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I checkout out www.mffais.com last night. here's what I found:
BAC was on the Global Top Ten Newly ADDED Stocks - newly added to 304
funds. But it was also on the top list of BAD moves - due to its big
drop last week. (As a shareholder I sure hope BAC is going to be on
the top list of good moves for those who bought at pennies over $7.)
BAC was also on the Global Top 10 Share INCREASES - holdings increased
by 503 funds. Also on Global Top 10 Most BOUGHT Stock - bought by 807
funds. And no, it was not on the most sold stock list.
1. Last week's change in positions of BAC by institutions:
Date Shares ADDED
01/16/09 3,249,641
01/15/09 11,093
01/14/09 10,906
01/13/09 1,947,145
01/12/09 58,670
It was a NET INCREASE of over 5 millions shares. At least the
institutions are not dumping BAC.
2. For funds that HELD 1 million (mm) shares or more as of 1/16/2009,
a net total of 414,842,708 were ADDED
shares since Oct 08, of which:
in Oct 08 27,295,472 shares added
in Nov 08 275,821,900 added
in Dec 08 116,968,015 added
in Jan 09 5,242,679 reduced - Out of the 23 funds that holds 1mm or
more in January, only 3 reduced holdings, but by large portions - 24mm
shares.
3. Of the 83 funds that have ADDED 1mm or more shares since Oct 08,
776,633,368 have been added in total by these funds.
23,900,977 were added in Oct 08 by 9 funds
601,191,664 were added in Nov 08 by 54 funds
133,489,078 were added in Dec 08 by 11 funds
18,051,649 were added in Jan 09 by 5 funds
4. Of of the 65 funds that REDUCED holdings by 1mm or more shares
since Oct 08:
4 did it in Oct 08
49 did it in Nov 08
7 did it in Dec 08
5 did it since 1/1/09
I am not saying these numbers are an indicator. I was trying to find
out what the big money has been doing on BAC. I find that there's no
exdus, at least yet, by the funds. Actually they have been bullish on
BAC.
From: http://finance.google.com/group/google.finance.662744/browse_thread/thread/a403e7b52284db1a#
Why January 20 is important to Stock Market
http://www.sunnewsonline.com/webpages/features/encounter/2009/jan/18/encounter-18-01-2009-002.htm
Most investment markets have become terrible and just last week. The global economies suddenly become jaundiced. In 2008 alone, the global leading stock markets lost significantly. New York Stock Exchange was down by 33.84%, London FTSE fell 31.3% and Paris down by 42.7%. Also, the following stock markets were in the red by figures they carry: Frankfurt (40.4%), Mumbai (51.9%), Singapore (49.2%), Sydney (41.3%), Hong Kong (48.3%), Shanghai (65.2%), Tokyo (42.1%). The most-celebrated emerging stock market, the Nigerian Stock Exchanges All-share Index was above 66,000 with market capitalization over N12 Trillion; but as at the time of writing this piece (Friday, January 09, 2009) the All-Share index was 28,690.80 while the market capitalization stands as N6,346,898,320,166.95 a loss of more than 50 per cent.
The President-elect, Barack Obama, while speaking during the week, described the American economy as ‘sick’.
But not only the American economy is not well, the entire global economy is off-colour. And the fact remains, as I had written few weeks ago on this page, that the present gloomy situation is as a result of what started in the United States of America in 2005. So, if the Americans, through their lifestyle of running debit card economy kick-started the present economic darkness, then it is instructive every investor keeps track of what change the November 14, 2008 has in stock for the global economy.
On January 20, 2009, Barack Obama will be sworn in as the next America’s president. He, on that day, will make his inaugural speech.
According to my friend, Tom Dyson, the speech "is going to determine the direction of the stock market for the rest of 2009"ù. A serious investor must not only watch the inauguration ceremony, or listen to Obama’s expected moving speech, but must also be ready to analyse and read in-between lines.
From the piece Tom sent to me, I choose to share an aspect with you: sentiment is the reason this speech is so important. Right now, America, and the entire world, is feeling pessimistic. People are worried about their jobs, their houses, and their finances. No one is spending money and in some economies there is no money to spend.
The consumers’ confidence has fallen to its all-time lowest.
American economy is built on consumption-before-payment system. To get the financial system working again, the US government needs the people to start shopping again (on credit) and to start taking investment risks. This means the government needs the people to start feeling hopeful again.
It is a known fact that the American financial system needs a constantly increasing injection of capital to keep the economy healthy.. This Tom also corroborates in his piece. As long as more funds (capital) enters the system than leaves it, the system functions. But as soon as the funds shrink, the system began to collapse.
It is believed that Obama is going to announce a huge government spending plan of $750 billion in his inaugural speech. How will this, by extension, affects the global market? Financial experts believe that such a spending plan will have negative effect and "will make the problem worse"ù in the long run. Since the gargantuan fund the US government wants to spend is coming from the revenues it receives from the people (in form of taxes), it is borrowing money "from the future and spending it today on investments" a free market may not want to undertake. The end-result is a more hurtful global market; but in the short run (2009), markets may experience boom.
However, a research firm reveals that investors are holding $8.85 trillion in cash, bank deposits, and money-market accounts. According to the research firm (Leuthold Group), this is the highest cash-to-market ratio in 18 years. The silent take here is that this whopping sum of money is to be spread as investments over several markets but everyone is waiting for the January 20 inauguration before taking next steps.
Stimulus plan repeals big tax break for banks
http://www.forbes.com/feeds/ap/2009/01/17/ap5934343.html
House Democrats' version of the $825 billion recession rescue package would end billions of dollars in tax breaks the Bush administration quietly gave to banks last fall.
Already almost exclusive beneficiaries of a $700 billion Wall Street bailout, banks are largely left out of the House stimulus package that President-elect Barack Obama wants passed quickly through Congress. Those getting financial bailout money wouldn't even be eligible for one of the main business tax breaks aimed at priming the economic pump.
Homebuilders, manufacturers, retailers and low-income families share the bulk of the $275 billion in proposed new tax cuts.
House leaders moved this week to repeal the tax break for banks even as the Senate voted to help many of those same institutions by releasing the second $350 billion of the widely unpopular Wall Street bailout. Many lawmakers are unhappy with the results after the Bush administration spent the first $350 billion, making them wary of helping banks in the stimulus package.
To address the financial industry meltdown, the Treasury Department last fall issued a new tax rule to make it more attractive for healthy banks to buy troubled ones hit hard by the mortgage crisis. It allowed healthy banks to avoid billions of dollars in taxes by offsetting their profits with the losses of the banks they acquire.
Before, the merged bank could write off only a limited amount of the losses. Removing much of the restrictions enabled the acquiring banks to make huge reductions in their tax liabilities.
In some cases, the tax breaks exceeded the cost of acquiring the troubled banks. Wells Fargo & Co., for example, made a bid to acquire Wachovia Corp., just days after the change in tax rules was issued Sept. 30. Wells Fargo paid $14.8 billion in a stock deal to buy Wachovia, but stands to reap about $20 billion in additional tax savings from the transaction, according to analyses by private tax experts.
Pittsburgh-based PNC Financial Services Group Inc. reduced its taxes by about $5.1 billion through its takeover of National City Corp., according to the analyses.
The Treasury Department did not release an estimate of how much the tax break would cost the government. However, a widely circulated commentary by the law firm of Jones Day estimated that banks could eventually reap tax savings of up to $140 billion by acquiring banks with large losses related to the housing market downturn.
Repealing the tax break would negate those savings in future bank mergers. It would not, however, affect mergers already under way, according to a summary of the stimulus package released by the tax-writing House Ways and Means Committee.
Bank of America Corp., already the recipient of $25 billion in bailout funds, got another $20 billion infusion from the government Friday to help it absorb Merrill Lynch's hefty losses. Bank of America took over Merrill Lynch in a deal closed earlier this year.
However, Bank of America probably wouldn't qualify for the tax break in any case because Merrill Lynch is not designated as a bank under the tax code, said Robert Willens, a corporate tax lawyer in New York.
"Bank of America probably has enough losses of its own to tide itself over," Willens said.
Some members of Congress felt the Treasury Department overstepped its authority in issuing the notice, which had the practical effect of enacting a new tax break.
"This is Congress reasserting its rights," said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP.
Many of the other tax provisions in the stimulus package mirror proposals by the incoming Obama administration, which worked with lawmakers crafting the package.
The main tax break for individuals would provide a credit of $500 per worker and $1,000 per working couple. Tax breaks for low-income families would be expanded through the child tax credit and the Earned Income Tax Credit.
Businesses posting operating losses could get tax refunds by using current losses to offset profits made in the previous five years. Under current law, they can only offset profits from the previous two years.
Struggling homebuilders, retailers and manufacturers would be eligible for the tax break, according to private tax experts. However, companies benefiting from the Wall Street bailout, known as the Troubled Asset Relief Program, or TARP, would be ineligible, according the House committee's summary of the package.
"They're saying that TARP is for the financial system bailout and the stimulus is for the rest of the economy, and there is a logic to that," said Mark Zandi, chief economist at Moody's Economy.com.
Zandi said the stimulus package has a good mix of spending and tax cuts to spark the economy in the short-term.
"This is a good plan in terms of its size," Zandi said. "The distribution seems very reasonable."
But Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, said the stimulus package doesn't provide sufficient tax incentives to help struggling businesses restructure their debt.
"The credit markets are still frozen," Josten said. "We're obviously disappointed."
The laborers' union said the stimulus package shouldn't benefit homebuilders who contributed to the housing crisis by offering risky mortgages to buyers who couldn't afford them.
"We should not reward behavior which contributed significantly to our current crisis," Terence O'Sullivan, president of the Laborers
International Union of North America, wrote in a letter to the House Ways and Means Committee.
More reasons that BAC will go up
People are panicking because they think what is happening to BAC is
similar to what happened to Washington Mutual. I am not going to get
into it here, but they are very different. These are the facts:
* The ENTIRE banking sector is suffering, not just BAC. BAC went down
about $3 from $10, and then all of a sudden rumors about
nationalization are being spread. I ask...why now? And why with
BAC? Citigroup has been dancing around near $5 for the last 2 months
and nobody seems to be worried about them failing, getting
nationalized, or even filing Chapter 11. BAC makes one drop to $7
just once and people panic. Really, it is a sector issue. Every
bank stock...JPM, WFC, USB, etc ... they've all dropped 20% or more.
The drop in BAC is normal for the sector.
* Obama will do whatever he can to prevent nationalization of any
bank or company. Why? For political reasons. The last thing he
would want to do during his first year (or any year) is portray
himself as against capitalism and the American way. He will be
tested, and he will be wise not to give Republicans or others who are
against him any reason think he is un-American. Nationalization will
NOT happen under his watch.
* As I mentioned before, we are in a recession. Obama cannot
follow through with his campaign promises to tax the rich. This is
the main reason that the stock market has been crashing. Obama will
give them a break in the spirit of the helping the economy...even if
it is temporary. This will make the stock market soar to between
9000-10000. BAC will go along for the ride.
* Think about it...if Obama can support something as trivial as
delaying the DTV transition date, I feel confident that he can delay
taxing the rich.
* The big money has been selling in order to take advantage of the
Bush capital gains tax rates. These people believe that Obama is
raising the rate. But Obama will surprise everybody by not doing
anything.
For those of you who are long BAC...stay in there. You will be
rewarded. But buy ONLY as it goes up from here on forward. Do not
buy on the way down.
http://finance.google.com/group/google.finance.662744/browse_thread/thread/ce7032b778f31e41#
Bank of America's (BAC) stock is poised to run almost EXACTLY as it did in late November 2008 when it jumped from $9.79 to $16.02-- look at the candle formations during that time, if you don't believe me. See anything similar? Congrats too who jumped on Friday after it double bottomed at $7. You'll be making some nice money here.
BAC stock is poised to run almost EXACTLY as it did in late November 2008 when it jumped from $9.79 to $16.02-- look at the candle formations during that time, if you don't believe me. See anything similar? Congrats too who jumped on Friday after it double bottomed at $7. You'll be making some nice money here.
C and BAC News
‘Aggregator Bank’ for Toxic Debt
By Rebecca Christie
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCcNKVDnUKMA&refer=home
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders’ balance sheets.
“A lot of work has been done on an aggregator bank” and other ways of using the $700 billion financial-rescue fund “to let it go further when it comes to dealing with illiquid assets,” Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have “some merit.”
Today’s remarks come days before President-elect Barack Obama takes office, and signal a readiness among regulators to undertake what’s likely to be the most radical effort yet to unfreeze lending. Fed Chairman Ben S. Bernanke earlier this week urged a “comprehensive plan” to address illiquid assets, floating the idea of a “bad bank.”
Investors continue to question banks’ viability even after officials committed the first $350 billion from the Troubled Asset Relief Program and after a doubling in the Fed’s balance sheet to $2.1 trillion. Bank of America Corp. today required a further $20 billion injection of taxpayer funds and government backing for a $118 billion pool of bad assets.
‘Barrier’ to Investments
Paulson and Bernanke sought to end a series of ad-hoc interventions with financial companies last September, by urging lawmakers to approve the TARP. While the initial plan was to use the TARP to purchase illiquid assets, Paulson instead used the money to buy stakes in banks. The Fed chief said Jan. 13 that the bad assets are a “barrier’ to investment and are holding back lending.
Obama’s advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far, according to people who’ve discussed the outlook with them.
“They need to do something dramatic,” said Harvard University Professor Kenneth Rogoff, a former chief economist at the International Monetary Fund. He is a member of the Group of Thirty counselors on financial matters, a panel that includes Treasury Secretary-designate Timothy Geithner and Lawrence Summers, incoming director of the National Economic Council.
The Senate yesterday approved the release of the second half of TARP, and Obama’s Treasury could use much of it to back a bigger campaign to buy the illiquid assets. The FDIC, which has authority to take “any action” with insured deposit-taking firms deemed necessary to counter “adverse effects on economic conditions or financial stability,” could also play a role.
‘Capital Cushion’
“We think by leveraging TARP funds in this way, you could have a significant capacity to acquire troubled assets,” Bair, who is set to stay on under Obama, said today. Officials could “require those institutions selling assets into this facility to contribute some capital cushion themselves.”
The Standard & Poor’s 500 Financials Index slid 5.1 percent to 133.28 at 12:01 p.m., extending its decline this month to 21 percent. Charlotte, North Carolina-based Bank of America lost 10 percent, and is down 43 percent this week, after today announcing its first loss since 1991.
Paulson listed several ideas under consideration to help sustain ailing banks and stabilize markets. Those include broadening the Fed’s Term Asset-Backed Securities Loan Facility, a $200 billion program aimed at reviving consumer lending.
Stimulus Package
Paulson also urged the Obama administration to extend efforts to stabilize the financial system and work with Congress to pass a stimulus package. House lawmakers yesterday began work on an $825 billion economic-recovery package.
“In the short term, the focus has to be on programs like the TARP and stimulus because we need to get this economy going,” Paulson said.
Shoring up banks’ longer-term financing and strengthening efforts to address the housing crisis would also help stabilize the financial system, the departing Treasury chief said.
Lower mortgage rates and foreclosure mitigation efforts will help slow the decline in house prices, helping investors figure out how to value home-loan-related assets.
Investors also need sources of longer-term funding to feel confident investing in the types of assets that have been the most troubled, he said. “Many investors say they would love to come in and buy mortgages but they can’t get the funding,” Paulson said. “If there is term funding, then it’s easier for people to come in.”
Paulson will depart when Obama takes office Jan. 20. Treasury Undersecretary Stuart Levey will become the department’s acting chief pending the Senate confirmation of Geithner, the New York Fed President. Geithner is scheduled to appear at a confirmation hearing Jan. 21.
Paulson, Bair Raise ‘Aggregator Bank’ for Toxic Debt
By Rebecca Christie
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCcNKVDnUKMA&refer=home
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders’ balance sheets.
“A lot of work has been done on an aggregator bank” and other ways of using the $700 billion financial-rescue fund “to let it go further when it comes to dealing with illiquid assets,” Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have “some merit.”
Today’s remarks come days before President-elect Barack Obama takes office, and signal a readiness among regulators to undertake what’s likely to be the most radical effort yet to unfreeze lending. Fed Chairman Ben S. Bernanke earlier this week urged a “comprehensive plan” to address illiquid assets, floating the idea of a “bad bank.”
Investors continue to question banks’ viability even after officials committed the first $350 billion from the Troubled Asset Relief Program and after a doubling in the Fed’s balance sheet to $2.1 trillion. Bank of America Corp. today required a further $20 billion injection of taxpayer funds and government backing for a $118 billion pool of bad assets.
‘Barrier’ to Investments
Paulson and Bernanke sought to end a series of ad-hoc interventions with financial companies last September, by urging lawmakers to approve the TARP. While the initial plan was to use the TARP to purchase illiquid assets, Paulson instead used the money to buy stakes in banks. The Fed chief said Jan. 13 that the bad assets are a “barrier’ to investment and are holding back lending.
Obama’s advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far, according to people who’ve discussed the outlook with them.
“They need to do something dramatic,” said Harvard University Professor Kenneth Rogoff, a former chief economist at the International Monetary Fund. He is a member of the Group of Thirty counselors on financial matters, a panel that includes Treasury Secretary-designate Timothy Geithner and Lawrence Summers, incoming director of the National Economic Council.
The Senate yesterday approved the release of the second half of TARP, and Obama’s Treasury could use much of it to back a bigger campaign to buy the illiquid assets. The FDIC, which has authority to take “any action” with insured deposit-taking firms deemed necessary to counter “adverse effects on economic conditions or financial stability,” could also play a role.
‘Capital Cushion’
“We think by leveraging TARP funds in this way, you could have a significant capacity to acquire troubled assets,” Bair, who is set to stay on under Obama, said today. Officials could “require those institutions selling assets into this facility to contribute some capital cushion themselves.”
The Standard & Poor’s 500 Financials Index slid 5.1 percent to 133.28 at 12:01 p.m., extending its decline this month to 21 percent. Charlotte, North Carolina-based Bank of America lost 10 percent, and is down 43 percent this week, after today announcing its first loss since 1991.
Paulson listed several ideas under consideration to help sustain ailing banks and stabilize markets. Those include broadening the Fed’s Term Asset-Backed Securities Loan Facility, a $200 billion program aimed at reviving consumer lending.
Stimulus Package
Paulson also urged the Obama administration to extend efforts to stabilize the financial system and work with Congress to pass a stimulus package. House lawmakers yesterday began work on an $825 billion economic-recovery package.
“In the short term, the focus has to be on programs like the TARP and stimulus because we need to get this economy going,” Paulson said.
Shoring up banks’ longer-term financing and strengthening efforts to address the housing crisis would also help stabilize the financial system, the departing Treasury chief said.
Lower mortgage rates and foreclosure mitigation efforts will help slow the decline in house prices, helping investors figure out how to value home-loan-related assets.
Investors also need sources of longer-term funding to feel confident investing in the types of assets that have been the most troubled, he said. “Many investors say they would love to come in and buy mortgages but they can’t get the funding,” Paulson said. “If there is term funding, then it’s easier for people to come in.”
Paulson will depart when Obama takes office Jan. 20. Treasury Undersecretary Stuart Levey will become the department’s acting chief pending the Senate confirmation of Geithner, the New York Fed President. Geithner is scheduled to appear at a confirmation hearing Jan. 21.
Paulson, Bair Raise ‘Aggregator Bank’ for Toxic Debt
By Rebecca Christie
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCcNKVDnUKMA&refer=home
Jan. 16 (Bloomberg) -- The heads of the U.S. Treasury and Federal Deposit Insurance Corp. gave further momentum to the idea of a new government-backed bank to remove toxic assets from lenders’ balance sheets.
“A lot of work has been done on an aggregator bank” and other ways of using the $700 billion financial-rescue fund “to let it go further when it comes to dealing with illiquid assets,” Treasury Secretary Henry Paulson told reporters today in Washington. FDIC Chairman Sheila Bair praised the idea in an interview on CNBC, saying it might have “some merit.”
Today’s remarks come days before President-elect Barack Obama takes office, and signal a readiness among regulators to undertake what’s likely to be the most radical effort yet to unfreeze lending. Fed Chairman Ben S. Bernanke earlier this week urged a “comprehensive plan” to address illiquid assets, floating the idea of a “bad bank.”
Investors continue to question banks’ viability even after officials committed the first $350 billion from the Troubled Asset Relief Program and after a doubling in the Fed’s balance sheet to $2.1 trillion. Bank of America Corp. today required a further $20 billion injection of taxpayer funds and government backing for a $118 billion pool of bad assets.
‘Barrier’ to Investments
Paulson and Bernanke sought to end a series of ad-hoc interventions with financial companies last September, by urging lawmakers to approve the TARP. While the initial plan was to use the TARP to purchase illiquid assets, Paulson instead used the money to buy stakes in banks. The Fed chief said Jan. 13 that the bad assets are a “barrier’ to investment and are holding back lending.
Obama’s advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far, according to people who’ve discussed the outlook with them.
“They need to do something dramatic,” said Harvard University Professor Kenneth Rogoff, a former chief economist at the International Monetary Fund. He is a member of the Group of Thirty counselors on financial matters, a panel that includes Treasury Secretary-designate Timothy Geithner and Lawrence Summers, incoming director of the National Economic Council.
The Senate yesterday approved the release of the second half of TARP, and Obama’s Treasury could use much of it to back a bigger campaign to buy the illiquid assets. The FDIC, which has authority to take “any action” with insured deposit-taking firms deemed necessary to counter “adverse effects on economic conditions or financial stability,” could also play a role.
‘Capital Cushion’
“We think by leveraging TARP funds in this way, you could have a significant capacity to acquire troubled assets,” Bair, who is set to stay on under Obama, said today. Officials could “require those institutions selling assets into this facility to contribute some capital cushion themselves.”
The Standard & Poor’s 500 Financials Index slid 5.1 percent to 133.28 at 12:01 p.m., extending its decline this month to 21 percent. Charlotte, North Carolina-based Bank of America lost 10 percent, and is down 43 percent this week, after today announcing its first loss since 1991.
Paulson listed several ideas under consideration to help sustain ailing banks and stabilize markets. Those include broadening the Fed’s Term Asset-Backed Securities Loan Facility, a $200 billion program aimed at reviving consumer lending.
Stimulus Package
Paulson also urged the Obama administration to extend efforts to stabilize the financial system and work with Congress to pass a stimulus package. House lawmakers yesterday began work on an $825 billion economic-recovery package.
“In the short term, the focus has to be on programs like the TARP and stimulus because we need to get this economy going,” Paulson said.
Shoring up banks’ longer-term financing and strengthening efforts to address the housing crisis would also help stabilize the financial system, the departing Treasury chief said.
Lower mortgage rates and foreclosure mitigation efforts will help slow the decline in house prices, helping investors figure out how to value home-loan-related assets.
Investors also need sources of longer-term funding to feel confident investing in the types of assets that have been the most troubled, he said. “Many investors say they would love to come in and buy mortgages but they can’t get the funding,” Paulson said. “If there is term funding, then it’s easier for people to come in.”
Paulson will depart when Obama takes office Jan. 20. Treasury Undersecretary Stuart Levey will become the department’s acting chief pending the Senate confirmation of Geithner, the New York Fed President. Geithner is scheduled to appear at a confirmation hearing Jan. 21.
Worst Is Over for Banks—Not Economy
BILL GROSS, ECONOMY, CREDIT CRISIS, PIMCO
Reuters
| 16 Jan 2009 | 05:48 PM ET
The greatest damage to bank balance sheets from the financial crisis may be over, but the worst for the real economy lies ahead, Bill Gross, manager of the world's biggest bond fund, said Friday.
Gross, founder and co-chief investment officer of Pacific Investment Management Co, told Reuters there is a need to do whatever is required to get banks lending again, and that to stem more waves of bank losses, U.S. house prices must find a bottom.
"We have probably seen the worst of the credit crisis from the standpoint of the banking balance sheets, to the extent that they've already received a lot of capital and are going to get some more," said Gross, in an interview via video link from Pimco's headquarters in Newport Beach, California, .
The U.S. government late on Thursday said it would inject $20 billion in fresh capital into Bank of America and provide a backstop against $118 billion of bad assets it holds to help it absorb the acquisition of brokerage Merrill Lynch.
That was just the latest move by the U.S. government to pump money into battered financial companies amid the worst financial crisis since the Great Depression.
But even as Gross said he thinks bank balance sheets will not see even greater harm, he warned the worst may not be over for the credit markets.
The damage to corporate bond markets is far from over, with high-yield bonds at particular risk of rising defaults, Gross said.
"We haven't seen the worst of it from the standpoint of defaults, in terms of the high-yield market and small corporations, layoffs in terms of individuals, higher unemployment rates," Gross said, adding, "The worst is ahead for the real economy." Economists and investors have widely said that an upturn in the housing market is critical for United States' economic growth.
Fourth-quarter gross domestic product is expected to contract by more than 5 percent.
Still, Gross said he is not bearish on mortgage-backed securities (MBS), despite having trimmed his $132 billion flagship fund's holdings of these securities in December.
"Our mortgage-backed securities holdings are still significant," Gross said. "We have a 4 to 4.5 percent yield from them versus 1 to 2 percent or 2.5 percent in the Treasury market -- and we also have, of course, a willing buyer from the standpoint of the U.S. Treasury down the road over the next six months."
The Pimco Total Return Fund, the world's largest bond mutual fund, reported sharply reduced holdings of mortgage-backed securities in December based on market value, while cash and Treasury investments rose, according to the fund's website.
Investments in MBS issued by companies such as Fannie Mae fell to 62 percent of the fund's portfolio last month from 81 percent in November, a chart showed.
"Mortgages represent a safe haven, high quality, decent carry, yielding investment for us," Gross said. "There hasn't been much in the way of liquidation."
Asked whether he was concerned about some analysts' view that the Treasury market is in a bubble, Gross told Reuters that U.S. government securities would still find demand given the anemic economic growth.
"There is a large concern, of course, that foreign central banks and sovereign wealth funds will at some point have a rather full plate of Treasuries," he said. "We have a situation here over the next 12 months I think where there are a number of possible buyers for these trillions of dollars of Treasuries that are going to be issued and ultimately the buyer of last resort, yes, will be the Federal Reserve."
He also said he considered Treasury Inflation Protected Securities attractive, with real yields of about 2 percent.
Gross said the U.S. government should return to the original intent of the Troubled Asset Relief Program to buy tarnished assets, adding that Pimco is in a good position to advise the government on purchases of subprime mortgage-related assets.
On U.S. municipal bonds, Gross said he expected the incoming administration of President-elect Barack Obama to unveil a substantial assistance package to municipalities over the next one to three weeks.
Municipal bonds yielding between 5.5 percent and 6 percent are an "extraordinary opportunity" for investors, he said.
http://www.cnbc.com/id/28695655
Worst Is Over for Banks—Not Economy
BILL GROSS, ECONOMY, CREDIT CRISIS, PIMCO
Reuters
| 16 Jan 2009 | 05:48 PM ET
The greatest damage to bank balance sheets from the financial crisis may be over, but the worst for the real economy lies ahead, Bill Gross, manager of the world's biggest bond fund, said Friday.
Gross, founder and co-chief investment officer of Pacific Investment Management Co, told Reuters there is a need to do whatever is required to get banks lending again, and that to stem more waves of bank losses, U.S. house prices must find a bottom.
"We have probably seen the worst of the credit crisis from the standpoint of the banking balance sheets, to the extent that they've already received a lot of capital and are going to get some more," said Gross, in an interview via video link from Pimco's headquarters in Newport Beach, California, .
The U.S. government late on Thursday said it would inject $20 billion in fresh capital into Bank of America and provide a backstop against $118 billion of bad assets it holds to help it absorb the acquisition of brokerage Merrill Lynch.
That was just the latest move by the U.S. government to pump money into battered financial companies amid the worst financial crisis since the Great Depression.
But even as Gross said he thinks bank balance sheets will not see even greater harm, he warned the worst may not be over for the credit markets.
The damage to corporate bond markets is far from over, with high-yield bonds at particular risk of rising defaults, Gross said.
"We haven't seen the worst of it from the standpoint of defaults, in terms of the high-yield market and small corporations, layoffs in terms of individuals, higher unemployment rates," Gross said, adding, "The worst is ahead for the real economy." Economists and investors have widely said that an upturn in the housing market is critical for United States' economic growth.
Fourth-quarter gross domestic product is expected to contract by more than 5 percent.
Still, Gross said he is not bearish on mortgage-backed securities (MBS), despite having trimmed his $132 billion flagship fund's holdings of these securities in December.
"Our mortgage-backed securities holdings are still significant," Gross said. "We have a 4 to 4.5 percent yield from them versus 1 to 2 percent or 2.5 percent in the Treasury market -- and we also have, of course, a willing buyer from the standpoint of the U.S. Treasury down the road over the next six months."
The Pimco Total Return Fund, the world's largest bond mutual fund, reported sharply reduced holdings of mortgage-backed securities in December based on market value, while cash and Treasury investments rose, according to the fund's website.
Investments in MBS issued by companies such as Fannie Mae fell to 62 percent of the fund's portfolio last month from 81 percent in November, a chart showed.
"Mortgages represent a safe haven, high quality, decent carry, yielding investment for us," Gross said. "There hasn't been much in the way of liquidation."
Asked whether he was concerned about some analysts' view that the Treasury market is in a bubble, Gross told Reuters that U.S. government securities would still find demand given the anemic economic growth.
"There is a large concern, of course, that foreign central banks and sovereign wealth funds will at some point have a rather full plate of Treasuries," he said. "We have a situation here over the next 12 months I think where there are a number of possible buyers for these trillions of dollars of Treasuries that are going to be issued and ultimately the buyer of last resort, yes, will be the Federal Reserve."
He also said he considered Treasury Inflation Protected Securities attractive, with real yields of about 2 percent.
Gross said the U.S. government should return to the original intent of the Troubled Asset Relief Program to buy tarnished assets, adding that Pimco is in a good position to advise the government on purchases of subprime mortgage-related assets.
On U.S. municipal bonds, Gross said he expected the incoming administration of President-elect Barack Obama to unveil a substantial assistance package to municipalities over the next one to three weeks.
Municipal bonds yielding between 5.5 percent and 6 percent are an "extraordinary opportunity" for investors, he said.
http://www.cnbc.com/id/28695655
Thank goodness for that!
One day short of the Obama Bounce! ;)
I hear ya! Let's roll-- UP!
Just in time for the Obama Bounce!
"He who fears being conquered is sure of defeat - Napoleon"
I hope you're right. The shorts are killing this thing. Let's hope it rockets up soon!
Wall Street unable to sustain rally, turns lower
Friday January 16, 1:02 pm ET
By Stephen Bernard, AP Business Writer
NEW YORK (AP) -- The reality of rising losses at Citigroup Inc. and Bank of America Corp. sank in on Wall Street Friday, making investors increasingly pessimistic about the struggling financial industry and forcing them to give back a big early gain.
The market initially focused not on the losses at the big banks, but the steps they were taking to improve their profitability.
Bank of America reached a deal late Thursday to receive an additional $20 billion in capital from the government. The bank will also receive guarantees to cover up to $118 billion in losses on loans and securities backed by residential and commercial real estate as it incorporates recently acquired Merrill Lynch & Co. into its operations. Bank of America's deal with the government is similar to one Citigroup reached with the government last fall.
John Merrill, chief investment officer of Tanglewood Wealth Management, said the change in direction Friday was not surprising.
"Every time the government does something, there is an initial and fleeting excitement this will help," Merrill said. "But (investors) look deeper and see, wow, this is a mess."
Merrill said investors don't have any insights into where future profitability will come from at banks. Current capital coming from the sale of assets and investments from the government are only enough to help support current lending levels, not enough to enable banking companies to increase operations, he added.
Citigroup, among the hardest hit by the ongoing credit and mortgage market turmoil, said it plans to split in two, separating its traditional banking business from its riskier operations. Earlier in the week, Citi agreed to sell a majority stake in its brokerage business to Morgan Stanley as it looks to streamline operations and shed assets
Citi said it lost $8.29 billion, or $1.72 per share, during the final three months of the year. Bank of America said it lost $2.39 billion, or 48 cents per share.
Bank of America shares tumbled 90 cents, or 10.8 percent, to $7.42. Shares of Citi fell 4 cents to $3.79.
In early afternoon trading, the Dow Jones industrial average fell 54.72, or 0.67 percent, to 8,157.77. The Standard & Poor's 500 index fell 6.70, or 0.79 percent, to 837.04, while the Nasdaq composite index declined 11.38, or 0.75 percent, to 1,500.46.
Alexander Paris, economist and market analyst for Chicago-based Barrington Research, said the price swings seen in the past couple of days are likely to continue in the coming weeks as the bulk of large-capitalization companies announce earnings.
"We're going into a test of the market, given the bad numbers coming out," Paris said. "It's a battle between sentiment and ugly fundamentals."
Tanglewood's Merrill said the market will be eyeing results outside the financial industry to see if banking troubles are seeping further into the broader economy. If non-financials can show some growth, it could restart the late 2008 rally that stalled in the first week of January.
"There's no sustained buying," Merrill said. "The follow through just isn't there."
The lack off broad-based buying allows for sharp retreats such as the on seen Friday, Merrill added.
The market also responded Friday to the government's latest reports showing the economy remains weak.
The Labor Department said the consumer price index fell 0.7 percent in December as energy prices slid. Economists polled by Thomson Reuters forecast a 0.9 percent drop. For the full year, prices rose just 0.1 percent -- the smallest gain since prices actually fell in 1954.
Meanwhile, the Federal Reserve said industrial production from the nation's factories, mines and utilities fell a larger-than-expected 2 percent in December. Economists expected a 1 percent.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 792.1 million shares.
The Russell 2000 index of smaller companies fell 8.79, or 1.90 percent, to 453.83.
Oil prices fell 86 cents to $34.54. The dollar mostly fell against other major currencies, while gold prices rose.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.29 percent from 2.20 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.12 percent from 0.10 percent late Thursday.
Overseas, Japan's Nikkei stock average rose 2.6 percent. Britain's FTSE 100 gained 0.9 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 was rose 0.7 percent.
VERY nice. Thanks!
Up. But due to jittery investors, it will take time to make this one skyrocket.
BAC shares are definitely moving higher today.
In terms you guys might understand.. It only got worse from here:
You bet it will. It's not going anywhere but up from here.
More details: http://www.cnbc.com/id/28685240
BAC will move and help bank sector tomorrow---
http://online.wsj.com/article/SB123205960618787447.html
Bank of America Corp. was near an agreement with U.S. officials late Thursday that would provide it with $15 billion to $20 billion of fresh capital while backstopping $115 billion to $120 billion of Bank of America assets to help shore up the bank.
This deal may be announced as early as tonight.
Bailout details emerging---
Bank of America Corp. was near an agreement with U.S. officials late Thursday that would provide it with $15 billion to $20 billion of fresh capital while backstopping $115 billion to $120 billion of Bank of America assets to help shore up the bank.
The firm has been hit hard by losses associated with its acquisition ...
http://online.wsj.com/article/SB123205960618787447.html
Bank of America is going to GAP in the morning. And it's gonna go on a major run. Look at after hours trading after the news:
Bank of America is securing a new rescue package, including $15bn in fresh capital and a government backstop for more than $100bn in toxic assets.
The news may be officially released as early as tonight!
Guys.. Why would it fail? Did you not read what i just posted?
Bank of America is securing a new rescue package, including $15bn in fresh capital and a government backstop for more than $100bn in toxic assets. It may be announced officially as early as this evening.
BAC News---
Developing.. Confirmed...
Bank of America is securing a new rescue package, including $15bn in fresh capital and a government backstop for more than $100bn in toxic assets.
Breaking... Bank of America is securing a new rescue package, including $15bn in fresh capital and a government backstop for $100bn + in toxic assets.
Think the stock will go up tomorrow?
AVII continues to amaze. No wonder the big buys keep coming in. Even in this market.
It will be interesting to see if they enforce the rules for those funds to sell, sell, sell on C. It could bounce back above 5 just like it did last time even as soon as this weekend.
Which is exactly why I'm loading up big time on GTCB. :)
I agree. GTCB has that Feb 09 FDA Approval in the bag and it should run. Got beat up hard during the last two bad market days.
Thanks so much for your update. Very helpful.
For the entire market?
A rational view of what's happening
All 14 messages in discussion
http://finance.google.com/group/google.finance.662713/browse_thread/thread/da03472d39000cd7
From: derziegenbock - view profile
Date: Wed, Jan 14 2009 7:34 pm
Email: derziegenbock <galen.simm...@gmail.com>
Rating: (4 users)
There's been a lot of discussion of Citi being broken up or going to
zero on these forums. I normally wouldn't spend time responding to
these sorts of blatant exaggerations, but I feel compelled to this
time around because I fear that there are small investors out there
who are scared and not sure whether to jump ship. The goal of this
post is to provide information, and perhaps some reassurance to long-
term oriented investors. I will lay out some facts first.
Citi has dropped nearly 40% this week. People attribute this to a
number of things: 1) the break-up of the financial supermarket 2)
speculation that said break-up is due to dire losses in a yet
unreleased yearly financial report 3) Comments from Obama that future
TARP money should be used for 'small banks' and mortgage holders 4)
idea that Fed has effectively taken over Citibank 5) speculation that
Rubin's departure was in anticipation of huge losses 6) possibility
that Citi is selling its future in the joint venture with Morgan
Stanley
The above are all of the negative events that I know of that have
occurred this week. Some are facts (i.e. Citibank did strike a deal
with MS), however most of the negative pressure on Citi stock is based
on uncertainty. For example, we do not know whether the next batch of
TARP money won't be used to buy bad assets off banks (Bernanke
suggested that it would at a talk at the London School of Economics on
Tuesday, contradicting what Obama had said earlier). Investors also
have no real information about Citi's potential losses. Most people
now think that Citi will book a loss of $10bn, and that has been
factored into the price of Citi shares to an extent. Citi may well
have sold a 51% stake in Smith Barney to cover losses, but we simply
do not know. In this climate, any business decision the firm makes
towards restructuring will be interpreted as a desperate measure and
reported as such. Investors have a short memory, and it was only a
month ago that Citi stock was rising in anticipation of a possible
merger with Goldman or Morgan Stanley. The timing of yesterday's deal
does call into question the judgment of the management, but at the
same time it has been clear for over a year that the financial
supermarket model has to be altered. The reason it has to be altered
is not because units like Smith Barney and CitiFinancial are 'the only
profitable' divisions Citi has, but rather the cost of managing these
different entities is so high that it is NOT profitable to try to keep
them. The bulk of Citi's profits have traditionally been produced by
its retail banking operations. There is hardly a single retail bank
in the country reporting positive profits for this year. The fact
that Smith Barney is profitable right now is irrelevant to the future
of the bank, because its survival depends on retail banking. If this
does not turn around, Citi may indeed be doomed regardless of how many
smaller profitable businesses it keeps.
I personally don't think that retail banking is doomed. Ironically,
it was a relatively good week for the credit markets (http://
gregmankiw.blogspot.com/2009/01/ted-is-more-relaxed.html), and most
serious economists are predicting a recovery in the second half of
2009. Let me close on this: volatility is a measure of uncertainty.
Right now, there are a lot of uncertainties. However, the
uncertainties don't just cut one way. Short sellers have a lot to be
gleeful about now, but since I really don't want to see anyone burned
too badly, let me suggest a scenario that might make you think before
unloading your Citi stock or shorting it too much. Citi announced
today that they will release their earnings on Friday. This is
probably calculated to calm down the markets. As I see it, one of two
things can happen. 1st scenario: Citi announces extraordinary losses
and the market sends Citi plummeting. Last time this happened on
Friday, if I recall correctly, Citigroup got a bailout and soared 50%
on Monday. If I were short on Friday, and Citi were down, I might
want to cover my shorts Friday afternoon. 2nd scenario: Citi
announces losses that are in line or below expectations, and the price
of the stock stays the same or rises. Even in this situation, though,
it's possible that the government might decide to start buying some
bad assets. Recognize that the government does have an interest in
seeing Citi's share price go up (remember those $10.61 warrants).
Also, the more capital Citi has, the less it needs to be bailed out.
So, if you're a pensioner with some money invested in Citi, don't
despair. Also, feel free to message me if you want advice. I'm busy
during trading hours, but I'm generous with my time as I hope you can
see.
Best of luck to everyone. I wouldn't wish financial ruin on any of
you.
Reply
From: triplese...@gmail.com - view profile
Date: Wed, Jan 14 2009 7:58 pm
Email: triplese...@gmail.com
Rating: (2 users)
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Thank you very much for the informitive breakdown of the situation.
People should try their best to emulate your well thought out post and
warm regards. Regardless of short/long posistion.
Reply
From: Tripps - view profile
Date: Wed, Jan 14 2009 8:22 pm
Email: Tripps <cwtri...@gmail.com>
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great post...the bottom line is you can't value citi anymore or most
of these big banks........no one trusts the data or balance sheet, the
stocks are constantly bear raided thru puts, credit default swaps, etc
as Citi was all week AGAIN. all FEAR and Loathing again
Reply
From: trader555...@gmail.com - view profile
Date: Wed, Jan 14 2009 8:51 pm
Email: trader555...@gmail.com
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You forgot 3rd scenario...
Citi posts huge profit and stock doubles.
If Citi needed capital it would be running commercials begging for
deposits.
Reply
From: rick28dearb...@gmail.com - view profile
Date: Wed, Jan 14 2009 8:57 pm
Email: rick28dearb...@gmail.com
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I agree with trader555
I recently borrowed $25,000 on my citibank credit card at an effective
rate of 3% on a balance transfer offer, and although I have great
credit, my point is that they have enough liquidity to make offers
like this.
Still long at $7.20 with my fingers crossed for good luck!
Reply
From: vlee2...@gmail.com - view profile
Date: Wed, Jan 14 2009 9:25 pm
Email: vlee2...@gmail.com
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Hi derziegenbock,
Thank you very much for your balanced comment. I am long on this and
was very tempted to cut my losses at a huge loss. I will sit tight
now. Whatever happens I will accept this. Life is uncertain. The
market is totally in panic stage now.
Very warm regards,
Reply
From: BananaB...@msn.com - view profile
Date: Wed, Jan 14 2009 9:36 pm
Email: BananaB...@msn.com
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Again thank you Derziegenbock for that write up, very helpful in a gut
wrenching time.
Reply
From: jba2...@gmail.com - view profile
Date: Wed, Jan 14 2009 9:55 pm
Email: jba2...@gmail.com
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Citi is expecting to post a $10 billion dollar loss, if Citi posted a
profit forget a stock doubling, the stock would go up 1000%
(seriously).
- Hide quoted text -
- Show quoted text -
trader555...@gmail.com wrote:
> You forgot 3rd scenario...
> Citi posts huge profit and stock doubles.
> If Citi needed capital it would be running commercials begging for
> deposits.
Reply
From: rick28dearb...@gmail.com - view profile
Date: Wed, Jan 14 2009 9:55 pm
Email: rick28dearb...@gmail.com
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Here's a graphic describing which assets will be kept & which will be
sold:
http://www.nytimes.com/imagepages/2009/01/14/business/20090114_CITI_GRAPHIC.html
Reply
From: iloveholiday...@gmail.com - view profile
Date: Wed, Jan 14 2009 10:02 pm
Email: iloveholiday...@gmail.com
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Hi all,
I have bought citi at $25 when everything seem so good. Bear in mind,
you are not the CEO of the company, you are as blind as anyone outside
(analyst...) The debt and the estimated losses you dont know, you are
just putting money on a horse that you dont even know you can run.
Golden Rule. One guideline, as long as the company dont make money no
dividend, dump its shares. Dont hold. I have dump it at $6.80. I
bought other horses (shares) that make money. Now, I have recoup.
Good Luck . If you still want to buy.. buy small 100 shares.. Dont
risk too your money.. It is not worth it.
From www.iloveholiday.com
- Hide quoted text -
- Show quoted text -
derziegenbock wrote:
> There's been a lot of discussion of Citi being broken up or going to
> zero on these forums. I normally wouldn't spend time responding to
> these sorts of blatant exaggerations, but I feel compelled to this
> time around because I fear that there are small investors out there
> who are scared and not sure whether to jump ship. The goal of this
> post is to provide information, and perhaps some reassurance to long-
> term oriented investors. I will lay out some facts first.
> Citi has dropped nearly 40% this week. People attribute this to a
> number of things: 1) the break-up of the financial supermarket 2)
> speculation that said break-up is due to dire losses in a yet
> unreleased yearly financial report 3) Comments from Obama that future
> TARP money should be used for 'small banks' and mortgage holders 4)
> idea that Fed has effectively taken over Citibank 5) speculation that
> Rubin's departure was in anticipation of huge losses 6) possibility
> that Citi is selling its future in the joint venture with Morgan
> Stanley
> The above are all of the negative events that I know of that have
> occurred this week. Some are facts (i.e. Citibank did strike a deal
> with MS), however most of the negative pressure on Citi stock is based
> on uncertainty. For example, we do not know whether the next batch of
> TARP money won't be used to buy bad assets off banks (Bernanke
> suggested that it would at a talk at the London School of Economics on
> Tuesday, contradicting what Obama had said earlier). Investors also
> have no real information about Citi's potential losses. Most people
> now think that Citi will book a loss of $10bn, and that has been
> factored into the price of Citi shares to an extent. Citi may well
> have sold a 51% stake in Smith Barney to cover losses, but we simply
> do not know. In this climate, any business decision the firm makes
> towards restructuring will be interpreted as a desperate measure and
> reported as such. Investors have a short memory, and it was only a
> month ago that Citi stock was rising in anticipation of a possible
> merger with Goldman or Morgan Stanley. The timing of yesterday's deal
> does call into question the judgment of the management, but at the
> same time it has been clear for over a year that the financial
> supermarket model has to be altered. The reason it has to be altered
> is not because units like Smith Barney and CitiFinancial are 'the only
> profitable' divisions Citi has, but rather the cost of managing these
> different entities is so high that it is NOT profitable to try to keep
> them. The bulk of Citi's profits have traditionally been produced by
> its retail banking operations. There is hardly a single retail bank
> in the country reporting positive profits for this year. The fact
> that Smith Barney is profitable right now is irrelevant to the future
> of the bank, because its survival depends on retail banking. If this
> does not turn around, Citi may indeed be doomed regardless of how many
> smaller profitable businesses it keeps.
> I personally don't think that retail banking is doomed. Ironically,
> it was a relatively good week for the credit markets (http://
> gregmankiw.blogspot.com/2009/01/ted-is-more-relaxed.html), and most
> serious economists are predicting a recovery in the second half of
> 2009. Let me close on this: volatility is a measure of uncertainty.
> Right now, there are a lot of uncertainties. However, the
> uncertainties don't just cut one way. Short sellers have a lot to be
> gleeful about now, but since I really don't want to see anyone burned
> too badly, let me suggest a scenario that might make you think before
> unloading your Citi stock or shorting it too much. Citi announced
> today that they will release their earnings on Friday. This is
> probably calculated to calm down the markets. As I see it, one of two
> things can happen. 1st scenario: Citi announces extraordinary losses
> and the market sends Citi plummeting. Last time this happened on
> Friday, if I recall correctly, Citigroup got a bailout and soared 50%
> on Monday. If I were short on Friday, and Citi were down, I might
> want to cover my shorts Friday afternoon. 2nd scenario: Citi
> announces losses that are in line or below expectations, and the price
> of the stock stays the same or rises. Even in this situation, though,
> it's possible that the government might decide to start buying some
> bad assets. Recognize that the government does have an interest in
> seeing Citi's share price go up (remember those $10.61 warrants).
> Also, the more capital Citi has, the less it needs to be bailed out.
> So, if you're a pensioner with some money invested in Citi, don't
> despair. Also, feel free to message me if you want advice. I'm busy
> during trading hours, but I'm generous with my time as I hope you can
> see.
> Best of luck to everyone. I wouldn't wish financial ruin on any of
> you.
Reply
From: dannyorgr...@gmail.com - view profile
Date: Wed, Jan 14 2009 10:11 pm
Email: dannyorgr...@gmail.com
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man I love the optimism in this group, it's about time
Reply
From: ajsz...@yahoo.com - view profile
Date: Wed, Jan 14 2009 10:37 pm
Email: ajsz...@yahoo.com
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Thanks for the analysis. I still have some of the stocks at $4.90.
Friday is the day. BTW, I'm confident Citi won't have profits posted.
Reply
From: manshd...@gmail.com - view profile
Date: Wed, Jan 14 2009 10:41 pm
Email: manshd...@gmail.com
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Come on man The World second richest man and the prince will back your
Citi UP
Dont worry be happy
WILL HE PULL ALL HIS MONEY OUT/???
Reply
US-Dow losses mirror 1988's January start -- CitiFX
http://www.cnbc.com/id/28657913
The losses of the Dow Jones industrial average so far this year are
tracking close to the start of 1988, according to technicians at CitiFx.
They noted that following the recovery off the 1987 low, the Dow rallied
through year-end to peak at 2,066.15 on the 5th Jan. 1988. It then corrected to
1,850.96 over 12 trading days (-10.4 percent)
The peak so far on the rally off the November 2008 low was posted on Jan 6
at 9087.82. The market has since been falling for 6 trading days. "A similar
drop of 10.4 percent off the 9087.82 high gives a level of 8,140.87. The low
today (so far) has been 8142.16," CitiFX said in a note.
US-Dow losses mirror 1988's January start -- CitiFX
http://www.cnbc.com/id/28657913
The losses of the Dow Jones industrial average so far this year are
tracking close to the start of 1988, according to technicians at CitiFx.
They noted that following the recovery off the 1987 low, the Dow rallied
through year-end to peak at 2,066.15 on the 5th Jan. 1988. It then corrected to
1,850.96 over 12 trading days (-10.4 percent)
The peak so far on the rally off the November 2008 low was posted on Jan 6
at 9087.82. The market has since been falling for 6 trading days. "A similar
drop of 10.4 percent off the 9087.82 high gives a level of 8,140.87. The low
today (so far) has been 8142.16," CitiFX said in a note.
Citi: Time for Heroic Measures?
Calls to nationalize are growing as lifelines fall short and the bank drags down the rest of the market
Should the government put Citigroup (C) out of its misery and just nationalize the massive money center bank?
Citi has been in crisis mode for a while. On top of $44 billion from private investors, Treasury injected $45 billion more. Regulators agreed to eat the majority of losses on $306 billion of assets. Then on Jan. 13, the bank ceded control of its brokerage Smith Barney and alluded to a bigger breakup.
Nothing seems to be working at Citi, whose woes have helped drag down the entire stock market this year. Since the government's first infusion of capital in October, shares of Citi have fallen by 76%, to 4.53, vs. 43% for the banking index. With faith eroding fast, a growing number of economists, analysts, and investors thinks the government needs to take more drastic action and seize the bank. "[Citigroup] may have to be nationalized," says Anil Kashyap, an economics professor at the University of Chicago and a former economist at the Federal Reserve. Says analyst David Hendler of CreditSights: "Until Citi is put on steady ground, they hurt everybody in the marketplace." Citi declined to comment before its earnings announcement on Jan. 16.
While Citi appeared to be stabilizing last quarter, at least on paper, the financial picture could deteriorate quickly. As of Sept. 30, Citi's bank assets (what it owns) exceeded its liabilities (what it owes) by $63 billion, or 5.2% of assets. That's a slim margin. A bank is insolvent when its assets don't cover its liabilities. Even before that, a bank can fall into the government's hands.
Close to the Edge
The big worry now is on the asset side of Citi's ledger. Just a modest decline in the value of its $1.2 trillion banking portfolio would put Citi close to the edge of insolvency. And there are plenty of toxic securities lurking. Citi owns roughly $400 billion of consumer and real estate loans. With the economy continuing to sour, those areas are particularly vulnerable to further losses and writedowns. "The sooner these toxic assets can be identified and quarantined, the sooner the healing process starts," says Jonathan M. Duensing, head of corporate credit at money manager Smith Breeden Associates.
Despite the inevitable pain to stock- and bondholders, a federal seizure could have a soothing effect on the rest of the market. By taking over Citi, the government could separate the good assets from the bad, much like after the savings-and-loan crisis in the 1990s. Back then, the government shut down hundreds of failed banks, paid depositors, and then sold off the portfolios of loans and real estate to restructuring specialists. The orderly process set a price for banks' bad loans, giving investors confidence in the value of those assets.
The market could use that sort of clarity today. Buyers and sellers have been at an impasse for months over the piles of toxic debt clogging up the system. Private equity firms, vultures, and other potential investors who think asset values are still unrealistically high, are sitting on the sidelines. Sellers, including banks, don't want to cut their asking prices for fear of further battering their balance sheets. The standoff has been exacerbated by the flip-flops in government strategy. "The toxicity of the assets is perceived to be much greater by the marketplace" than the banks, says Tom Barrack, founder of Colony Capital and a veteran manager of distressed assets. "We're in this massive fight to regain financial credibility."
With Matthew Goldstein and Emily Thornton.
Der Hovanesian is Banking editor for BusinessWeek in New York. Henry is a senior writer at BusinessWeek.
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