Postman and Saved came to Wall Street
The postman came and saved Wall Street
Buenos Aires, March 2009 Argentina11
Glorious day yesterday for the U.S. markets, and after losing more than 20% in the last four weeks, the indexes returned to party like they did not since last November. The S & P 500 climbed 719.60 points, a variation of 6.4%, the Dow Jones ended at 6926.49, a rise of 5.8% and the Nasdaq Composite climbed 7.1% to 1. 358 points. The financial sector ended with hikes of 20% average. Europe flew yesterday in unison with an average 5% rise but enthusiasm plots yield, since this morning operated with mixed results. The market seized three news to explain the rise: first, the Federal Reserve chief Ben Bernanke called for a greater and deeper financial market regulation for the second, Barney Frank, Chairman of the Committee on Financial Services of the House of Representatives U.S., said the Securities and Exchange Commission (SEC) could be to replace the “uptick Rule” (rule that only you can take a bearish position or short-sell if the share price last-tick-is superior as above), and third, filtering the contents of a letter. The letter was CEO of Citigroup (NYSE: C), Vikram Pandit, aimed at employees of Citi, and she said the bank had profits in first two months of 2009 and so far the first quarter results have been the best since the last time that Citi had net earnings in the third quarter of 2007. He added that the current value of the bank’s shares does not reflect the soundness of the capital base of Citi. This information is officially made public only on April 17, but Citi’s shares rose 38% to U.S. $ 1.45 at the close, continuing the rise in the after-market last night, reaching U.S. $ 1.58 per share A further 12% increase to the rise of the day. The bank had suffered losses coming in five consecutive quarters, including $ 8. 290 million in the last of 2008. In late February, Citigroup and the U.S. government agreed to a share of the latter on the bank of 36% after the injection of $ 45. 000 million. And if they need more funds, the U.S. government is willing to give them. Citi today is like the guy who lost the apple and you get another mother. Pandit said yesterday, for those who can read and understand: “there is still a month to complete the quarter and market volatility may affect the results.” Reuters says a cable: “The advance of financial stocks marks an improvement in investor confidence after the sector was recently hurt by increasing credit losses in the banks.”
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But. . . What Wall Street yesterday that celebrated? What Citi has dropped to a level of penny stock and last week traded at $ 0.97, their lowest point ever? What has been profitable because it has received injections of money at zero cost? What did not lose more money, even having received fresh funds? What common stock shareholders will have limited participation by 26% if the U.S. government and other private investors to transform the maximum of preferred shares in common? What Pandit warned that volatility in March could hit results? What Citi shares fell 93% in the last six months? What Citi will emerge from now on over the deep recession that hangs over the U.S. and the world and its financial institutions by Endesa? What if the losses banking industry intensifies, the U.S. government should nationalize more entities to the force, with the capital they need? Does anyone explain me? Ed Yardeni try a more near-religious faith that the market logic: “We poor investors do not need too much to rejoice, we have been so severely beaten,” he says hopefully. “At this point, we’ll take what we can,” is formed. “Those who invested based on what they said These managers in the last 12 months probably lost all his money. There is a credibility issue,” he told Reuters David Williams, analyst at Fox-Pitt Kelton. “The share price one dollar means that the market has stopped listening.” It is very dangerous what happened yesterday. A simple letter to employees of a bank in anticipation of good results, so far only-bi, but have not yet been reflected in the quarterly results will be given in less than a month that will come the real final expenditure incurred by the entity. The market study should celebrate before the quarterly results that can demonstrate that the U.S. government can close the stream of funding to the bank. There is no reason for celebration, nor for a cat that bounced because it still died. Yesterday’s seems to have been a run of sold at what the market could take a breath, the letter from Citi. Only further improvement and support around the level of 740-750 points for the S & P 500 return achieved on both life and in the meantime, the downward acceleration continues. Until tomorrow, and watch out for the postman. . . “The Postman Always Rings Twice?
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