For the first half of 2010, almost two thirds of money managers are bullish, according to Barron's. In fact, 54% are bullish, and 5% are "very bullish." Responses suggest that the Dow Jones Industrial Average is expected to gain another 5% by the end of the year.

According to Barron's, "Today's bullish investors see the major stock indexes making steady progress through next June, amid signs the U.S. economy is on the mend after a searing recession."

Late yesterday, MetLife (NYSE: MET) announced a second-quarter net loss of $1.74 per share, compared to earnings of $1.26 per share a year ago. The company blamed the loss on derivative losses of $1.8 billion, $1 billion of which was related to an increase in the company's own debt in the second quarter. Excluding charges, MET earned 88 cents per share for the quarter, topping the consensus estimate by 20 cents. The insurer's premiums, fees, and other revenue increased 4% to $8.38 billion thanks to a record amount of money spent in variable annuity products.

Variable annuities can be described as a contract between the purchaser and the insurance company. The insurer agrees to make payments to the purchaser either immediately or at a future date. Investment options for variable annuities are usually a mutual fund that invests in stocks, bonds, money market instruments, or a combination of the three.

American Express Company (NYSE: AXP), a company that competes with Visa Inc. (NYSE: V), MasterCard Incorporated (NYSE: MA), and Discover Financial Services (NYSE: DFS), issued Q2 results earlier in the week. Earnings from continuing operations dropped very steeply to 9 cents per share. How steeply? Well, the per-share profit lost 84% of its value this time around. However, it might make you feel a little better to know that 18 cents can be added back, since that was the net worth of repurchase activity relating to preferred shares from the U.S. Treasury department. Therefore, American Express took in 27 cents per share from continuing activities. According to this Reuters piece, that number met expectations.

The Reuters article also points out that revenues fell by 18% and that net charge-offs increased. Not a great picture. Reading through the press release, an investor might come away with a feeling of dread. Management mentions the not-so-strong spending by its cardmembers and the fact that loan losses are at historic levels.

"This is a great time to be a banker," New York Times columnist Floyd Norris says, somewhat tongue-in-cheek. Jabs about bailouts and huge bonus payments aside, it's true that banking system is finally seeing rational pricing of risk -- and that means earnings power has greatly increased for deposit-taking banks. If you have a savings account or money market, you might have noticed that your interest payments have dried up to a pittance; the interest you aren't being paid is dropping through to banks' bottom lines.

Looking at today's earnings report from Citigroup, Inc. (NYSE: C), for example, is useful to see how the economics of the industry function, and whether Citicorp -- the "good bank" as Citigroup works to split itself -- will live up to the promise CEO Vikram Pandit attributes to it. In a company press release, Pandit said, "Citicorp is our core franchise and will be the source of Citi's long term profitability and growth. Citicorp is unique with institutional and consumer businesses operating on an unmatched global footprint."

After a nifty rebound off a 52-week low of $5.73, industrial and financial services giant General Electric (NYSE: GE) is in a weird place. The company's shares are trading at around $11.75, which is well below the $15 levels achieved in early May. This would seem odd as GE appears to be well positioned for the Green Shoots Scenario. The company has a big presence in alternative energy, health care solutions, and industrial products -- all big beneficiaries of both the Obama stimulus package and a nascent economic rebound.

So why does the market seem to be scared of GE? A couple of key reasons. First, GE's investments in commercial real estate (CRE) are looking increasingly toxic as the rate of CRE failures soars and CRE debt remains difficult to roll over.

Talk of "green shoots" abounds with the S&P 500 up 40% from its lows in March 2009, but Goldman Sachs (NYSE: GS) CEO Lloyd Blankfein remains cautious in his outlook for the global economy. "I think it's going to be a long, protracted recession," he said while speaking on a panel at the annual International Organization of Securities Commissions (IOSCO) conference in Tel Aviv.

Blankfein also emphasized the importance of intelligent regulation and risk management, warning fellow finance executives not to discount the latter. "The culture of risk management is very important and hard to legislate, but at the end of the day, you have to make sure that the people on the risk management side of your operation are just as capable, and maybe therefore, just as well-paid and have the career opportunities as people on the producing side of the business."

As one would naturally expect, revenues and profits were down. Sales from continuing operations declined 9%, and net income decreased 40% to $0.26 per share. You have to play the analyst game to really see how GE might be doing. In this regard, the conglomerate won. According to this source, Wall Street was calling for something closer to $0.21 per share.

Wednesday's announcement that the Fed would buy into the U.S. Treasury bond market was no surprise to most Fed watchers. In fact, the Fed has been talking about it for weeks.

But the big surprise was the size of the buybacks and the impact on future inflation.

So, with a newly revived concern about inflation, and five days of gains out of seven under their belts, traders decided it was time to cash in some chips.

But, technically, there is much more to the market's reaction to Wednesday's Fed move.

The Wall Street Journal reports (subscription required) that "More than 40 financial firms have been hit with pay-related proposals, including Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), J.P. Morgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS). Most of the targets are recipients of government capital from the Troubled Asset Relief Program."

This is great news and represents an increase of more than 60% over last year, according to RiskMetrics. Of course, it doesn't matter nearly as much as it should: The "say on pay" votes are really just advisory: All that they do is put a little box on the proxy ballot where shareholders can say how they feel about their company's egregious executive pay practices.

Despite the overwhelming tide of bad news from Q4 earnings reports, stocks not only held above the support line at Dow 8,000 and S&P 500 800 Monday, but the stochastic indicator on both the NYSE Composite Index and the Nasdaq issued buy signals.

Our other internal indicators are still oversold, and the CBOE Volatility Index (VIX) fell to 45.69 and appears to be headed lower -- which is generally a bullish sign.

The key, however, to moving the markets higher could be the financial stocks.

This week, a number of closely watched banks, such as Dow members American Express (NYSE: AXP) and Wells Fargo (NYSE: WFC), will report earnings. The expectation for all of these former finance powerhouses is low, so upside surprises could have a positive impact on the Dow.

JPMorgan Chase (NYSE: JPM) posted earnings Thursday. In a surprise to analysts, who had been expecting a break-even quarter, JPM reported earning 7 cents for the fourth quarter.

While the report showed a 76% decline from the previous year, the news pushed the stock to early gains in the face of a drop in the Dow.

Typical of the lack of conviction in the markets, JPM gave up early gains. Subsequent trading restored the stock to the positive column before it succumbed to a late-day sell-off that shaved more than 6% from its market value.

The mid-morning decline in JPM occurred as Bank of America (NYSE: BAC) plummeted to a new low at $7.50. BAC is sagging under the weight of absorbing Countrywide and Merrill Lynch, both of which have proven more difficult to digest than earlier thought.

Bank stocks in general are under heavy selling pressure after Federal Reserve Chairman Ben Bernanke declared Wednesday that billions more will be required to restore stability to the nation's (and the world's) banking system.

The dismantling of the financial stocks is mind-boggling but not entirely unexpected. Last year, we discussed the need for culpability to extend throughout the societal spectrum, from borrowers who over-extended on their credit to the institutions that financially engineered risk to policy makers who were compliant by acceptance.

The fact that many of these names are going to Fannie Mae (NYSE: FNM) is perhaps the healthiest possible scenario through the lens of "taking medicine as a function of time and price." It is, however, massively unfortunate for the employees who simply followed marching orders.

We're talking livelihoods lost here. Life savings evaporated. Careers ruined.

Therein lies the "other side" of the aforementioned "healthy" scenario: societal and structural implications. We've talked about the former ad naseum so I don't think we need to beat that horse. On the structural side -- and something to keep in mind for those calling for the heads of financial professionals -- is the fact that if there isn't incentive for people to fix the system, it simply won't get fixed.

Incentive on Wall Street equals money. The industry will be austere and ripe with humility, mind you, but we must find our way to a healthy supply-demand and a balanced give-and-take. For if we don't crack the code in short order, we risk that our capital market structure will cease to exist altogether.