WSJ on Citi Conference Call
Submitted by
CalculatedRisk on Fri, 04/18/2008 - 6:03am (58 comments)
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Unprecedented is a popular word these days.
How reassuring.
"increases in credit-card losses, poor housing fundamentals and rising unemployment."
"including attrition and job losses. Mr. Crittenden estimates it in the 16,000 range."
Wonder where those are coming from.
CNBC reported on air that Citi actual writedowns were $15.8bn including RMBS & SIV.
Citi also says no turnaround until 2010.
And the Market is up with all of this good news, go figure.
jo6pac
The race to the bottom continues.
Interest assessment from another board.
"The Dragon didn't eat the sun today, so that must mean the worst is behind us".
Yup, that's the herd mentality today, lead by sheep dog CNBC.....Shill Masters of the universe. Guests better be embarrassed to be intro'd as CNBC contributor. eesh.
including attrition and job losses. Mr. Crittenden estimates it in the 16,000 range.
How many of these will be off-shore?
Will somebody please teach this guy to use plain english?
That's a pretty straightforward statement from Citi's Crittenden. They're battening down the hatches, paring the expense side.
That's probably the most honest assessment i've seen in a while from management. there is no cheer-leading in anything crittenden says and, frankly, i don't see why the stock is up at all.
Ex-losses, earning are flat and will be facing headwinds according to him. The plan is to cut expenses and headcount? I think that's a bit like the government saying they're cutting discretionary spending when we all know where the real spending is. C is not going to turn the ship by doing that, and think they have no choice but to off-load some divisions. Interesting that they are slashing on the consumer side too.
Very gloomy but realistic here. I'd say they are about 1/2 way though their write-downs.
I liked Crittenden's answer, in the sense that I found it informative. Parsing through everything, I think he gave a long winded, 'that's correct,' to Whitney's question. Her question was a fair one, but extraordinarily rude, since it, from my point of view, boiled to "given the extent to which your management has lost control of the situation, we really shouldn't look for meaningful financial statements in the usual since from you guys for the rest of the year, now should we?"
Here are some numbers from WSJ Earnings data base.
For all of 2007, earnings of over 4,000 public U.S. companies declined by 16% compared to all of 2006. Taking out financials, earnings declined 6%.
In the last two quarters of 2007, all earnings declined by 58%. Earnings less financials declined by 26%.
There is evidence of more earnings weakness beyond financials in the first quarter of 2008 so far.
"Facing 'tail' winds" might be more appropriate when dealing with big shitpile.
Citi 8k(.pdf)
Citi's Financial supplement spreadsheet(.xls)
The odd thing(I haven't looked at the spreadsheet) is that skimming through it I saw nothing about their tier I situation, yet they say they don't need to raise more capital.
Show me that and I'll know if they need to or not.
"Parsing through everything, I think he gave a long winded, 'that's correct,' to Whitney's question"
Actually, I read it a little differently. More like:
Whitney: How will us analysts know you aren't stuffing your "restructuring charges" like a Xmas turkey to make your operating results look better?
Crittenden: You won't.
CR - you should listen or read ETFC conf call when you have a chance. Lots of interesting statements about the process of trying to unwind all the HELOC that they own.
When the going gets rough, the English language seems to fail Mr. Crittenden.
I can't believe I'm posting this, but did anyone realise she's married to a professional wrestler? Like, WWF? I knit you shot. JBL, a JR Ewing type character. Or something, what do I know.
WEDDINGS/CELEBRATIONS; Meredith Whitney, John Layfield - New York Times
Citi Q4: Whew! The worst is behind us.
Citi Q1: Ya this is the kitchen sink quarter
Citi Q2: We see turn around in Q3
Citi Q3: This is the worst Q3 in our history
City Q4: Q4 numbers will be suspended until the merger between USB Citi and BAC JPM is completed and rolled into the FED.
but did anyone realise she's married to a professional wrestler
Opposites attract.
City Q4: Q4 numbers will be suspended until the merger between USB Citi and BAC JPM is completed and rolled into the FED.
Interesting Times
By that time the Dow will be at 16,000 of course.
"given the extent to which your management has lost control of the situation, we really shouldn't look for meaningful financial statements in the usual sense from you guys for the rest of the year, now should we?"
or maybe something along the lines of "What assurances can you give us, that we should believe a damn thing that comes out of your mouths given the spectacular display of greed and incompetence you have demonstrated over the past year?"
I think every conference call should very ceremoniously start with this question. If I was a shareholder, I would even add some profanity and crude insults for good measure.
I don't understand all the angst over the daily moves in the stock market. The market has always had big rallies and sell offs in the short term. Always.
The market has been over-valued since the late 1990s imo. Hence the poor returns, especially on a risk & volatility adjusted basis.
If it ain't there, it ain't there. These things take years to shake out.
... couple things that we make significant progress on headcount...
For those who might be confused, e.g. because you hav a different understand of what progress means: "progress" here refers to eliminating jobs. Not the speaker's of course -- that would definitely not count as "progress".
Angry Saver said: "I don't understand all the angst over the daily moves in the stock market. The market has always had big rallies and sell offs in the short term. Always...."
I've been trying to make the same argument about the economy for over a year now. Good luck.
S.
How long can these guys spin before the bearings wear out ?
is the fed posting daily or otherwise periodic "loans" at the Primary Dealer Credit Facility (PDCF)
that number along with the TSLF could go a long way to explaining the markets bounding optimism...
by the way, Rich...your wsj figures...thanks
Sebastian
"I've been trying to make the same argument about the economy for over a year now."
Pretty good coming out of a guy who thinks devaluing ones currency is the road to riches. Good luck.
"I've been trying to make the same argument about the economy for over a year now."
I am a fan of efficiency so I would just like this to be resolved, especially before the next NFL season opener!
i'm on it but have not found the right fed web page yet.
from another site...seems data for
PDCF borrowing is made available Thursdays, at the web page :
"Federal Reserve Statistical Release H.4.1 - Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks".
The H.4.1 release supposedly contains the total amount of PDCF credit outstanding as of the close of business the day before.
i'm looking
mkt up 250+ pts on good news of global recession and more cash burn; don't be priced out in this game of hot potato!
Mish's Global Economic Trend Analysis: Global Recession On The Way
"The market has always had big rallies and sell offs in the short term. Always...."
Actually, most long-time observers of the market (meaning people who've been in it for 2-3 decades) say that the day-to-day volatility we're seeing in the market these days is highly unusual in historical terms. I have a relative who manages pension investments for a state in the southern US who confirms this, as do other colleagues in similar positions. in other states.
"Citi also says no turnaround until 2010"
Wall st looking past the valley -LOL!
The mkt volatility stopped after Bear was bailed out, i.e, the mkt on average is up almost 10% since then with no downside trends. The Fed gave everyone the greenlite to pump up collateral, but at what point do you call this 15% overvaluation a bubble?
from wikipedia
Primary Dealer Credit Facility (PDCF), ...During the first three days the facility was open an average of $13.3 billion was borrowed daily with $28.8 billion in loans outstanding
(note, thought i read at bloomberg or wsj that recently the number was above 30 billion each day...trying to confirm numbers here)
here is an easy reference which comes from brad delongs blog to remind all ...but what has the fed done for us lately, (snark)
"Since last fall the Federal Reserve has done eight things:
It's all priced in now!
I'm not clear on why you're obsessing on the PDCF mock?
I think that we're gonna have to withstand that kind of volatility / madness until November... then...
Don,
I think you'll find cyclical bear markets can be enormously seductive to those optimists who generally take up long positions.
Within your time frame of twenty years, we've experienced two or three recessions, but only one really significant market downturn (dot.com), which provided a period of considerable volatility.
Essentially, we are now descending a wall of worry - lower highs and lower lows. The return of an active VIX is to be expected.
Crap! Someone sed ther wuz WWF headshots here to see. Nothin' but boring gobbldeegook about financial meldown. Citi? That be like play me anotha Jethro Tull Citi in da citiplaya? Eat me summore Doritos here.
Also, me needs more COWBELL! Shout out
i'm not obsessing..just interested
if pdcf borrowings are buoying the equities market....then....volume as indicated on H.4.1 might give insight about when to go long verses short.
Before I got sick in 2001 and dropped out I thought that because the tech boom blew out, and low interest rates that housing prices would rise as people started pumping money into real estate. (And think of the leverage you can get, with a 10%, 5% or even no money down loan)
Now that mortgage backed stuff is imploding I think we're back to pumping money into stocks. So even though the business fundamentals suck, people are still tossing money at them because other investments are even scarier.
I'm kinda wondering if there isn't a huge amount of inflation thats been fire walled off in real estate and tax protected paper.
Her question was a fair one, but extraordinarily rude...
If only we had more analysts willing to ask "extraordinarily rude" questions...
I should add that your friends are entirely correct -volatility has been muted through most of the years you are considering. Be careful, however, in what conclusions you draw.
Don writes:
"The market has always had big rallies and sell offs in the short term. Always...."
Actually, most long-time observers of the market (meaning people who've been in it for 2-3 decades) say that the day-to-day volatility we're seeing in the market these days is highly unusual in historical terms.
Bear markets are far more volatile than bull markets as optimists continuously rally, routinely hoping we finally hit bottom... at some point that will be true, IMO not until end 09 early 10.
if pdcf borrowings are buoying the equities
i think what's buoying equities is money coming back in because, as someone astutely pointed out, everything else is starting to look scarier and treasuries don't have the yield people are looking for. I'm sure some think crisis mode has passed. Their right about that, but they're totally wrong about earnings for the rest of the year.
$13 billion in one quarter? No, these losses occurred the day they took the paper on the books; the same day they loaned money to someone who had no ability to abide by the terms and conditions of the note.
"Were three quarters into this."
My translation is: "I'm trying to shorten the list of quarters requiring restatement. Restatement projects are expensive. Besides, I still have much more garbage on my books that I need to charge off over the next 2 years."
Oh an psssstttt! conspiracy theorists! while you were busy looking at the Fed, you should have been talking about Google! If you believe their reported click-through rates and earnings, I've got a couple of SIVs to sell you.
Two headlines from Yahoo:
Google, Citi Spark Fierce Rally- AP
Wall Street jumped Friday as results from companies like Citigroup Inc. and Google Inc. helped ease investor anxiety about the health of corporate profits.
Followed by:
Citigroup Reports $5.1 Billion Loss, to Cut 9,000 Jobs
Is it me, or is this shit not insane?
The crisis hasn't passed. It hasn't even truly emerged yet. When the CDS issue blows up, who knows what the financials will be left with.
THEN you've got those pesky little macro issues to contend with, and with rising food and fuel prices, and collapsing housing markets near and far, the rest of the world ain't going to be able to prop up our export markets for much longer.
The thing I don't get is where there are reports that Citi went up because it wasn't as bad as some investors expected. Supposedly somebody thought they could write down as much as $22bn.
WHAT INVESTORS?
Some pump n dump monkey?
To figure out the writedowns all you had to do was figure out how much pier debt they sold, look at their last tier I ratio report and figure they could shave 1a little less than 1 percent off it and still look cool because they had liquidated some other assets.
The translation of Crittenden's management speak is "We have fired everyone who knew what they were doing and instituted a bring your on toilet paper policy for the remaining peons in order to cut expenses. If you focus on these stellar management decisions, our stock will go up,up, up ! Please excuse me now, the corporate Gulfsteam is waiting on the tarmac for me to take the little wife on our weekend get away."
The only really intelligent thing that anyone could have asked at this conference was when Citi would file for bankruptcy and start liquidating. Any reasonable assessment of current and future conditions and Citi's cesspool financial condition indicates that they are completely insolvent at this point.
Citi! Give up the ship now while you can save some of the passengers!
I couldn't get past "marks that we have taken"
Now I see why you call these Confessionals.
"Citi also says no turnaround until 2010"
Sounds optimistic until you realize, even the speaker doesn't say that it will turnaround in 2010 - just not before.
I am confused as to why things will turn around in 2010. Seriously: We have run-away inflation without wages keeping up, I don't see an end to outsourcing of real jobs, housing prices are declining which causes problems when a good chunk of the economy (70%) is based upon a Ponzi-scheme of out-of-control consumer spending, and there is rampant corruption and looting at all the higher levels in this market.
How is ANY of this going to change for the better by 2010?! Sure, housing may be closer to a "bottom" in that the 5% of the population who has a down payment and who want to buy a house may be able to do so without overpaying (assuming they still have a job), but what is going to make the markets (housing in particular) rise again unless the Fed just decides to hand out money to anyone walking by? And wouldn't the resulting hyperinflation cause other problems?
I don't really see an "end" to any of this until there is a huge change in the behavior of the people as well as actual enforcement of the law with regard to the crooks who are gaming the system.