Harry and Tom

It is heartwarming, as a citizen of the world and a taxpayer of the United States, to see that another of our beleaguered financial institutions has apparently righted the ship after the recent travails of the industry. Having received access to government guaranteed funding, central bank asset purchases, and a capital top-up from the public purse, JP Morgan, like Goldman before them, beat consensus earnings expectations and declared its participation in the TARP to be a "scarlet letter" which it would be happy to be shot of.

We'll leave aside the issue that Q1's robust performance, if repeated for the next three quarters, would have JPM earning $1.60 this year- and thus trading on a P/E of more than 20, which hardly seems to be compelling value. No, the real question is how much would the Goldmans and the JPMs and the Wells Fargos be earning if they had to raise the money themselves, didn't have the Federales trying to polish their turds, etc. One can only hope that if the TARP funds are paid back, all of the special benefits these guys have enjoyed are also summarily withdrawn; access to the Fed programs, the FDIC guarantees, etc. Hey, there's nothing wrong with these guys wanting to stand on their own; but if they do, then they shouldn't expect to see dime one of help from John Q. Taxpayer.

One institution that seems, ahem, less likely to pay back the TARP funds is Citigroup, which reports earnings today. Unlike many others, the once-mighty C is not expected to announce a profit, though in fairness consensus looks for the smallest quarterly loss since Chuck Prince was ejected from the dance floor.

While Macro Man is trying very hard to check his biases at the door, markets do seem to be reaching a potential turning point. A lot of recent trends look to be reaching potential exhaustion points. Consider "Harry", below, which had a nice rally in mid-March, but has subsequently put in a sequence of lower highs and lower lows. It recently broke a little support line and is threatening the 55-day mocing average, a break of which would get the momentum crowd piling in to sell.

Harry is EUR/USD (times Macro Man's age.)

Or consider Tom. He's had an excellent 35% rally over the past six or seven weeks, breaking through a number of moving averages. Yet he's had quite a sharp pullback today and is now sitting bang on his uptrendline. Given the severity of that slope, should it break, there could be quite a bit of juice on the downside. Of course, he could be worth a cheeky purchase with a stop just below the trendline. But given that he's at the top of his Bollinger bands and his RSIs are rolling over, Macro Man is not tempted.

Tom is the Taiwan Stock Exchange Index (divided by e.)

His bearish worldview notwithstanding, Macro Man has actually made small money in equities over the last few weeks- his pain has come in other markets.

There does appear to be a slightly louder drumbeat of negativity from a number of sources- certainly the results from the recent sentiment poll were pretty skewed to the ursine. Now, that could man that the bearish money is now ready to return to the market....or it could mean that the shorts are already engaged and the pain trade remains to the upside.

So if readers will indulge him, Macro Man would like to follow up the sentiment poll with one on positioning. Those who responded to the prior poll (all 653 of you) are particularly requested to participate, to generate some kind of like-for-like comparison. Results are here.