Tuesday, January 20, 2009

Managers of the American Financial Institutions: In need of Ritual Seppuku?/ IBM: A RAY OF SUNSHINE

I have to admit that I was a tad unnerved today by the fall in bank stocks, sort of a one day confirmation of Mr. Roubini's opinion that there is not any there there anymore.   This was enough to keep me on the sidelines today even though I was tempted on a few issues. It is just amazing that Citigroup has been reduced to a 15 billion dollar market cap company, less than what it paid for the number 3 Japanese brokerage company about a year ago.   Bank of America is not far behind and gaining quick. MarketWatch For all practical purposes, excluding the dividend, BAC has returned to close to its October 1987 low, adjusted for stock splits, the destruction of  two decades of value creation in the space of one year.   The managers of all of the once mighty American financial companies are lucky they do not follow the old samurai code.   I wonder if anyone has told Stan about seppuku yet. 

The old Bronx Cheer greeted Obama on his first day with the Dow starting his Presidency at 7,949.09 and the S & P at 805.22.  The S & P number has significance for me.  It was the closing monthly low in the prior bear market.
So, I am on hold again for the reasons stated in those posts.  I will still go ahead and invest the cash flow received in January which has not yet been deployed. 
Hopefully, the IBM earnings, released after the close, will buoy the market tomorrow.  MarketWatch  IBM forecasted $9.20 in 2009, better than the consensus estimate of $8.7.MarketWatch

It is interesting to read the blather of bankers who cut off a business from credit even when the business is current on all interest payments and had never been late.   A spokeswoman for J P Morgan said in response to the Times inquiry as to why as follows: "We have been and continue to work with our clients to find the best solution to manage risk for them and for us,” said Mary Jane Rogers, a spokeswoman for JPMorgan Chase."  What a bunch of B.S.  There was a business that had to shut down just recently in Middle Tennessee and lay off about 300 workers because the banks would not lend it money.   

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