Government to the rescue with Citigroup Sunday Night?

This will be interesting news to watch tomorrow.

Everyone knew Citigroup was in trouble. Now it looks like the government is stepping in to do something.

What is VERY unique about Citigroup (NYSE: C) is that they are 60%-70% international revenue vs. JPM at roughly 30% or so and Bank of America at 5%-10% max. This basically means that there is more COUNTERPARTY risk associated with Citigroup going under than other institutions since they play a much larger role in foreign capital markets. If Citigroup goes under than the global financial markets could really unravel quickly....That is the concern that the government is trying to address before the markets open tomorrow.



Dan Ross
http://www.BetterBizBooks.com

Banking Bubble and More Room to DROP?

More thoughts that Citigroup needs to raise more $$$ from the government.

Dan Ross

http://www.BetterBizBooks.com

S&P 500 and the Bank Stocks

If we look at Bank of America (BAC) vs. JP Morgan Chase (JPM) and the S&P 500 JPM is clearly leading in performance over the last 6 months. Below I show some YTD comparisons with Citigroup. Citigroup is the worst performing stock in that respect.

So my question here is "Why is JPM outperforming BAC so much, ESPECIALLY in the last few weeks. Their stock is only off 15% but BAC is off nearly 25%. Is the market saying something?" Why does the analyst at Institutional Risk Analytics think JPM and Citigroup need to go back to the Feds and not BAC? The charts/market seem to indicate a different scenario.



http://finance.yahoo.com/echarts?s=BAC#chart1:symbol=bac;range=ytd;compare=jpm+c+^gspc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Dan Ross
http://www.BetterBizBooks.com

Citigroup & JP Morgan Need to Raise MORE $$$??

So I have posted earlier on my blog re: Citigroup and my thoughts that they were in dire straights. The reason that The government gave four banks $25 billion was so that no one would shoot Citigroup after they were the only ones getting $$$. They would stand out from everyone else.

Now this guy from Institutional Risk Analytics is saying JPM will need more $$$?

Both $$$ mentioned are very scary. Guess I'll keep on building cash for awhile! My Jan-09 target for cash building is now moving to March-09.

Dan Ross
http://www.betterbizbooks.com/

Citigroup and their forecasted losses

Citigroup has taken more than $40 billion in writedowns since the middle of 2007.

Apparently they indicated in their meeting on Monday with employees that losses will be $4.9 billion in Q3 with losses going up $1 to $2 billion each quarter. That means next June the company could lose up to $10 billion.

Anyone else need a stiff drink after reading that?

Wow. Where was the board during all of this? I mean, these guys lost an INSANE amount of money and no one seems to be losing their shirt except the U.S. taxpayers (for the time being). I sure as heck feel now that Robert Reubin shouldn't be the Treasury Secretary in Barack Obama's Cabinet as the guy has been paid $15 million per year as a board member and investment banker at Citigroup since leaving the Clinton presidency. What was his role in this?

Dan Ross
http://www.BetterBizBooks.com

Citigroup (C) & Robert Roubin / Obama

So what is interesting here is this:

1) Roubin was an advisor/banker at Citigroup and Board Member. He is an an economic advisor to Barack Obama and possible Treasury Secretary. He had that role with Bill Clinton. Should a guy that clearly was asleep at the wheel re: risk management and enriched himself the entire time get such a role? I don't think so.....

2) Citigroup is really the reason that the banks got $25 billion each (Citigroup, Wells, JPM, Bank of America) in loans from Paulson via their "closed door" meeting that was highlighted in a 60 minutes video link I posted about a month ago. Ken Lewis of Bank of America is interviewed.

Citigroup is 60%-70% international. If they go under the "counter party" risks (ie. exposure of other worldwide banks/nations) would go THROUGH the roof and take down the entire global financial system.

If you look at their losses they have some of the highest amongst all banks in writedowns associated with mortgages - I am sure they will eventually be passed by Wachovia.

Additionally, look at their exposure to consumer credit. Henry Blodget estimated it at $500 billion in exposure. A 10% writeoff is $50 billion!

Just something to keep an eye on.



Dan Ross
http://www.BetterBizBooks.com

Argentina Throws the Markets in the Crapper Today

So Japan was down 7% pre-market. Bottom line there is that the Japanese Yen, their currency, is SOARING vs. the EURO and U.S. $$$ so their exports and economy are going to get pinched in a big way. Either they sell for less profits overseas or increase prices. Their economy is PURELY export related. Their economy is NET savings (they loan their $$$ to the U.S. via gov't bonds), another reason why their currency is appreciating.

Then, as the day went on we get word that Argentina privatizes their pension funds for $30 billion. This is VERY interesting given that they are negotiating to re-structure their debt. Over 10,000 layoffs were announced today as well. Then the stock market started sliding and finished down 5% on the day.


Watch CBS Videos Online

http://news.yahoo.com/s/afp/20081022/bs_afp/financeeconomyargentina;_ylt=AjjrskeJsxVE0RGrFxe4LZCyBhIF

So here are a few other thoughts. Let me know re: your opinion.

1) Spain is a big trade partner/banker of Argentina, going back to colonial days. Their banks are in danger if Argentina defaults on $150 billion in debt. Seems like a reasonable thought/concern.
2) What is Citigroup's exposure?

3) I keep watching this video and think, the bank he won't mention by name is Citigroup. BAC is 10% international revenue, JPM about 25%-30% and Citigroup about 50%. If Citigroup goes belly up the counterparty risk WORLDWIDE would go through the roof and the entire world banking system could seize up......Yikes! I keep thinking....Citigroup, Citigroup, Citigroup..... Your thoughts?


Watch CBS Videos Online

I also need to publish this link re: someone mentions Citigroup and a few line items in their financial statements that were published earlier this year. Basically they had TONS of assets subject to being written down.

http://www.moneyshow.com/video/video.asp?t=4&wid=608DA58E31394BE0AAD5E89435E2FCBB1

Dan Ross
http://www.BetterBizIdeas.com/