When is bad news really good news? When the bad news is not nearly as bad as expected, notes the New York Times. You could almost feel the relief wash over the markets as many top banks (except Washington Mutual and Wachovia) released earnings that were bad--even horrific--but still better than expected. Now, one could argue that the armies of investor relations people out there are working the Street's fear to their advantage; expectations were certainly set low. Another view is that we are finally at the bottom, that the worst is over. Of course, we've heard that before from the top execs at the top banks, so it would be wise to view the ferocious rally we've seen in bank stocks with some skepticism. It may yet prove to be a dead-cat bounce. The mortgage market doesn't seem to be getting much better, with Fannie and Freddie's woes.

For more:
- here's the New York Times article

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