It is getting crazy out there. Most of the trading days so far this year have had at least a 200 point swing on the Dow during the day. Traders are scrambling to react to each and every bit of news that comes out and with the ECB meeting, Greek elections. Central Bank currency wars, the Fed meeting and of course earnings season there has been plenty of which to react.

The Fed was generally positive on the economy in this weeks report saying “On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow.”

The key line for traders and investors was “Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.” There is growing crowd of observers that think that weakness form Europe will spill l over to the US and we could see drastic job losses from the energy industry that could make it pretty much impossible for the Central bank to raise rates in 2015.

Earnings are not exactly starting off with a bang as there have been pockets of weakness from big companies like McDonalds (MCD), Microsoft MSFT, Proctor and Gamble and other have had poor results. Facebook (FB) had a strong report (although in all honesty non GAAP earnings were twice GAAP earnings management ignored things like amortization of good will and the almost $1 billion in share based compensation in the quarter when they talked up non-GAAP earnings. Apple (AAPL) and NetFlix (NFLX also had solid quarters. I hate to say it (but I will. I am kinda mouthy sometimes) but the emerging pattern of earnings season reflects a population that has a lot of times on its hands, possibly due to the high levels of part time employment, that is not doing very much productive and is sitting at home watching ,movies and checking Facebook on their iPhone. I am just not convinced that an economy based on entertainment products and texting is a solid plan for the future.

We have a long way this earnings season to go but I am still seeing revenue weakness and a lot of buybacks and other financial engineering techniques to keep earnings and stock prices inflated. Earnings are not a disaster but I have to stop short of calling what we have seen so are a rousing success. I have my list to almost cheap enough stocks on my desk and am hoping for shortfalls that create some safe and cheap bargains for long term accumulation.

There is one group that is exceeding expectations and hosing fantastic fourth quarter results. Of course no one is really noticing because only a handful of us track the sector but all month I have been seeing headlines like this:

XXX First Bancshares Corp. Reports Record 2014 Financial Results

XXXX Capital Bancorp Reports Record Profitability -- Cash Dividend Declared

XXXX Bancorp, Inc. Reports Increased Earnings for Fourth Quarter 2014

XXXX Financial Earnings Increase 35% in 2014

XXX Bancorp EPS Increases

XXXX Bancorp, Inc. Reports 25% Increase in Quarterly Diluted Earnings per Share

The little banks are seeing the benefits of improved credit and better but not really good economy. I am seeing huge earnings increases, buybacks below book value that are very beneficial to s as shareholders, and dividend increases. The big regionals are looking for growth in 2015 and they are gong to be buying these community banks at an accelerated pace in 2015.

The other day I put together short video titled Explanation, Opportunity and Offer that explains why you should subscribe to the Gold level Banking on Profits service and made you a special offer to become a member . A lot of you watched it and took advantage of the offer I made you but comparing the list to folks who get this Thursday missive and the number who viewed the video a bunch you didn’t take the 20 minutes to watch it. I am not one to use hyperbole or make grandiose statements but if you are a member of the gold level weekly Banking on Profits Service it is worth your while to take 20 minutes. It could help you make a lot of money over your investing career. If you are not already a member Click here to watch the video and learn more about the Trade of the Decade in community banks

Have a great week everyone!

Tim

If you are in Orlando area for the money show next week I should be around a of and on during the show. Drop me a note and lets grab a drink or coffee

You know why I buy community banks? Because https://www.youtube.com/watch?v=FOXFG4YoSVM