Enron Rescued – I Mean Citigroup Rescued!
Gary Kaltbaum is an investment adviser with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge. Mr. Kaltbaum is also the host of the nationally syndicated radio show “Investors Edge” on over 50 radio stations. Gary is also editor and publisher of “Gary Kaltbaum’s Trendwatch”… a weekly and monthly technical analysis research report for the institutional investor. If you would like a free trial to Gary’s Daily Market Alerts click here or call 888.484.8220 ext. 1.
You need to read the following article out of the NY Times. You will easily know why I was so sick to see Bob Rubin standing behind Barack Obama.
The Reckoning – Citigroup Saw No Red Flags Even as It Made Bolder Bets – Series – NYTimes.com
I now repeat 3 paragraphs from that article:
“But when Citigroup’s trading machine began churning out billions of dollars in mortgage-related securities, it courted disaster. As it built up that business, it used accounting maneuvers to move billions of dollars of the troubled assets off its books, freeing capital so the bank could grow even larger. Because of pending accounting changes, Citigroup and other banks have been bringing those assets back in-house, raising concerns about a new round of potential losses.”
“Also, hundreds of billions of dollars in dubious assets that Citigroup held off its balance sheet is now starting to be moved back onto its books, setting off yet another potential problem.”
“The bank has already put more than $55 billion in assets back on its balance sheet. It now says an added $122 billion of assets related to credit cards and possibly billions of dollars of other assets will probably come back on the books.”
So…what does Citi get for hiding losses, non-disclosure of these losses, bad accounting and every other securities violation under the sun? Yup…good old Mr. Government shows up with another $300 billion guarantee with our money. Isn’t this grand? Isn’t it great to be politically connected? How does this make you feel? What’s another $300 billion when the government has already spent trillions? Of course, these numbers are not real! This chart does not include CITI, another $40 billion to AIG, and any hidden backstops for BAC/CFC,WFC/WB deals.
There is still no end in sight to our government’s largesses. There is just one significant problem. Our government does not have one single dime of this money. This money will be conjured up and added to the $13 trillion of debt that has been run up by the people we have elected. This money will be coming out of all of us, our kids, our grandkids, their children and their grandkids…and for what? To pay off the bad bets of all these slime bags. We get nothing for our money. We haven’t seen one indictment, one perp walk…nothing.
In my last report, I wrote this:
Markets have now broke recent support…but be careful. I have seen many times a break…and a move back up. Also, the DOW just came down 2100 points in 12 days. But the fact remains, when I scanned my usual 2500 stocks last night, it was as bad as I have ever seen…and I have studied them all.
I now want you to focus on a couple of items that no one is focusing on. Therein lies the edge. Start watching the DOLLAR and GOLD. The DOLLAR has soared recently in a “flight to quality” orgy. I am not sure this can last. GOLD is now starting to outperform the DOLLAR…so I am watching for the GLD to move above the levels it is sitting at now. Get a chart of GLD and you will see it is trying to come up the right said of its recent range. Typically, I would tell you markets would rally if the DOLLAR weakens…which has been the case in recent months…but not sure. I would guess all commodities would get a lift, if the DOLLAR dropped as they are massively stretched and extended to the downside…which will help the indices but markets need the financials…and this second, financials cannot find a friend.
By now you know the market ramped into the close Friday. Already and amazingly, for the hundredth time, pundits are calling for another bottom. They never stop. Every up day is the bottom even though they are batting 0.000. For me, it is simple, if it is the bottom, a bottom or whatever, I will need to see more. I will need to see more in follow-through, in leadership, in no more heavy volume down days. So far, we have another 500 point, one hour move after a 2100 point drop in the previous 12 days.
As far as GOLD, it is now on my radar as it moved above near-term resistance on Friday…and with the underlying stocks moving on big volume. This is potentially important. Why? Because it may mean the dollar is going to weaken. If the dollar weakens, I believe the markets will rally as there has been a direct correlation between a strong dollar and a weakened market. I would also suspect other commodity areas will take a leadership position. Asset markets are ridiculously depressed and oversold while investors have plowed into the U.S. dollar and U.S. Treasury’s. An unwinding of this trade could see a very strong rebound in asset markets in conjunction with a sell off in dollar and bonds…and due to the fact these trades are now crowded and central banks are providing massive liquidity at the same time, once the unwinding starts, it could be powerful in the short term.
But I repeat, let’s get some follow through first. So far, it is again only one day…I mean one hour. We are in the midst of seasonal strength so anything is possible. Remember, markets do what is least expected. I do believe there is a big rally out there somewhere. The market has not had one in quite a while. But big rallies leave footprints.
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