By MICHAEL GRAY

So Vikram Pandit pulls off the weekly trifecta on bank earnings and perhaps saves his job for another quarter.

All three of this week’s earning’s reports –– Goldman Sachs, JPM Chase and Citi –– showed tremendous profits coming from their investment and trading accounts. Part of the answer could be AIG and the favorable terms all banks received from the unwinding of credit default swaps with AIG.

Another aspect for Goldman –– in particular –– was that losses in Dec. were not included in any quarterly filing because of a change it its accounting. Goldman’s last quarterly statement ended in Nov. This new report is from Jan-Mar.

So December’s huge losses are a footnote in the latest report, but not figurered into the statement. Those losses go into a black hole.

On the trading desks these banks have to be leveraging up the risk again. There is little else to explain the returns.

According to some, Citi is making huge profits on its own CDSs and other derivatives that are insurance against Citi defaulting. How bazaar that a bank would profit from a hedge on its own demise?

I guess these are the times we live in.

Not quite sure, but I believe the market is way over bought at these levels and will see a pullback next week. These phantom bank earnings cannot hold up these levels with all other data showing a “slowing” of bad news, or a “softening of second derivative data” which is con man speak.

How long can the market hang it hat on only 602,000 weekly unemployment claims? And when will someone wake up and say: How can we be in the sweet spot of no inflation or deflation is occurring right now.

These numbers are so cooked they are well done and would taste like shoe leather, if they were a steak.
For more on Wall and Washington and the cratering economy see: http://mgray12.wordpress.com