Wednesday, Mar. 11 2009 @ 8:58AM
The U.S. market staged its biggest rally in four months, largely on the basis of beleaguered Citigroup CEO
Vikram Pandit's claim in an inter-office memo that the bank conglom is actually profitable so far this year.
I noted yesterday that Pandit is likely either a liar or a bandit. And I guess he probably still wants more bailout money, even though Citigroup, after sinking to penny-stock status, is allegedly now profitable. I don't see him stopping the government from offering it.
Investors, clinging to the allegedly good news as if they were Nick Schuyler hanging onto his capsized boat in the Gulf of Mexico, leaned on it to spark a market surge yesterday, and the market is also "poised to extend" the rally today, the Wall Street Journal reports.
But was Pandit bullshitting everybody? Seeking Alpha points out that the Financial Times (U.K.) is debunking Citi's "leaked" memo. SA's Tyler Durden writes:
Good read on the purposefully leaked Citi memo today from Financial Times. The Brits make a good point about Citi's so called bumper revenues, which a) are not bumper at all based on historical standards and b) are to be expected as increased revenues always accompany volatile markets, especially in f/x and cash equities. The main thing Citi did not provide info on is the impact of writedowns, which one can bet their bottom dollar will be large to quite large.
From the FT's story itself:
[I]nvestors should not lose their heads. The headline-grabbing revenue number [$19 billion in the first two months this year], of course, does not include costs or writedowns. Besides, Citi exceeded $20 billion in adjusted revenues for eight quarters up until the end of September. Even in the nightmare final quarter of last year, revenues excluding writedowns were still a respectable $13.4 billion.
Losing their asses, investors are more likely to lose their heads. But Pandit's ploy did at least work in the short-term.
