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So How Good Are Citigroup's Results?

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April 17, 2009 – Comments (6) | RELATED TICKERS: C , FAZ

Looks like Citigroup beat estimates. Wow.

But what does this mean? Any thoughts here on CAPS? In particular, I'd like to know how much of these results is due to the "softening" of the mark-to-market rule. Did the rule change allow them to hide how bad things are, like opponents of the rule change argue? Or is the rule change working as intended: preventing major banks from collapsing because these bad assets on their books will improve at some point?

Disclosure: no position in C. Long FAZ at the time of writing.

6 Comments – Post Your Own

#1) On April 17, 2009 at 8:58 AM, RookieQB (28.98) wrote:

I have a position in C and BAC for the short term. I bought and sold BAC last week for a few Gs, then I started this new position a couple of days ago. Banks has been going up every time on good earnings results from any of the major banks. Regardless of how a person feels about the way the numbers are calculated, C will (well already has) posted a better than expected earnings will probably give it at least a 10% pop today and I expect BAC to do the same on Monday.

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#2) On April 17, 2009 at 8:58 AM, russiangambit (28.67) wrote:

It is too funny. Financias are reporting great earnings ( thanks to free money and the spread), while real companies like Alcoa, Mattel miss. Does it seem like a healthy pattern?

Also, if the  banks are not lending as we keep hearing, how did they make the money? I think they reduced the losses ( by applying creative accounting), this is how. WFC also got mortgage refinancing, GS  and C got the trading. They made billions fro trading. Wow. I don't know how one can do that much money from trading consistently.

All in all, this is as healthy as a sugar high. It is the sugar hihg from all the free money.

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#3) On April 17, 2009 at 9:32 AM, jlmjlm77 (97.82) wrote:

Banks are getting near free money from the government and charging loan shark rates to everyone and raising fees.  Hard not to make money.  My opinion, if fed is successful at inflating asset values all companies will do well if they own assets.  Government needs inflation to get out of trouble the easy way, so I would not bet on the Gov't taking the hard road.  Rising asset values also will get the big banks out of trouble.  Smaller banks and companies with leverage will have a hard time, but those who survive can do great.

 

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#4) On April 17, 2009 at 10:33 AM, rd80 (94.59) wrote:

In what has to be the best environment for banks to make money in years, Citi still loses 18 cents a share.  Granted, they were profitable before preferred stock dividends and they plan on converting that preferred to common.

I put a red thumb on C before the market opened this morning.

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#5) On April 17, 2009 at 11:58 PM, Tastylunch (28.52) wrote:

Well i think they are completely phony but that doesn't mean delusion can't continue

Interesting commnetary in this vid

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#6) On April 27, 2009 at 11:13 PM, arisktaker (56.78) wrote:

I don't think the mark-to-market change had much effect this quarter.  The tax implications of not setting aside, or removing money, from loan loss reserves were probably too much to adjust for and still put out the quarterly reports on time.  Also all the major financial companies were waiting to see how the "stress test" would go.  Better for them to wait.  Bankers tend to be consertitive ;-),

If they don't do well on the "stress test" they have six months to fix the problem before the government takes action.  They have been given a "wild card"  and can use it as need to "re-value" their "bad" assets to fix the problem, avoiding government intervention.  

I bought BAC earlier this month and sold 1/2 the position last Friday for a nice profit.  I have been trading FAS. Got out on Friday.  Should have bought FAZ but didn't.

Interesting trend that most, if not all Mondays for the last eigth weeks (current bull market) have been down.  I sold on the trend and got the bonus of the flu scare.

 

 

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