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Bank Earnings Preview

Friday, 9 Apr 2010 | 5:48 PM ET

They say the rally can’t sustain without the financials. Well, we hear from some of the nation's biggest banks next week. What should you expect and how should you trade?

The Expectations

You might call this the show-me-the-money quarter for banks with Wall Street looking for signs that banks are actually making money, rather than losing less.

JPMorgan is expected to report earnings of 65 cents per share against 40 cents a year earlier and is widely seen as the strongest of the four biggest U.S. banks, having weathered the financial crisis better than most.

Early Returns
The best plays ahead of earnings.

Wells Fargo is projected to report 41 cents per share, compared with 56 cents a year ago, according to analyst surveys by Thomson Reuters I/B/E/S.

On the rockier side of things are the two biggest bailout recipients among the top banks:

Bank of America is projected to report earnings of 8 cents per share, down from 44 cents a year earlier, and Citigroup is seen breaking even after losing 18 cents a share a year ago.

What’s the trade?

Watch what the banks say about delinquencies and non-performing loans, counsels Brian Kelly. If they come in better and you’re a risk taker look at Fannie Mae or Freddie Mac, says Brian Kelly.

Citigroup and Bank of America "still look relatively less expensive," says Michael Holland, chairman of Holland & Co, a money management firm. "You still have some undervaluation."

It's worth noting, earlier in the week Wells Fargo raised large-cap U.S. banks by a notch to "market weight," citing positive economic data and more clarity on asset-quality trends. Wells picked BofA and PNC as best positioned to benefit from an investor focus on normalized earnings.




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Trader disclosure: On April 9, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (HES), (TER), (AXP), (YHOO), (APA),; Terranova Is Short (LCC), (XLY); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM): Finerman's Firm Is Long S&P Puts: Finerman Owns (AAPL), (USO); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC) Preferred, (BAC), (BAC) Calls; Finerman's Firm Owns (CASY); Finerman's Firm And Finerman Own (JPM); Finerman's Firm And Finerman Own (BBY); Finerman's Firm And Finerman Own (WFC) Preferred; Grasso Owns (LPX), (ASTM), (ABK), (AAPL), (BAC), (BGP), (C), (CVGI), (COST), (JPM), (NEM), (PRST), (WMT), (PFE), (BA), (T); Iuorio Owns (AAPL), (WMT), (FXA), (FXC); Iuorio Owns (SPY) Calls; Iuorio Owns (QQQQ) Calls; Iuorio Owns (USO) Puts; Iuorio Owns (GLD), (GLD) calls; Iuorio Owns (FXE) Puts; Jon Najarian Owns (PALM); Jon Najarian Owns (JPM) Preferred; Jon Najarian Owns (GOOG) Put Spreads, Owns (AAPL) Call Spreads; Kelly Owns (NBG), (FRE); Karabell Owns (FCX); Seymour Owns (AAPL), (AA), (BAC), (BP), (INTC), (MSFT)

For Tim Seymour
Seygem Asset Management Owns (POT)

For JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLI)

For Steve Grasso
Stuart Frankel And Its Partners Own (LPX)
Stuart Frankel And Its Partners Own (CUBA)
Stuart Frankel And Its Partners Own (CVGI)
Stuart Frankel And Its Partners Own (GERN)
Stuart Frankel And Its Partners Own (HSPO)
Stuart Frankel And Its Partners Own (MERC)
Stuart Frankel And Its Partners Own (NWS.A)
Stuart Frankel And Its Partners Own (NXST)
Stuart Frankel And Its Partners Own (NYX)
Stuart Frankel And Its Partners Own (PDE)
Stuart Frankel And Its Partners Own (PFE)
Stuart Frankel And Its Partners Own (PRST)
Stuart Frankel And Its Partners Own (RDC)
Stuart Frankel And Its Partners Own (TLM)
Stuart Frankel And Its Partners Own (XRX)
Stuart Frankel And Its Partners Own (SDS)
Stuart Frankel And Its Partners Are Short (QQQQ)
Stuart Frankel And Its Partners Are Short (CL)
Stuart Frankel And Its Partners Are Short (AAPL)

For Brian Kelly
Kanundrum Capital Owns (MS)
Kanundrum Capital Owns (FRE)
Kanundrum Capital Owns (FNM)
Kanundrum Capital Owns (VMC)
Kanundrum Capital Owns (POT)
Kanundrum Capital Owns (GOOG)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Is Long Dollar
Kanundrum Capital Is Long Treasuries
Kanundrum Capital Is Short Euro
Kanundrum Capital Is Short Yen
Kanundrum Capital Is Short Franc


CNBC.com with wires

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