Global Macro Speculations has an interesting take on the stress test results:

“The stress test result is out showing that is expected that banks will lose $600b against $362.9b in pre-tax pre-provision income (What the feds call pre-provision net revenue, PPNR), this is a $237.1B in net losses for the US 19 largest banks. Of all the banks tests only three show they will have a net gain over the next two years, Goldman with a whopping $0.7B gain($17.8B losses against $18.5B in PPNR), Bank of New York Mellon with a gain of $1.3B, Amex with a gain of $0.7B

If you look at anlysts earnings estimates they painting a much more optimistic forecast and the stock market is putting something like a 10 multiple on those rosy forecasts, what happens when the market realizes the economy wont grow at 2% rate in 2010 and there will be no earnings and more dillution coming?  What we are seeing in banks stocks is one of the biggest suckers rally eve.”

So, the main point is…even if the banks will be around, they will be losing money for quite a while.  What PE mulitple is fair for banks’ current reported earnings levels, when the next 2 years, as estimated by the Fed, will be negative?