Citigroup: CEO Vikram Pandit, in a letter to employees, said the bank was profitable year-to-date and that it is confident about its capital position. The letter, filed with the Securities and Exchange Commission, was a relief to investors after Citi’s share price broke the buck as the company has struggled to stay afloat. However, most of Wall Street disagrees with Pandit’s comparatively optimistic outlook.
The government has stepped in repeatedly to bolster Citi, most recently last week when it agreed to take up to a 36% stake in the company. Pandit’s letter said that, so far, the first quarter of 2009 has been the best since the third of 2007, the last time Citi was profitable. Yet, the letter did not specify how much credit losses and other one-time items would offset the profit. (Full story)
Not so fast – that is before they deduct debts etc. So on a rumor more or less, the market skyrockets over 370 points. Hard to understand all the frenzy over Citi when their stocks were trading for less than a buck a day or so ago.
Barney Frank also came out and stated that the Uptick Rule will be reinstated:
“Citigroup got us started, but then Barney Frank came out and said that the uptick rule could be reinstated and that helped a lot too,” said Tom Schrader, managing director at Stifel Nicolaus.
Rep. Barney Frank, D-Mass., the head of the U.S. House Financial Services Committee told reporters Tuesday that the Securities and Exchange Commission would restore the “uptick rule.” The SEC said it could reinstate the rule as early as next monht.
The uptick rule — which was in place until July 2007 — limited short sellers from adding to the downward momentum of a stock that is already plunging. In short selling, traders make money when the price of a stock falls.
Critics say the ending of the uptick rule has added to the selling in the financial sector stocks over the last year and a half.
There is a huge debate on whether the selling was due to this or not. I guess we will see, but I don’t think this will keep the stock market from tanking. Better get your funds out while it is up even slightly, because I have a bad feeling we are nowhere near the bottom yet.