Word to Investors (and Sleepy Citizens): The FIRE Economy Is Alive and Well

Slate ran an article on November 26, 2012, claiming that 88% of the earnings growth in the S&P 500 companies came from just 10 companies, with nearly 60% of that growth coming from 4 among this 10:  Bank of America, Apple, AIG, and Goldman Sachs.  And keep in mind that Citi and Wells Fargo were also among these top 10.  Here is the article:

http://www.slate.com/blogs/moneybox/2012/11/26/apple_aig_goldman_sachs_and_bank_of_america_provided_most_of_2012_s_earnings.html

What conclusions can we draw from this:

 1.  Apple, which was the biggest single contributor to earnings growth, is one heck of a company to be able to generate these kinds of earnings in a world where the only other folks who can make money are banks and insurers.

2.  These figures may be skewed because large banks and insurers had their earnings sharply depressed in recent years.

3.  The financial collapse has done little to stop the inordinate flow of profits to the FIRE (Finance, insurance, real estate) sector of the economy. 

Bank of America; Wells Fargo; Chase; Citi: A Potential Legal Settlement To Watch

For some time now, the largest lenders have been in negotiations with the Attorneys General of all 50 states to reach a settlement regarding the banks' handling of foreclosures, including robo-signing and other practices.  According to press reports, there are only a few holdouts among the AG's and the federal government and the banks are pushing hard to finalize the agreement.  The banks want the settlement because it will insulate them from further liability (or at least so they think) for frankly turning the servicing of mortgages into complete chaos.  The banks' liability to borrowers for their practices is significant.  This is evident from the banks' eagerness to enter into what's been reported as a $20 billion settlement.  If this settlement happens, the market may react by boosting bank stocks.  Keep a lookout for this -- I will.