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It Doesn't Get Much Better For Banks

The problem for financials: the best have already reported. It's simple: Goldman Sachs and JP Morgan have reported, it doesn’t get any better than that. They are the highest quality companies. From here, the news will likely be tougher.

In the next few weeks, we will be hearing from regional banks, and there will be lots more concern over commercial real estate losses.

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Tomorrow, we also get Bank of America, with its significant exposure to the consumer and mortgages. A little nervousness about this one.

Elsewhere, credit card delinquenciescontinue to rise, for the most part.

American Express the last of the big card companies to report credit card delinquency trends for September.

The news for them was good: delinquencies (30 days or more late) were 4.1 percent, the same as August.

But that is not the trend: delinquencies are increasing at the other major companies.

The hope of the bulls was that delinquencies would slowly be dropping by now.

But look at these delinquency numbers for September:

Capital One: 5.38 percent, UP from 5.09 percent in August.

Bank of America : 7.53 percent, UP from 7.47 percent in August

Discover : 5.57 percent, UP from 5.38 percent in August

All up. That wasn't supposed to happen. Delinquencies are an early warning sign, and there's a close correlation between delinquencies and net charge-offs (money the banks think they will never recover).

Card companies are getting squeezed from both sides:

1) receivables are going lower because the consumer is not using their cards as much, and card companies are tightening credit.

2) losses are still large.

So how do you make money? It's tough. Bottom line: job losses and stresses on consumer budgets still hurting credit card companies.

Remember, these card companies are also dealing with consumer protection legislation that will hurt their income.

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