the 50-cent tax benefit, earnings slid to 22 cents from 56 cents. Starwood in April projected 14 cents to 20 cents, below analysts' views at the time. Starwood has a history of sandbagging, which analysist should be used to by now.

Revenue decreased 23% to $1.21 billion. Analysts polled by Thomson Reuters most recently were looking for $1.19 billion.

Key hotel metric revpar, or revenue per available room, fell 25% in North America and 30% internationally.

President and Chief Executive Frits van Paasschen said the company's focus on cost cutting and long-term growth strategy boosted results, despite an estimated $10 million impact from the swine flu. He noted Starwood raised nearly $1 billion to help reduce its debt in the period.

At its timeshare business, revenue from vacation ownership fell 35% and residential sales dropped 47% amid average prices that fell 24% and weak demand.

This company is in a bad way, yet had been thoroughly rewarded today for playing sandbagging games. Things are bad and are getting worse for this company, and they have clearly admitted it, yet they are able to ride beta higher.

PNC was the trainwreck that we all saw coming, several times over:

The problems that PNC, WFC, JPM, and Citi have are real, are long lasting, and have yet to be mitigated. The green shoots theorists and blinded bulls are literally gambling with their monies. Unfortunately, this is a very difficult time to make money, for rampant bullish buying is being rewarded more than actually counting assets and earnings. Every time this has happened that I know of, it presaged a market crash.


PNC Financial Services Group Inc. (NYSE:PNC), Pittsburgh's largest bank, on Thursday reported a second quarter profit of $65 million, or 14 cents per share, down sharply from $505 million, or $1.45 per share, in the year-ago quarter.

Revenue was up from the year-ago quarter, to $399 billion, compared with $204 billion. The latest quarterly figures, however, include the impact of National City, which PNC acquired in December 2008, while the year-ago figures do not.

PNC's bottom line is still being affected by its Dec. 31 acquisition of National City Corp; its credit-loss provisions were $1.09 billion, mostly due to National City.

"Our businesses performed well in the second quarter given the extremely challenging economic environment. We increased our loan loss reserves again this quarter as credit quality deteriorated with the broader economy," CEO James Rohr said in a prepared statement.

Analysts surveyed by Thomson Reuters estimated that PNC’s (NYSE:PNC) second quarter 2009 earnings will range between 20 cents and 82 cents for an average of 45 cents per share. I warned everyone. As a matter of fact, PNC is no where near out of the woods! They are in trouble for they purchased a toxic mess with taxpayer funds.

... In late May, PNC raised $624 million through the sale of 15 million shares of common stock to increase its common equity. PNC was among the nation’s 19 largest bank holding companies tested by the government to see if they were adequately capitalized to withstand worst case scenarios in a prolonged severe recession. Ten were directed to raise capital, including PNC, which was told it needed an additional $600 million. It was the smallest amount assigned to the tested banks, and the only one less than $1 billion.