This time last year, the great financial white hope was that, going into 2011, a "recovery summer" would expand into a recovery for all seasons, and that the engine for growth -- the U.S. banking sector -- would get a complete overhaul (and maybe a turbo).
So, has said hope become a reality? According to some experts, the scales officially tipped in favor of YES on June 30. That day, bankzilla BOA (Bank of America) put an end to the guesswork and finally revealed exactly how many jellybeans were in their jar of soured mortgage-backed securities: $8.5 billion worth.
That act of assigning a real number to the abstract concept of dire straits was a huge step in the direction toward resolving said debt. On this, a June 30 Wall Street Journal wrote: "Bank of America's settlement is the beginning of the end of the mortgage troubles... [We] can see a light at the end of the tunnel."
Bolstering that view was a fresh July 14 new report on higher-than-expected second-quarter earnings from JP Morgan Chase and Co. (See: "JPM Results a Solid Start for Banking," from MarketWatch.)
But before you join the financial media in their collective sigh of relief, let me point out that in the May 2011 Elliott Wave Financial Forecast, EWI analysts presented the following chart of the DJIA versus two key financial indexes: the KBW Bank Index and EWI’s own Poolers Index, comprised of the top 4 leading investment firms:
Since May, both indexes have continued to decline.
So, you need only ask yourself: Have the banks really returned to solid ground?