Last week, $340 million of TARP funds were given back to the government from four very small banks. Clearly, this is not a lot of money when weâre talking of a program with $700 billion and a larger crisis in the scope of the trillions of dollars. However, when the CEOâs of such entities as J.P. Morgan (JPM), Bank of America (BAC), and Goldman Sachs (GS) intimated that they wanted to do the same (GS as soon as possible with the others in time), there was no raucous happiness by government officials with in fact a stalling of the giveback occurring. Why is this the case? Here are two possible reasons- one political and one economic. Political first- and I say this with extreme delicacy, but is this an effort of the Obama administration to control the banks? I know the connotation this has yet I do not mean this suggestion as a negative or a positive- rather as a truism. In the negative scenario, it could be a matter of the White House simply wanting to tell the banks what to do. By overseeing the banks, the government gains that much more of a foothold over the economy. The positive connotation would be that the government could simply being trying to make sure that what happened before does not happen again. Either way, the point is the same- the government simply wants to control things for better or worse. As for economic reasons, letâs say the government takes back monies from Goldman Sachs- and the stock of GS rallies 30%. Then JPM gives back their moniesâ¦and JPM rallies 25%. What this would make most bank presidents to do is make their inclination to give the money back as fast as they can- even if they need the funds. If the incentive is there (better stock performance), well, the short-term always outweighs the long-termâ¦that is the nature of the way of the world. However, many banks likely do genuinely need extra capital- whether from the government or elsewhere- to even have a shot at remaining solvent. Thus, the incentive for the government is there to tell everybody to keep the money- the long-run outweighs the short-run. For day traders of the world, it is yet one more thing to monitor. If the government does start taking back these monies sooner than later, it will be fascinating to watch the reaction of the stocks. The designed stress tests should be out next month so we will start getting answers soon. Markets overnight were up fairly strong in Asia with the Nikkei in particular firm as it gained 3%. European bourses are more mostly up with the FTSE gaining ground fractionally all the way to the DAX up just shy of 1%. Oil is up with gold, bonds, and the dollar quiet. There are two major counterwaves; WMT issued poor guidance, but WFC announced that there will have a record quarter. The net of this is very positive as confidence in the banking sector should outweigh worries in the retail sector. Look for very strong gains in the early going with some giveback, but trading in a relatively narrow range to the upside. Trading will be frantic early this morning amid the relative paucity of participants and then likely slow down as the day progresses. Use WFC and WMT as your main benchmarks. Reiterating- Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea. If the whole story is not there - If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified- Good- The following stocks have good news and/or a strong technical pattern EXM- phenomenal quarterly earnings; watch DRYS, DSX, GNK among other dry bulk shippers to go with it SMSC- decent earnings BBBY- closed on its absolute high after posting great earnings MOS- major reversal yesterday after missing earnings; closed near a high along with MON and POT CHIC- pre-announced earnings to the upside HOTT- solid earnings JOSB- rocketed yesterday in closing on its intra-day high HLX- rose sharply on vague takeover rumors; closed near a high EMR, NYX- mentioned on âMad Moneyâ positively CRME- signed agreement with MRK on licensing of heart drug to MRK BCS- nearing a sale of its Ishares division APWR- great earnings GYMB- great earnings WFC- announced that the WB acquisition is exceeding their expectations and that they will beat earnings estimates Bad-The following stocks have bad news and/or a weak technical pattern SGR- missed on estimates and warned for year SIVB- closed near a low after posting terrible earnings Tuesday afternoon EQY- doing a 4 million share offering ASIA- priced 4 million share block sale at 15 OSIR- broke to a new trend low HPT- suspending dividends on its common stock WDFC- poor earnings ANF âmissed same store sales estimates WMT- missed on same-store sales estimates and issued hazy guidance Earnings: THURS APR 9 BEFORE APWR MTRX THURS APR 9 AFTER CBK Good luck today. Erik R. Kolodny