Billionaire investor George Soros said yesterday (Monday) that the U.S. recovery would be a slow one because of all the “basically bankrupt” financial companies impeding it.

U.S. Federal Reserve Chairman Ben S. Bernanke and Congress agreed Friday that the financial system – not the American taxpayer – should bear the costs of bank bailouts. Sheila Bair, head of the Federal Deposit Insurance Corp. (FDIC), wants the banks to ante up $45 billion – three years’ worth of deposit-insurance premiums – to bail out the fund that insures bank deposits.

When it comes to bank stocks, we all know that there were a number of Money Morning readers shrewd enough to buy Citigroup Inc. (NYSE: C) shares when the foundering giant’s stock price was below $1 a share.

If you’re one of those investors, good for you: With Citi’s shares now trading at nearly $4.70 a share,

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Big Moves For Bank Stocks

by Ryan Cole, Investment U Research Team

I’m sure by now, you’ve heard that September is the worst month for stocks.

October gets the press, with its biggest, single-day calamities, but September still stands as the clear Biggest Loser. And mark my words: That matters.

Simply put, this September is shaping up like a bloodbath:

Sentiment has been extremely bullish in the lead-up, even in the face of bad stats. Yet when good stats come out, the markets remain flat. We’ve already seen a few sharp down days. Insider selling stayed extremely high in this month’s run-up. And the savviest contrarian investors have warned us about overbought conditions for a couple months now.

If 2 + 2 = 4, Then The FDIC Is Broke

But that’s not the worst of it. This is… 416. That’s the number of “bad” banks – banks on the FDIC’s “troubled

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In the last 18 months, Strategic Short Report readers had the chance to make 432% when Lehman failed, 162% when Allied Capital (NYSE:ALD) came clean, and 220% on PNC Financial (NYSE:PNC)… This month my subscribers are poised to make money on the next bank drop.

And I’m going to give you a chance to join them.

If you think Canada escaped the downward trend in U.S. banking, think again. While the country may not have plunged headfirst into subprime mortgages, it did dip heavily into risky derivatives. The leverage it took on generated impressive returns on equity in good times, but that same leverage is set to wipe out equity today.

Shareholders in one “safe” Canadian bank will have to rethink their loyalty. Its looming solvency crisis practically guarantees a dividend cut. And that’s our catalyst for this month’s short play action - offering us a chance for 200% profit potential.

Accounting

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U.S. stocks rose to their highest levels since November as upbeat reports on construction and strong bank profits spurred hopes that the global economy is gaining strength.  Investors found new reason to put money into stocks, pushing all major averages up at least 1%.  The broader S&P 500 breached the 1,000 level for the first time since November 5.  Helping sentiments further was Chinese manufacturing data that jumped to its highest level in a year.   

Premarket futures suggest stocks are likely to fall as profit taking emerges.  Dow Jones industrial average futures are down 46 to 9,202. Standard & Poor's 500 index futures are down 6 points to 994, while Nasdaq 100 index futures are down 10 points to 1,616.

On Monday, the DJIA rose 115 points, or 1.3%, to close at a nine-month high of 9286.  The index is up 42% from its twelve-year lows hit on March

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[Editor's Note: After more than a year of chaos and controversy, some of the leading U.S. banks saw their stock prices soar during the second quarter. As part of its mid-year forecast series, Money Morning examines the outlook for U.S. banks for the rest of this year. To see earlier stories from our mid-year forecast series, please click here.] By Martin Hutchinson Contributing Editor Money Morning

Can U.S. bank stocks continue their winning streak?

In February, I analyzed the top 12 U.S. banks to determine whether they really needed $1.5 trillion in taxpayer-provided bailout capital. I concluded that only a few of those banks seemed to be in any danger of collapse, and actually recommended several.

Policymakers and the market later came to agree with me: The Standard & Poor’s 500 Financial Index has more than doubled from its March low and several bank stocks have posted triple-digit …

Economist sees a floor for financial stocks thanks to a reversal in bonds. He also says nonfinancial profits are better than many think.

 

David Morris is chief executive of London-based Global Wealth Allocation Ltd., an asset management and research firm with around $3 billion in assets under management. He began his career by serving in economic development for the Canadian government in East Africa. In 1980, he took over as treasury manager for Xerox's Canadian operations. Then, six years later, he became treasurer for Campbell Soup in Canada. Morris later started a pension consultancy business. In 1992, he founded GWA.

Morris is probably best known for developing a series of 20 indexes that are sold worldwide in partnership with the FTSE Group. The benchmarks, which were created in 1996, are "wealth-weighted." GWA takes standard FTSE indexes and weights components based on three

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David Morris, developer of the GWA indexes, also says nonfinancial profits are better than many people think.

 

David Morris is chief executive of London-based Global Wealth Allocation Ltd., an asset management and research firm with around $3 billion in assets under management. He began his career by serving in economic development for the Canadian government in East Africa. In 1980, he took over as treasury manager for Xerox's Canadian operations. Then, six years later, he became treasurer for Campbell Soup in Canada. Morris later started a pension consultancy business. In 1992, he founded GWA.

Morris is probably best known for developing a series of 20 indexes that are sold worldwide in partnership with the FTSE Group. The benchmarks, which were created in 1996, are "wealth-weighted." GWA takes standard FTSE indexes and weights components based on three valuation measures: net profit, cash flow and book value.

IndexUniverse's Murray Coleman recently caught up

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Trillions of taxpayer dollars spent and in return promises, hopes and more have filled the airwaves from presidential speeches, preliminary questionable economic data and a media that has called the official bottom to the stock market. The markets now sits up 25-30% in the last 6 weeks. All seems to be returning to normal or at least that is what those in the upper levels of government hope you think. The wool can only be pulled over the markets eyes for so long. Changing accounting rules to hide losses, pumping trillions of dollars into banks and financial institutions to re-inflate the credit bubble has a small chance if any at succeeding.

Let’s take a look at some of the recent data that has been swept under the rug while bank profits took the forefront. After an impressive drop in foreclosures in …

It was the bank reports of good earnings (albeit much of a one-time nature and based on yield spreads that cannot go on forever) that started and continued to fuel this rally.  But how valuable are questionable improvements in earnings at the same time that shareholder dilution is around the corner, as this article would lead one to imagine:

April 20, 2009 (Reuters) Obama administration officials have determined they can avoid asking Congress for more bank bailout funds by converting existing loans to the largest U.S. banks into common stock, The New York Times reported on Sunday.

… Converting the loans to the 19 biggest U.S. banks into common shares would turn the government aid into available capital and give the government a large equity stake in return, the newspaper said.

Some critics would consider the option a back door to nationalization since the government could become the largest shareholder in several

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By Michael McKee and Matthew Benjamin

April 17 (Bloomberg) — The Obama administration’s bank- rescue efforts will probably fail because the programs have been designed to help Wall Street rather than create a viable financial system, Nobel Prize-winning economist Joseph Stiglitz said.

“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.

“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and

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