Three Top Picks from Options Expert Bryan Bottarelli

*****I received a very topical question from a Daily Profit reader … 
Do you think that Obama is a legitimate "for the ordinary people" real deal, or is he just another cleverly marketed pretty face representing the interests of the ruling class? If you prefer call them the rich, the wealthy, the owners, the bosses … whatever works for you. In the end they are the same people. I deliberately did not label them as capitalists because I believe that they are corrupt capitalists, scamming the game in their favor even though their performance is proven to be mediocre. In real capitalism, ability and performance matter. As in, let the failed banks, brokerages, etc fail and allow the strong to take them over. When I read about these recent government led bailouts it becomes clear that we have been set up and conned into taking the hit for the unworthy managers, making it possible – inevitable – for the rich to triumph regardless of their audacious arrogance and incompetence.  This is not what I understand capitalism to be – and it stinks!

Where the S&P 500 is headed next

Treasury Secretary Tim Geithner is having his "Lucy" moment today. Yes, he’s got "a lot of explaining to do …" 
He’s speaking before Congress today to answer questions as to how the Public-Private Investment Program will actually remove toxic assets and protect taxpayer money at the same time. Also up for explanation is how the remaining $110 billion in TARP money is enough to fund any future bank rescues. 
I don’t envy Geithner one bit. That’s because there’s no way he can adequately answer these questions:

Bank Stress Test to Discredit BAC and C Earnings Report?

Banks are getting pounded this morning after Bank of America (NYSE:BAC) handily beat earnings estimates. Analysts were expecting $0.04 in earnings per share; BAC came in with $0.44. 
As I write, BAC shares are down 15%. Now, after Citigroup’s earnings, BAC was expected to beat its number. Are you wondering why investors seem so disappointed at what looks like a solid quarter from a troubled bank?

Earnings Expectations and Toxic Assets

Stocks have marched steadily higher since March 9. The first 10 days or so of the rally was a mad dash, which is how recovery rallies behave. But since the huge up day on March 23, stocks have settled higher. The S&P is now within spitting distance of its 2009 highs.
 

Builders PHM, CTX, HOV in the News

The saga continues for the homebuilders. Last week, we saw the first steps toward consolidation in this sector when Pulte Homes (NYSE:PHM) bought out Centex (NYSE:CTX). This came on the heels of some slight improvements in existing home sales.  
Even yesterday, a builder sentiment survey showed an improvement among builders. That got investors excited for this morning’s housing starts number. Unfortunately, the optimism was misplaced. Housing starts came in below expectations for March.

Oil Steady Around $50 a Barrel: Economic Bellwether

I hate to keep talking oil here, but the sticky stuff is a great proxy for what’s going on with the economy and the financial markets. On the one hand, demand is down considerably, even OPEC has cut production and inventories are rising to the point that some analysts are saying "…we’re swimming in the stuff…"
 

Goldman Blows Out Earnings: Numbers vs. Actions

"Given the challenging fundamental backdrop in the global economy, we continue to be cautious about the near-term outlook for our businesses …" 
That’s what Goldman Sachs CFO had to say after it posted pretty good earnings numbers on Monday. Of course, no one in the banking sector in his or her right mind is going to say things are great. But numbers are one thing, actions are another.

Financials Lead

Thank you, Wells Fargo. The S&P 500 ramped nearly 4% on Friday as Wells Fargo said it expects its first-quarter earnings to be nearly double what analysts were expecting. And it wasn’t even Wells Fargo’s earnings day – the company pre-announced earnings that will be released on April 22. These days, if you have something to crow about, you do it. ASAP.
 

Earning Season Starts with AA, BBBY, and CVX

Time flies. Seems like earnings season just ended and yet here we are again. But first-quarter earnings kick off tomorrow with Alcoa (NYSE:AA). 
Given how far the stock market has come over the last three weeks, you might think stock prices are set up for a fall as the reality of earnings dashes the enthusiasm that economic recovery is at hand.