Kevin Walmsley

Sentiment Positive Ahead of Citi Earnings

"Only Citi knows their actual results, but their current sentiment points to Citi meeting or exceeding earnings expectations on Friday."

That might be giving C more credit than they deserve. For the past three years, they have been famously clueless about what assets they even carry on their balance sheets, let alone on the many off-sheet vehicles.

Months ago, Congress and the FASB decided it would be prudent to let banks lie to investors, and to themselves, by not recognizing real losses. So, is natural that people are optimistic that they will meet their numbers, just as I could drop 40 pounds in one night if you let me fiddle with the scale.

Sentiment Positive Ahead of Citi Earnings

Only Citi knows their actual results, but their current sentiment points to Citi meeting or exceeding earnings expectations on Friday.

Monday Options Recap

We took down a small covered call position in DRYS this afternoon, selling the June 7.5 calls.

Where Citigroup Went Wrong

I dunno. Jamie Dimon helped to assemble the financial supermarket model that is in such disrepute. Would he have helped Weill build it, only to tear it apart when left to his own devices?

Citigroup went wrong when it embarked on a strategy to become "too big to fail". By doing so, it became too big to succeed. The Titanic sank because no ship should have been sailing at full speed through iceberg-choked oceans. It did NOT sink because the wrong captain was sitting in the chair.

Year-End Buyouts: Big Challenges for the Big Banks

Too big to fail probably means they're also too big to succeed. Now that the taxpayer is on the hook for future losses, why should the banks lend? Would you?
Suppose you were a banking executive at the new, federally funded Bank of America, and have before you a loan application from a large retailer. Or a big commercial developer. Or an aircraft leasing company. Or a heavy equipment manufacturer. And you know that in the event of default, not only might you lose your job, but you might have to testify before Barney Frank's goons on the House Financial Services Committee, followed by the possibility of incarceration. Would such a prospect make you more inclined to lend? Or less so?
As soon as the United States Congress became part of their board of directors, Wall Street became Amtrak. Too big to fail, yes. Too politically connected to officially go bankrupt, yes.

But no sane person would invest money in it.

Citigroup's Derivatives Reduce Bailout to a Non-Event

Ummm . . . if you're recommending a buy on Citi, maybe you should have come up with a better example than Lehman Brothers to make your point.


On Jan 04 07:45 PM samrock001 wrote:

> Looks like you are the same cookie who had short position in C/GS/JPM
> and published a similar article last week. Now, with this article
> it seems you have covered your short position on GS. Good job else
> you would have your a** blown away. You still have short position
> in C and JPM. Similar to my advice last time with respect to GS,
> cover your short positions in C and JPM before Jan 15. Else you know
> what I am talking about.
>
> Why the hell on this earth people want to post such rubbish article
> when they don't have a clue about derivatives/swaps and how they
> work. Go and read a little before trying to post such BS. The derivatives
> may stand at trillions but the net exchange or inter party trade
> would be only couple of billions. Take Lehman an example.
>
> Folks, this cookie has published similar article in the past. Don't
> get swayed. Now is the time to go long Citi and JPM.

Tough Times for Card Companies - Barron's

Warhorse and MP--good comments.

I have a briefcase safe that I call my run-n-gun (it's used to contain a firearm, but no more. But I've kept the moniker). I have important insurance documents, a few thousand dollars cash, birth certs, etc. It's in case my house is burning down or there's a hurricane on the way, and I have time only to grab a couple of things and rebuild my life somewhere else.

Anyhow, I also had two unused credit cards in there, with $10k credit limits. And last month I got letters saying that they had been closed. I thought at first my identity had been stolen or something--I didn't recognize the account numbers, or the banks. Then it occurred to me that they had closed my run-n-gun credit card accounts, just in case I ever got the mind to use them, but at least now they don't have to maintain reserves against that possibility.

Six months ago, they would barrage my mailbox with offers to increase the limits, if only I would use it. Now they apparently feel that if I start buying stuff, I won't pay them back.

Not a good picture. The banks are running scared. Not only are they refusing new loans, they're busy closing up old ones.

The Rules on Buybacks Ought to Be Changed for Citigroup

On Nov 23 02:14 PM mik123 wrote:

> Once Citigroup gets through 2009, it will get
> back to earning 25 billion per year. At 10x earnings that's a 250
> billion market cap which is 12.5x the current market cap. 12.5x the
> current price takes it to $47 a share.

How much of that $25 billion came from subprime and mortgage origination, which won't be back EVER. How much of that $25 billion came from mark-to-market trading in derivatives and CDS's? How much of that $25 billion came from asset-based management, which have been chopped in half? And how are they going to get back to $25 billion, given the fact that they've laid off so many of the people who generated those false profits in the first place?

You also, of course, assume no additional losses going forward. That foreclosures stop right now, credit card debts suddenly get paid, and unemployment heads the other direction.

Well, time will tell. That's what markets are for, after all.

The Rules on Buybacks Ought to Be Changed for Citigroup

Um . . . you can change the rules all you like. But if Citi doesn't have the money to pay dividends, and if they put Rubin on a jet with a cup in his hand, raising capital wherever he can find it, it's likely they're not going to be announcing any big share buybacks anytime soon.

Citigroup: The End Draws Near

Nobody complains when buyers using margin drive stock prices higher. But when short sellers show up, suddenly they're vilified as the main actors in driving down prices.
It wasn't the short sellers who told Chuck Prince to run dozens of unsupervised businesses, levering and blowing through billions of company capital. It wasn't the short sellers who told Citi to go boldly into the CDS markets, move the assets off balance sheet, announce to the world they wouldn't be bringing them back, then doing so. It wasn't the short sellers that blew up Pandit's hedge fund, had Citi make the investors whole, then name Pandit CEO. It wasn't the short sellers who sold investors billions of dollars worth of Auction Rate Securities, then let them blow up. It wasn't the short sellers that disclose, month after month after month, more exposure to toxic assets than they acknowledged previously. And it wasn't the short sellers that paid Robert Rubin $15 million a year to jet around the world with a cup in his hand, borrowing all he can at 13%.
Some of the bullish posters on C have a slavish devotion to this company that beggars belief. Time will tell. But usually short sellers are right.

Citigroup: The End Draws Near

The markets are annihilating all the equities with exposure that nobody seems to get a handle on. How anyone could take Citi's management at their word after the disastrous past 14 months staggers the imagination. From bringing back onto the balance sheet tens of billions of toxic assets, to the ARS debacles, to sending Rubin around the world with a cup in his hand to anxiously raise capital at 13%, then disclosure after disclosure that their liabilities in the CDS and mortgage-backed markets are far higher than was revealed just a few weeks before.
There's no crisis in confidence in Citi here at Seeking Alpha. But everywhere else, there sure is. Me? I'll have to side with the rest of the market, and assume that usually the short sellers are right.