Hussman’s commentary this week piggyback’s on last week’s column in that value of what assets are claimed to be contrasts to what assets are worth. Recent earnings releases from JPM and BAC are his targeted examples.
…”favorable” earnings reported by J.P. Morgan and Bank of America in the first quarter were due to reduced provisions for credit losses – charges that are largely discretionary. ..the provision for credit losses [was] lower than it was a year ago (when delinquency rates and credit losses were running at a fraction of current levels)…
delinquencies, foreclosures, non-performing loans, commercial mortgage strains, and actual charge-offs reported by various sources have been either unchanged or accelerating…. provisions for credit losses are again falling short of net charge-offs, which is what we saw in 2008 before banks got into trouble.
http://www.hussmanfunds.com/wmc/wmc100419.htm
