Things change so quickly in Wall Street. Wells Fargo Bank said that it expects record first-quarter earnings of $3 billion, easily surpassing analysts’ estimates. Market participants are salivating for any good news. Wells Fargo news bumped up the Dow by 164 as I write this. S&P 500 is up by 20.

Good earnings from banks will definitely jump start the recovery process. Let us keep our fingers crossed for the earnings results of all the major banks. Wells Fargo is scheduled to announce earnings on April 22. Citigroup, Goldman Sachs and JP Morgan scheduled to report their earnings next week. Citigroup already announced that they had good profits in January and February. We need to see their earnings result for the entire first quarter.

If banks are getting in good shape, we may see more lending and better economic recovery in the next six to nine months. If all goes well, we may be out of recession by end of this year. That is a big “if”.

Wells Fargo Bank had booked 12 nights, beginning Friday, at the Wynn Las Vegas and the Encore Las Vegas, to celebrate and motivate its employees. What are they going to celebrate at this point of time in the economy, that too when they just received bailout money from taxpayers?

After the outrage from lawmakers and media, Wells Fargo canceled its plans. Kevin Waetke, spokesman for Wells Fargo, said the Las Vegas trip provided a unique opportunity for employees of Wells Fargo and newly acquired bank Wachovia Corp. “to focus on continuing to do all we can for U.S. homeowners.”

Ok. Don’t you guys have already done enough to U.S. homeowners???

Source: Wells Fargo defends the trip, then cancels Vegas Junket

Today, Bank of America’s stock is up 13%. Citibank is up 10%. It looks like these stocks are really cheap, isn’t it? Yes, they are. Only problem is that they may go even cheaper.

Analyst firm Friedman, Billings and Ramsey came out with some bearish opinions on the banking sector yesterday. They said that Bank of America might have to raise an additional $80 billion in capital by selling more stock. FBR was also concerned that Wells Fargo will have to drastically reduce its dividend and that it may also need to raise capital by selling more stock. All of this negative news took toll on the banking sector yesterday. It may be a sucker’s rally today, it’s better not to get in there even when the 10% per day return is dangling in front of you.

Here is my problem with the banking sector. These guys are not telling the truth. I doubt whether they even know the full extent of their internal problems. Bank of America at $5+ and Citibank at $3 look very attractive. But, it’s prudent not to get lured by these numbers. Just wait out until the fundamentals improve.