Wow, what a day. After a seesaw day yesterday, the indecies made a powerful move to the upside today on some very interesting news.
Asia:
Nikkei => 7,054.98, -31.05, -0.44%
Hang Seng => 11,694.05, +349.47, +3.08%
Straits Times => 1,485.75, +28.80, +1.98%
Europe:
FTSE => 3,715.23, +172.83, +4.88%
DAX => 3,886.98, +194.95, +5.28%
CAC => 2,663.68, +144.39, +5.73%
U.S.:
Dow => 6,926.49, +379.44, +5.80%
Nasdaq => 1,358.28, +89.64, +7.07%
S&P => 719.60, +43.07, +6.37%
As for me:
AMD =>$2.32, +0.18
MIPS => $2.36, +0.17
NG => $2.43, -0.11
AMD DG => $0.11, +0.01
BKC PX => $2.15
First, a memo was leaked indicating that Citigroup Inc operated with a profit for both January and February of this year. A surprising announcement considering the billions of dollars in government aid they have taken even up to the end of February.
So, if they truly are making a profit and can afford to give out some sort of bonus' to their Smith Barney fund managers, then why are they being given any aid at all. Why did the U.S. Government have to take a 36% stake in the company. Maybe if they had disclosed that they made been making a profit their stock price would not have dipped below $1.
So, the question arises, is it time to start considering Citigroup Inc. for a stock position? Only if you are a speculator. The stock price is well below all the commonly followed moving-averages (20/50/200), there has been no recognizable or significant candlestick patterns, the RSI is only now moving back up after being beaten below 30 points.
But on the side of speculators, the Chaikin Money Flow indicator is showing that volume is becoming less negative, the Stochastic and MACD indicators show that it is very oversold but turning.
So what am I doing? I am sitting on the side lines. I am going to wait for a pull back and an indication that this pop wasn't a one time thing.
Second, U.S. Rep. Barney Frank, chairman of the House financial services committee, said that the up-tick rule, intended to hinder shorting stocks unless they first moved up in price, may be reinstated within a month from now.
Well it looks like all the discussions on the financial media outlets have been heard. 'Bout time!
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Showing posts with label Citigroup. Show all posts
Showing posts with label Citigroup. Show all posts
Tuesday, March 10, 2009
Monday, March 2, 2009
Nationalization Revisited.
The financial sector continues to give the market a heart attack as AIG reports huge losses and the their bailout is renegotiated.
Asia is the first to react to the bad news:
Nikkei => 7,280.15, -288.27, -3.81%
Hang Seng => 12,317.46, -494.11, -3.86%
Straits Times => 1,533.40, -61.47, -3.85%
Europe didn't react any better:
FTSE => 3,625.83, -204.26, -5.33%
DAX => 3,710.07, -133.67, -3.48%
CAC => 2,581.46, -121.02, -4.48%
And the US finished the day:
Dow => 6,763.29, -299.64, -4.24%
Nasdaq => 1,322.85, -54.99, -3.99%
S&P => 700.82, -34.27, -4.66%
As for me:
AMD => 2.01, -0.17
F => 1.88, -0.12
NG => 2.54, -0.32
AMD DG => 0.09, -0.01
HRP JZ => 1.50, unchanged
NLH JZ =>1.55, unchanged
Today I listened to a Yahoo! Finance techticker interview by hosts Aaron Task and Henry Bloget, and their guest Nouriel Roubini of NYU's Stern School. In the interview they got Roubini's reaction to Bill Gross' comments that "nationalization is a bad idea." I believe Roubini made a few interesting points about how the "nationalization" of the banks isn't the same as the Swedish model that Gross is referring to. If you haven't watched the video, please do(2). This video is a continuation of the interview where Roubini encourages full nationalization as better(1).
Roubini comments in a way that indicates that the situation is no longer "if" the banks will be nationalized, but how and how much. He uses the words "partial" or "full" and illustrates that with Citigroup who is now 36% owned by the government. To him, anything over a third is effectively partially nationalized, and that is the status of Citigroup right now.
I personally don't agree with the idea of fully nationalizing the banks since it will wipe out the shareholders, of which I am not. However, Roubini does make a point at the end of the first video that could very well be true. He comments that at this point fully nationalizing Citigroup and Bank of America would barely have an effect on the market because their stock has already been beaten down so much. Nationalizing the "big banks" would only have about a 50 point effect on the Dow and the significant moves in the market are a result of systemic fear because of the financial sector.
Unfortunately, I see that as a continuing inevitability. News reports will still come out about how the government is disassembling these "to big to fail" banks and those reports will affect the stock value of other companies since these big banks are still the account providers for existing companies.
My opinion on what the government should do is very simple, yet not at all pretty. If the banks want to clean up their balance sheets, they should have to follow these 4 steps.
First, accept a moratorium on all incomplete foreclosures. This will provide time for the owners to get their act together for the last step.
Second, the banks will have to accept the government's offer to buy the bad assets from them at market value or for the foreclosure principle balance, whichever is least. This is fare because the Bank wants more but the government wants to pay less, neither will be happy.
Third, the government should then send the list of assets to the county court house for which the properties reside so that they can be auctioned off, starting at the value the government bought it from the banks for. The resulting amount should then be funneled into the counties budget to pay for education and infrastructure.
Forth, the banks should be forced to allow for every property owner the opportunity to refinance even if they are not in default yet.
Like I said, it is simple, not pretty.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
Asia is the first to react to the bad news:
Nikkei => 7,280.15, -288.27, -3.81%
Hang Seng => 12,317.46, -494.11, -3.86%
Straits Times => 1,533.40, -61.47, -3.85%
Europe didn't react any better:
FTSE => 3,625.83, -204.26, -5.33%
DAX => 3,710.07, -133.67, -3.48%
CAC => 2,581.46, -121.02, -4.48%
And the US finished the day:
Dow => 6,763.29, -299.64, -4.24%
Nasdaq => 1,322.85, -54.99, -3.99%
S&P => 700.82, -34.27, -4.66%
As for me:
AMD => 2.01, -0.17
F => 1.88, -0.12
NG => 2.54, -0.32
AMD DG => 0.09, -0.01
HRP JZ => 1.50, unchanged
NLH JZ =>1.55, unchanged
Today I listened to a Yahoo! Finance techticker interview by hosts Aaron Task and Henry Bloget, and their guest Nouriel Roubini of NYU's Stern School. In the interview they got Roubini's reaction to Bill Gross' comments that "nationalization is a bad idea." I believe Roubini made a few interesting points about how the "nationalization" of the banks isn't the same as the Swedish model that Gross is referring to. If you haven't watched the video, please do(2). This video is a continuation of the interview where Roubini encourages full nationalization as better(1).
Roubini comments in a way that indicates that the situation is no longer "if" the banks will be nationalized, but how and how much. He uses the words "partial" or "full" and illustrates that with Citigroup who is now 36% owned by the government. To him, anything over a third is effectively partially nationalized, and that is the status of Citigroup right now.
I personally don't agree with the idea of fully nationalizing the banks since it will wipe out the shareholders, of which I am not. However, Roubini does make a point at the end of the first video that could very well be true. He comments that at this point fully nationalizing Citigroup and Bank of America would barely have an effect on the market because their stock has already been beaten down so much. Nationalizing the "big banks" would only have about a 50 point effect on the Dow and the significant moves in the market are a result of systemic fear because of the financial sector.
Unfortunately, I see that as a continuing inevitability. News reports will still come out about how the government is disassembling these "to big to fail" banks and those reports will affect the stock value of other companies since these big banks are still the account providers for existing companies.
My opinion on what the government should do is very simple, yet not at all pretty. If the banks want to clean up their balance sheets, they should have to follow these 4 steps.
First, accept a moratorium on all incomplete foreclosures. This will provide time for the owners to get their act together for the last step.
Second, the banks will have to accept the government's offer to buy the bad assets from them at market value or for the foreclosure principle balance, whichever is least. This is fare because the Bank wants more but the government wants to pay less, neither will be happy.
Third, the government should then send the list of assets to the county court house for which the properties reside so that they can be auctioned off, starting at the value the government bought it from the banks for. The resulting amount should then be funneled into the counties budget to pay for education and infrastructure.
Forth, the banks should be forced to allow for every property owner the opportunity to refinance even if they are not in default yet.
Like I said, it is simple, not pretty.
That is my opinion, you can take it or leave it.
Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.
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