Back to Square One...
Interesting that Citi CEO Vikram Pandit would go on the record yesterday with an announcement that his company has had two profitable months in 2009. Interesting indeed. I find it interesting for the simple fact that Citi has still not revealed the amount, or extent to which toxic assets have fouled the balance sheet. While some speculators saw this news as an opportunity to pile money into the market, it appears that this news should be chewed well, and swallowed slowly. Truth be told, Citi was one of the first banks to respond to a moratorium on foreclosures, not to mention the reset of alt-A and ARM loans. I write this not so much to frighten investors, but more or less to offer an opinion that was widely disregarded on any of the major networks.
That being said, Neel Kashkari seems to have a decent pulse on the financial situation inside the United States. In his COngressional testimony, Kaskari said that "Forcing banks to lend was a bad idea... and that the over-extension of credit was the root cause of the current financial crisis." Soon there-after, Treasury Secretary Geithner and President Obama called on a world-wide stimulus package to create jobs and promote spending. They too have realized that the extension of credit alone will not solve any crisis in the United States.
CONSIDERATIONS
FLSR, and any of the oil companies or an all in one play of SCO
NOC, DE, and TM also look as though a protracted recession (or whatever the experts are calling it these days) could suffer. NOC is particular may suffer with defense spending cuts and an already negative EPS.
MSFT cash rich, and idea poor... maybe just maybe they will look to better themselves in a discounted financial market with a key acquisition.
2 comments:
I disagree with you about Kashkari...he is one of a long line of GS clones meant to play ball with the good ole' boy network of big banks and old politicians. Don't expect anything good from him or Geithner.
No doubt that he is one of the long line of GS clones... That being said, I do believe that he is right that forcing the banks to lend would only cause more problems since the over-extension of credit in many ways was the true root of the problem... Oh did I forget bank lending and accounting practices were the other problem...
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