More Swings On The Street And No One Blinks

The markets have stabilized as bank stocks have stabilized.

Of some help is PNC , which is generating a few raised eyebrows on trading desks. Recall they dropped 41 percent yesterday and is up 21 percent today (no one even blinks at these price swings any more).

They said:

1) They don't expect to ask for more TARP money (they have already received $7.6 billion);

2) They don't expect to issue additional common shares; and

3) They expect to pay their full dividend of $0.66 (Lawrence Summers' letters be damned!).

The talk is that this is the start of a trend: that any bank that has anywhere near a decent capital position will turn down TARP money in the future.

The problem is that the Street believes most banks (including PNC) will have to raise more capital and will be forced to cut their dividends, regardless of what they say at this moment.

PNC also announced it expects to report a loss for Q4 due to integration costs associated with the National City acquisition, but excluding that they are expecting to report a meaningful profit but still below company expectations.

This sounds like good news, but the bottom line is that credit quality trends are continuing to deteriorate.



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