Wall Street's giving tips again

One sure sign that the markets may be getting ahead of themselves this summer: Wall Street banks are recommending each other's shares again.

Citigroup (C 2.89, -0.08, -2.66%) got on its squawk box Wednesday with an analyst report claiming that shares of rival Bank of America (BAC 12.76, -0.29, -2.22%) may be the best bank buy out there now. The TARP-ridden banking giant said its government cash-infested competitor will return to normalized earnings in a couple of years and slapped an $18 stock target on the shares, up more than a third from where they closed Wednesday. See full story.

That's all well and good. Financial shares have been hit hard and when this recession and economic crisis finally do end, the survivors could be good investments. But after all the damage caused by Wall Street to the nation and the global economy in the last nine months, are you ready to start taking stock tips from these guys again? Touting their own sector? Didn't this group miss the global crisis in the first place?

It's only one example, but it's a glaring warning that a nasty strain of complacency has settled over Wall Street in the last several weeks, as the stock market has begun its traditional summer lull. At some point, sooner rather than later, the Dow Jones Industrial Average (INDU 8,331, -172.61, -2.03%) , the Nasdaq Composite Index (COMP 1,803, -43.20, -2.34%) and the S&P 500 (SPX 902.40, -20.47, -2.22%) are going to break from their range.

My guess is it will be earnings season, which starts next week. Most of us have seen the research that says another dismal set of quarterly corporate performance reports are due, and that any sort of improvement won't be seen until the

That massive intervention has allowed many banks to paint rosier financial pictures than they might have a year ago.

Take, for instance, Wells Fargo & Co. The San Francisco-based bank took $25 billion from the Troubled Asset Relief Program, an amount representing 13.8% of all funds under program, according to the investigative reporting publication ProPublica. Wells hasn’t returned any of its TARP money. It also benefited from a nearly $5 billion write-up of assets stemming from the easing of mark-to-market rules.

These measures helped Wells to report a $3 billion profit in the first quarter.

And that’s just one bank. Citigroup Inc. is benefiting from $250 billion in government guarantees on its balance sheet. Bank of America Corp. received additional TARP money to offset deteriorating assets at Merrill Lynch. General Motors Acceptance Corp. has been forced back to the government trough after private investors took a pass on providing financing.

http://online.wsj.com/article/SB124646461085080881.html?mod=mktw

Are they flipping them, or just holding on to them?

Are they accepting them at face-value?

If I were a vendor to CA I would demand a huge discount on any IOU, ie, 25 cents on the dollar.

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