Citigroup – CEO’s phony statement sparks phony rally
March 10, 2009 · Posted in Business
Yahoo Finance writes Dow ends up nearly 380 on Citigroup profit news:
Wall Street has had its best day of the year, storming higher after some good news from Citigroup. Citigroup Inc. says it operated at a profit during the first two months of the year. That energized financial stocks and in turn, the entire stock market. Surprised investors drove the major indexes up more than 5.5 percent to their biggest one-day rally of the year. The Dow Jones industrials shot up nearly 380 points.
However, many analysts are still cautious — noting that Wall Street has seen many blips higher since the credit crisis and recession began. Word of Citi’s performance broke a months-long torrent of bad news from the banking industry but analysts weren’t ready to say the stock market was at a turning point and about to barrel higher after a slide that’s lasted more than 16 months.
“To have a sustained rally, we have to have a shift in sentiment,” said Kurt Karl, chief U.S. economist at Swiss Re. “One day isn’t going to make a trend.”
Still, the Citigroup news offered investors some hope that the first quarter will show signs of improvement.
In a letter to employees Monday, Citi Chief Executive Vikram Pandit said the performance this year has been the bank’s best since the third quarter of 2007 — the last time it booked a profit for a full quarter. Based on historical revenue and expense rates, Citi’s projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.
Pandit declined to say how large credit losses and other one-time items have been that would at least partially offset profit.
…which would be sort of interesting and/or relevant numbers to know if you’re proudly reporting a profit for the period in question.