Fitch is nothing but a group of grouchy bears, They aren't part of the club, and bitter. Their ratings are meaningless to those the NEED the game to roll ahead.
Gonna be a tough day, options expiry and all. Steamroller ride today for me, and not occupying the drivers' seat.
How does anyone expect conditions to improve? Incomes/revenues for individuals and municpalities is falling.
Past earnings were based on CRE debt, Mortgage Packaging, Private Equity offerings, IPOs, HELOCs, credit card revenues, ect..... Now most of those are gone or losing money.
With the future looking negative, what is the positive?
Back in the days when things like fundamentals and such mattered, the Fitch downgrade would be bad news as higher debt costs would hurt C going forward. Today those higher costs are not "as bad as could possibly be" and presto, big up day.
The 2008 phrases in the running to replece the 2007 winner "contained" seem to be:
1. "Kitchen Sink"
2. "Not as Bad as it Could Have Been"
Bloomberg quotes a full year estimate EPS of 1.37. Excuse me, exatly how much money (profit) do they expect Citi to make for the rest of the year? Where's this earnings growth going to come from?
Citi's CFO says there are scenarios that could lead to significantly worse outcomes this year than Citi's own projection. That is, of course, always true, but Citi has seen fit to mention it. To some extent, that is probably just SarbOx caution, but the "kitchen sink" will be with us until asset prices are all marked down to whatever turns out to be the trough price.
Too much talk of "bottoms" and "troughs". Sometimes assets go down, and stay down for a while. Not everything is a V move. Until the realization that homes are not going back up for years takes hold, only then can we get at a final price for all this junk. Until some crazy time frame passes, like 3 more years, hope will remain a driver and keep any real "bottom" from forming.
This Q isn't even the kitchen sink confession; one more biggish($6-10bn) in 90 days, then a little one 90 days after that(the losses from the pier debt saleback.)
They made so many bad bets in so many different areas it's hard to keep a scorecard.
I've been watching Citi pretty seriously since late June, I've got them pegged pretty good.
Rather than a kitchen sink, I'd liken it to a hot air balloon out of propane, but still way too high. Looking around, most of the ballast has already been released, now is the time to decide which people you really don't care for that much.
If this is the kitchen sink quarter, there's a way to go; the grani-tops quarter, then the copper pipes quarter, and the light fixtures quarter. Let's hope it stabilizes before the sod quarter.
PULASKI, Wis. Carver Boat Corp. says it will make $27 million worth of expansions to its operations in northeastern Wisconsin and add 450 jobs.
The company plans to expand its plants in Pulaski and open new facilities in Oconto County and the city of Green Bay.
The company makes luxury yachts under the Marquis and Carver brand names ranging in size from 36 feet to 70 feet. The expansion will allow the company to produce yachts up to 100 feet long.
Carver will receive more than $4 million in state assistance for the project.
Its major markets are in coastal markets of the United States, Caribbean, Mediterranean and Pacific Rim.
But it sure can be when the money printers make money so easy and cheap. Then the right ascension is easy easy easy.
Thanks, Ben. That should keep peace until the people finally revolt. Much better than keeping fairness so the working classes who suffer through at least feel they are doing it for themselves, rather than suffering so the rich can get even richer.
Easy money is the surest pathway to total societal breakdown.
"Carver will receive more than $4 million in state assistance for the project."
That's nice that tax dollars support a company that only caters to the ultra-rich.
In other words, they want state money to help provide jobs, the state says 'sure, it'll provide a few jobs', and the blind run away declaring the economic expansion a result of capitalism, when in reality it was the socialist state funding that really provides the jobs.
Yikes! I I were the CFO there, I'd have been up vomiting all night before I delievered those numbers.
I agree with Alec. One more big quarterly loss, one smaller quartely loss, and then perhaps a very small profit. By that time, anyone who has bought C in the last year will be killed.
And on the topic of the dollar, isn't it funny that Soros was making noises about the dollar being the preferred reserve currency for a long time to come, and someone is buying them today big time in EUterville.
Another try
Freddie Mac and Fannie Mae attempt to kick-start a federal program and revive high-priced housing markets by encouraging lower interest rates on jumbo mortgages
By Kimberly Blanton
Globe Staff / April 18, 2008
The nation's two largest mortgage investors yesterday stepped up their efforts to revive housing markets in high-cost cities, with one promising to provide up to $15 billion to lower interest rates on jumbo home loans
For the purposes of figuring out when write-downs will peter out, a trough need not imply a subsequent rise in asset prices. Once prices reach a floor, even if they don't come off that floor, write-downs will become a minor issue. It will take time and honest bookkeeping to know that we have reached that point, but we don't need a V.
But won't all these kitchen sinks etc. reverse the fall in Home-remodeling spending? Please, someone, explain, I'm trying here, but I think my logic-module's fried. Who forgot to pay the rational bill this decade?
I'm sure the thinking is if they buy enough time this will all blow over and I think the bet is inflation will lift all boats. I doubt that's the case, though.
Here's why: inflation will grow in food and fuel, not in luxury goods or houses. Why?
1) continued decline of the dollar
2) speculative money creating a commodities bubble
House prices will continue to decline and banks will continue to tighten the credit spigots. With fewer credit dollars available and more money flowing into food and fuel, the decline in the American service/retail economy will continue to accelerate leading to increased unemployment and cascading defaults on mortgages, car loans and credit cards.
There's your deflationary cycle.
This dynamic is above and beyond the wave of Alt-A and prime mortgage defaults coming in distressed markets and assumes that the mortgage defaults don't spread significantly from the currently distressed markets.
Deflationary pressure outside of food and fuel will increase as people look to liquidate assets and used toys. If only Craigslist was a public company . . .
So in effect, we'll get the worst of both worlds in the short term- "non core" inflation- aka inflation in survival goods [food and fuel] and deflation everywhere else.
I think the disconnect between the stock markets and our expectations is driven by people expecting inflation to win the day, especially after Bear Stearns.
But I don't see where the wage inflation is going to come from. Until wages increase there is no way out of the deflation trap.
We haven't reached the tipping point yet. But I am pretty sure deflation is going to win this battle in the long-term and I expect that to hit home later this summer and no later than the Christmas shopping season.
This squeeze shouldnt surprise any of you. The fundamentals will win out in the long run. I cant help but nibble at some short positions at some point here today. Always keep some powder dry!
Does anyone here think anything has really changed? I dont
Whats going to change all that we know is wrong? Nothing I can see.
Do you think everyone is going to win the Lottery and pay off his or her mortgages? Na
Does anyone think $4 Oil is going to help the U.S.? Na
And the market is up nearly 200 points based upon Citi losing a huge pile of money.
I've had it - this is nuts! I want access to the Fed Discount Window so I can trade in junk for piles of money, then lose all that money on stupid bets, only to finally get a golden parachute while raising the stock market a few hundred points based upon tanking my company.
Gah... can we reward stupidity and greed any more?!
LIBOR is up but so are all the other rates. The market is forecasting growth for the rest of the economy in conjunction with moderate but not apocalyptic trouble for financials. It's not a crazy prediction.
I am sure the 9,000 out of work Citi people will be buying grossly overpriced houses at 10x their stated income to keep the ball rolling. Then, they will disappear from the unemployment reports and their houses will sit for years marked 5% under wishing price while rotting away...
Yeah, Bubble are just "great" for the economy! So, tell me - how is inflation going to fix this without huge WAGE INFLATION for EVERYONE, Bubbles Ben Bernanke? I bet he hasn't thought that one out yet... such a conundrum!
dunham writes:
The Fed PUT is only a reality until the bond market says its not.
Who wants to take the bet when the bond market decides that?
I think we're closer than anyone will be allowed to admit. The real question in my mind is if the Chinese throw their party first before announcing themselves the new world power.
For those who say the Chinese would be slitting their own throats, I'd counter by saying that politics trumps economics, especially for a Communist Party that has killed 70 million of its own people.
I want access to the Fed Discount Window so I can trade in junk for piles of money, then lose all that money on stupid bets, only to finally get a golden parachute
Like others have said, maybe this is all options expiration and Monday will see a drop... who knows... it does seem irrational. And the brewing trouble in Alt-A doesn't look to have been factored in yet... but who knows.
Irritating, the schmucks/shysters/shylocks bidding things up today on lousy news.
Well, unfortunately for them, it appears that the sheeple are catching on; surprising front page story in the San Diego Union Tribune on how the inflation statistics are skewed, today: Page not found
Enjoy your spring fling, schmucks/shysters/shylocks; the end is near.
I want to run a big public company: I can loose money, provide no visibility on earnings, lay people off....then get paid 15M for doing the same brainless sh** every other MBA drone would do...oh I forgot if I do real bad, my stock goes up, too.
Anonymous,
As I posted a few weeks ago, when a CEO/CFO post opens up, there are hundred of qualified people who never get an interview because they do not know anyone on the Board of Directors. If you dropped the pay in half, the same few hundred qualified people would apply for the job....you know, if they thought they had a chance.
That's the problem with this picture. Large banks announce writedowns in the billions and these large banks are still profitable. A 4 billion dolla hit this quarter reduces profits to only one billion! I remember these banks were making 3-5 biillions a quarter for years what's a few billion in losses once in a while? Either someone else is going to eat the losses or this mortagage mess has been overblown.
CR, you are obviously wrong about this report. Otherwise, how could their shares be up 7%?
Wow, I'm going to lose alot of money today.
CR: Wasn't last quarter the "kitchen sink" write down quarter?
Yeah, but this is a new and improved "kitchen sink" write-down quarter!
By the way, what does Fitch's downgrade mean, anything?
Citi needs a bigger sink!
Fitch is nothing but a group of grouchy bears, They aren't part of the club, and bitter. Their ratings are meaningless to those the NEED the game to roll ahead.
Gonna be a tough day, options expiry and all. Steamroller ride today for me, and not occupying the drivers' seat.
How does anyone expect conditions to improve? Incomes/revenues for individuals and municpalities is falling.
Past earnings were based on CRE debt, Mortgage Packaging, Private Equity offerings, IPOs, HELOCs, credit card revenues, ect..... Now most of those are gone or losing money.
With the future looking negative, what is the positive?
I like that they conflate alt-a and CRE write-downs. Makes future comparisons just a bit murkier.
Back in the days when things like fundamentals and such mattered, the Fitch downgrade would be bad news as higher debt costs would hurt C going forward. Today those higher costs are not "as bad as could possibly be" and presto, big up day.
The 2008 phrases in the running to replece the 2007 winner "contained" seem to be:
1. "Kitchen Sink"
2. "Not as Bad as it Could Have Been"
Bloomberg quotes a full year estimate EPS of 1.37. Excuse me, exatly how much money (profit) do they expect Citi to make for the rest of the year? Where's this earnings growth going to come from?
Writedowns are a bit worse than expected, but the revenues are a bit higher than expected.
The market seems to ignore the first "bit" and focus only on the second one
Oh, I think a rising dollar and falling fuels might have some effect here. Options expiry.
Not the teddy bears' picnic, certainly.
Citi's CFO says there are scenarios that could lead to significantly worse outcomes this year than Citi's own projection. That is, of course, always true, but Citi has seen fit to mention it. To some extent, that is probably just SarbOx caution, but the "kitchen sink" will be with us until asset prices are all marked down to whatever turns out to be the trough price.
LIBOR is spiking hard.
The Eurodollar front month is getting destroyed like you wouldn't believe. There is HUGE stress in the market today.
We're hearing rumours that an intervention is going to be necessary to bring LIBOR back under control.
I've got some charts up on it.
Too much talk of "bottoms" and "troughs". Sometimes assets go down, and stay down for a while. Not everything is a V move. Until the realization that homes are not going back up for years takes hold, only then can we get at a final price for all this junk. Until some crazy time frame passes, like 3 more years, hope will remain a driver and keep any real "bottom" from forming.
This Q isn't even the kitchen sink confession; one more biggish($6-10bn) in 90 days, then a little one 90 days after that(the losses from the pier debt saleback.)
They made so many bad bets in so many different areas it's hard to keep a scorecard.
I've been watching Citi pretty seriously since late June, I've got them pegged pretty good.
Rather than a kitchen sink, I'd liken it to a hot air balloon out of propane, but still way too high. Looking around, most of the ballast has already been released, now is the time to decide which people you really don't care for that much.
will google buy citigroup?
ice charts ninja
If this is the kitchen sink quarter, there's a way to go; the grani-tops quarter, then the copper pipes quarter, and the light fixtures quarter. Let's hope it stabilizes before the sod quarter.
In related financial meltdowns:
RBS has capital call, goes with rights issue
Total estimates range from $10-25bn.
Yikes!!
Car sales may be down, but yacht sales are up:
Carver Yachts announce expansion
© 2008 The Associated Press
PULASKI, Wis. Carver Boat Corp. says it will make $27 million worth of expansions to its operations in northeastern Wisconsin and add 450 jobs.
The company plans to expand its plants in Pulaski and open new facilities in Oconto County and the city of Green Bay.
The company makes luxury yachts under the Marquis and Carver brand names ranging in size from 36 feet to 70 feet. The expansion will allow the company to produce yachts up to 100 feet long.
Carver will receive more than $4 million in state assistance for the project.
Its major markets are in coastal markets of the United States, Caribbean, Mediterranean and Pacific Rim.
404 Error, No such article | Chron.com - Houston Chronicle
Thank God that the rich are doing well in this economy, anything else would be unthinkable.
Looks like everyone is selling gold and buying GOOG and the financials today. Good times!
Last quarter was the "kitchen sink" write down quarter.
This quarter it's kitchen sink plus granite countertops.
I think a little brandy goes into the morning cuppa today.
Someone in Euroland bought a whole bunch of dollars. Pretty blatant.
Its all spin.....how can losing $13BN be a good thing...
Days like this are why Bankers wear a belt AND suspenders.
Were still dancing.
JJL writes "Not everything is a V move. "
But it sure can be when the money printers make money so easy and cheap. Then the right ascension is easy easy easy.
Thanks, Ben. That should keep peace until the people finally revolt. Much better than keeping fairness so the working classes who suffer through at least feel they are doing it for themselves, rather than suffering so the rich can get even richer.
Easy money is the surest pathway to total societal breakdown.
Does anyone know who is the manufacturer of the money presses? I would like to buy their stock.
I wonder how much the market would be up if Citi actually had made money this quarter.
RE: Carver Yachts
"Carver will receive more than $4 million in state assistance for the project."
That's nice that tax dollars support a company that only caters to the ultra-rich.
In other words, they want state money to help provide jobs, the state says 'sure, it'll provide a few jobs', and the blind run away declaring the economic expansion a result of capitalism, when in reality it was the socialist state funding that really provides the jobs.
And the Deluded maintain their grip on power.
What a country!
CR: Wasn't last quarter the "kitchen sink" write down quarter?
Yes, but this is the stainless steel in a granite countertop kitchen sink quarter. It's far more desirable.
If anyone is interested, I'm investing in confessional futures.
What should I buy in this market? Depends? Depends on what? Depends and Xanax!
Speaking of ascension, there is a celestial body that perfectly sums up the current stock market located at:
Right Ascension: 19h 59m 36.340s
Declination: +22° 43′ 16.09″
Not sure Google has a Galaxy Mapper!
I don't understand the mentality of this current market. When bad news that isn't as bad as it might be becomes good news?? Market rally! Hoot?
I think my SRS is going down to 20 or so today. Just a hunch.
Is this what you're thinking of, JJL
It's unwise to bet against the Fed.
Yikes! I I were the CFO there, I'd have been up vomiting all night before I delievered those numbers.
I agree with Alec. One more big quarterly loss, one smaller quartely loss, and then perhaps a very small profit. By that time, anyone who has bought C in the last year will be killed.
And on the topic of the dollar, isn't it funny that Soros was making noises about the dollar being the preferred reserve currency for a long time to come, and someone is buying them today big time in EUterville.
Bosch,
That one was pretty funny, but no. The coordinates will lead the way to the.......
"Where are the customer's yachts?"
Ah, the old lines still make me smile!
It's unwise to bet against the Fed.
For some reason mp, you made me thing of those old commercials with mother nature in them for some margarine. I'd like to see BB in that outfit
Dumbbell Nebula - Wikipedia, the free encyclopedia
... leads to... Funny.
TY, JJL.
I need Tanta to 'splain this to me:
Another try - The Boston Globe
Another try
Freddie Mac and Fannie Mae attempt to kick-start a federal program and revive high-priced housing markets by encouraging lower interest rates on jumbo mortgages
By Kimberly Blanton
Globe Staff / April 18, 2008
The nation's two largest mortgage investors yesterday stepped up their efforts to revive housing markets in high-cost cities, with one promising to provide up to $15 billion to lower interest rates on jumbo home loans
Obviously someone told their buddies they are planning on cutting rates again...(looks like mp beat me to the punch?)
Yes, the mentality is inverted. Let the good times continue to roll.
JJL,
For the purposes of figuring out when write-downs will peter out, a trough need not imply a subsequent rise in asset prices. Once prices reach a floor, even if they don't come off that floor, write-downs will become a minor issue. It will take time and honest bookkeeping to know that we have reached that point, but we don't need a V.
So... yesterday Merrill writes down $9.7B, today it's Citi chalks off $13B.
When the losses... (oops. Used the L-word on a family blog,) ...exceed $1T, does the Dow reach 15,000 at the same time?
But won't all these kitchen sinks etc. reverse the fall in Home-remodeling spending? Please, someone, explain, I'm trying here, but I think my logic-module's fried. Who forgot to pay the rational bill this decade?
I think these banks are having a contest to see who can lay off the largest amount of folks.
I think my logic-module's fried
Logic is SO 1900s.
For those who want more cowbell... (because I linked this pretty late lastnight)
YouTube - ? v=ctDX_s5QxZ8
I imagine at the end of today or maybe Monday the MSM will write another, "Fed signals another rate cut" article, that will send stocks higher.
Boone is to be whipsawed and disgraced.
it seems that everything in this market - short of a fed bailout or bk - is good news
k harris,
Honest bookkeeping! BWAHAHAHAHAHAHA!
Best joke of the day.
By the way I was behind you when you certified the Florida election in 2000!
CNN: Citigroup cuts 9,000 jobs.
Ouch.
Alot of people who are a lot smarter than I am seem to be betting that the worst is over (for the stock market at least). Can we hope?
Ok, I'm going to try that again the right way!
You're gonna want that Rate Cut!
Ah, there it goes...
I'm sure the thinking is if they buy enough time this will all blow over and I think the bet is inflation will lift all boats. I doubt that's the case, though.
Here's why: inflation will grow in food and fuel, not in luxury goods or houses. Why?
1) continued decline of the dollar
2) speculative money creating a commodities bubble
House prices will continue to decline and banks will continue to tighten the credit spigots. With fewer credit dollars available and more money flowing into food and fuel, the decline in the American service/retail economy will continue to accelerate leading to increased unemployment and cascading defaults on mortgages, car loans and credit cards.
There's your deflationary cycle.
This dynamic is above and beyond the wave of Alt-A and prime mortgage defaults coming in distressed markets and assumes that the mortgage defaults don't spread significantly from the currently distressed markets.
Deflationary pressure outside of food and fuel will increase as people look to liquidate assets and used toys. If only Craigslist was a public company . . .
So in effect, we'll get the worst of both worlds in the short term- "non core" inflation- aka inflation in survival goods [food and fuel] and deflation everywhere else.
I think the disconnect between the stock markets and our expectations is driven by people expecting inflation to win the day, especially after Bear Stearns.
But I don't see where the wage inflation is going to come from. Until wages increase there is no way out of the deflation trap.
We haven't reached the tipping point yet. But I am pretty sure deflation is going to win this battle in the long-term and I expect that to hit home later this summer and no later than the Christmas shopping season.
S&P follows suit & puts Citigroup rating on CreditWatch negative
"NSA writes:
CNN: Citigroup cuts 9,000 jobs."
Hopefully they fired the guy who always asks me to buy insurance whenever I renew my card.
This squeeze shouldnt surprise any of you. The fundamentals will win out in the long run. I cant help but nibble at some short positions at some point here today. Always keep some powder dry!
Does anyone here think anything has really changed? I dont
Whats going to change all that we know is wrong? Nothing I can see.
Do you think everyone is going to win the Lottery and pay off his or her mortgages? Na
Does anyone think $4 Oil is going to help the U.S.? Na
Ask yourselves. What has really changed?
Nothing!
Citi is up 4%+ this morning.
We're all Starship Enterprise now. Goodbye Planet Reality!
YouTube - Star Trek TOS Original Intro
CNBC(on air) reporting the actual total writedown for Citi is $15.8bn, including RMBS & SIV writedowns.
In Soviet Russia, Citibank writes down you!
"We're all Starship Enterprise now. Goodbye Planet Reality!"
Huh? Don't you understand Fed Put?
A Fed Put IS reality.
mp, I think I should come to you for investment advice. My brain just doesn't wrap that way.
And don't forget - 9000 more jobs in the toilet.
The Fed PUT is only a reality until the bond market says its not.
Who wants to take the bet when the bond market decides that?
And the market is up nearly 200 points based upon Citi losing a huge pile of money.
I've had it - this is nuts! I want access to the Fed Discount Window so I can trade in junk for piles of money, then lose all that money on stupid bets, only to finally get a golden parachute while raising the stock market a few hundred points based upon tanking my company.
Gah... can we reward stupidity and greed any more?!
And don't forget - 9000 more jobs in the toilet.
blogenfreude
What to worry about, with the BLS B/D model, there'll be another 20,000 financial jobs created.
Is bumming for change a financial job like making burgers is manufacturing?
LIBOR is up but so are all the other rates. The market is forecasting growth for the rest of the economy in conjunction with moderate but not apocalyptic trouble for financials. It's not a crazy prediction.
Wasn't last quarter the "kitchen sink" write down quarter?
Well you know, we've got a lot of kitchens in this place.
Sorry about that.
It could have been worse.
(Wait - that's coming next quarter).
Bring on the Soveriegn Wealth Funds!!!!
I am sure the 9,000 out of work Citi people will be buying grossly overpriced houses at 10x their stated income to keep the ball rolling. Then, they will disappear from the unemployment reports and their houses will sit for years marked 5% under wishing price while rotting away...
Yeah, Bubble are just "great" for the economy! So, tell me - how is inflation going to fix this without huge WAGE INFLATION for EVERYONE, Bubbles Ben Bernanke? I bet he hasn't thought that one out yet... such a conundrum!
dunham writes:
The Fed PUT is only a reality until the bond market says its not.
Who wants to take the bet when the bond market decides that?
I think we're closer than anyone will be allowed to admit. The real question in my mind is if the Chinese throw their party first before announcing themselves the new world power.
For those who say the Chinese would be slitting their own throats, I'd counter by saying that politics trumps economics, especially for a Communist Party that has killed 70 million of its own people.
Don't be shocked.
It's unwise to bet against the Fed.
150 oil is in the bag.
I want access to the Fed Discount Window so I can trade in junk for piles of money, then lose all that money on stupid bets, only to finally get a golden parachute
On Planet Reality, we used to call that enabling.
"On Planet Reality, we used to call that enabling."
Around here, we call it "business as usual"
Like others have said, maybe this is all options expiration and Monday will see a drop... who knows... it does seem irrational. And the brewing trouble in Alt-A doesn't look to have been factored in yet... but who knows.
Irritating, the schmucks/shysters/shylocks bidding things up today on lousy news.
Well, unfortunately for them, it appears that the sheeple are catching on; surprising front page story in the San Diego Union Tribune on how the inflation statistics are skewed, today:
Page not found
Enjoy your spring fling, schmucks/shysters/shylocks; the end is near.
Are there any adults left running around Wall Street?
Hmm, "Does anyone think $4 Oil is going to help the U.S.? Na"
I don't know, a 96% drop in oil prices might ease some inflationary pressures.
I want to run a big public company: I can loose money, provide no visibility on earnings, lay people off....then get paid 15M for doing the same brainless sh** every other MBA drone would do...oh I forgot if I do real bad, my stock goes up, too.
Anonymous,
As I posted a few weeks ago, when a CEO/CFO post opens up, there are hundred of qualified people who never get an interview because they do not know anyone on the Board of Directors. If you dropped the pay in half, the same few hundred qualified people would apply for the job....you know, if they thought they had a chance.
Anonymous @ 12:35
Yeah. But you have to kiss a lot of ass to get there. And you have to be the kind of person who will stab someone else in the front.
I was listening to Bloomberg this morning on Citi: "the stock is rising because on losses that were less bad than the most pessimistic estimates."
How can I get back in the market when I hear something like that? I just can't do it.
That's the problem with this picture. Large banks announce writedowns in the billions and these large banks are still profitable. A 4 billion dolla hit this quarter reduces profits to only one billion! I remember these banks were making 3-5 biillions a quarter for years what's a few billion in losses once in a while? Either someone else is going to eat the losses or this mortagage mess has been overblown.